Give us a break: Where does the KitKat decision leave trade mark protection for shapes?

Non-traditional trade mark registrations

“Non-traditional” registered trade mark applications which seek to protect colours, smells, sounds and shapes in relation to particular goods and services are a fascinating part of branding law. They raise questions about how we choose what we buy: what we notice and what we rely on. They also raise important questions of legal philosophy as to what should remain in the “intellectual common” for everyone to use in order to create and compete. On 17 May 2017, the Court of Appeal judgment in the dispute between Nestlé and Cadbury added to this case law and important related debate. The decision upheld the UK Intellectual Property Office’s rejection of Nestlé’s application to register the shape of its KitKat bar as a UK trade mark based on Cadbury’s opposition to it.

The case started in the UK Intellectual Property Office in 2013 and moved through the High Court, the Court of Justice of the European Union (“CJEU”) and then back to the Court of Appeal. So far, the battle to register the four-fingered bar as a UK trade mark has taken seven years from the filing date of the application. The Court of Appeal has now concluded that the shape of the bar cannot be registered as a trade mark because it is not relied upon by the public in order to signify the origin of the goods. Nestlé may now seek permission to appeal to the Supreme Court, for a final say on the application. At its simplest, the dispute rests on the difference between whether we simply perceive the shape of a KitKat as indicating it was made by or for Nestlé or we rely on the shape of the KitKat as indicating it was made by or for Nestlé when we buy one.

Legal protection for shape marks

Any sign which is capable of distinguishing goods and services of one undertaking from that of another can be registered as a trade mark under section 1 of the Trade Marks Act 1994 (“the TMA”). It can consist of words, designs, letters, numerals or the shape of goods or their packaging. Under section 3(1)(a) of the TMA, it is only marks that are capable of distinguishing goods and services which are registrable. In 2002, the electric three-headed rotary shaver case of Philips v Remington established that there is no group of signs inherently incapable of distinguishing goods or services. So that is an easy hurdle for a potential shape mark to overcome (or no hurdle at all).

The next issue is whether the mark is distinctive or in fact lacks distinctiveness under section 3(1)(b) of the TMA. The test for distinctiveness is whether the average consumer would recognise the mark as distinguishing the goods and services of one proprietor from those of another. The CJEU held that no trade mark monopoly was available for Philips’ three-headed rotary shavers, nor for the shape of Henkel dishwasher tablets. In Henkel, the CJEU said the public was not used to shapes conveying trade origin and there was insufficient evidence that the dishwasher tablet was distinctive. In the 2004 Court of Appeal decision in Bongrain, the shape of a cheese also did not pass the threshold for protection as a registered trade mark. In that case, Jacob LJ warned of the dangers of depleting the “intellectual common” by allowing monopolies over shapes and stated, “I do not accept that just because a shape is unusual for the kinds of goods concerned, the public will automatically take it as denoting trade origin … as being the badge of the maker.” It can be seen from these cases, that it is very difficult for shape marks to be distinctive in a trade mark sense, in and of themselves.

Acquiring distinctiveness

In certain circumstances, however, it is possible for brand owners to secure trade mark protection for non-traditional marks such as shapes if they can demonstrate that the mark has acquired distinctiveness through use. The test for this was set out by the CJEU in the 1999 case of Windsurfing Chiemsee v Attenberger and involves the Court making an overall assessment of the evidence that the mark has come to identify the goods/services as originating from a particular company. If a significant proportion of the relevant class of persons identify the goods/services as originating from a particular company because of the trade mark, then it must be registered.

Opinion poll evidence is sometimes used by brand owners to try to pass this test. Two such polls were used in the KitKat case. In Philips v Remington, the CJEU confirmed that specific and reliable data is required about the presumed expectations of an average consumer of the goods/services. That consumer is deemed reasonably well informed and reasonably observant for the purposes of the test. Finally, the identification by the relevant class of persons of the goods/services as originating from a particular company must result from the use of the mark as a trade mark. The court will look at factors such as how widespread the use is, for how long, the amount invested in the mark and the proportion of the relevant class who identify the goods/services as originating from a particular company. It is a high evidential burden to satisfy. For example, August Storck (the company that makes the ‘Werther’s Original’ caramel-flavoured sweet) was unsuccessful in its application for a shape mark for the shape of a light brown sweet because the evidence it submitted did not permit a determination of market share; the advertising costs were not specifically attributable to promotion of the shape of the sweet; and the consumer surveys contained no reference to the shape of the sweet but focused only on the name.

Likewise, in the KitKat case, the UK IPO concluded on the evidence (and the High Court and Court of Appeal agreed) that third-party products consisting essentially of a number of joined chocolate fingers separated by breaking grooves and consumers were on the market prior to Nestlé’s filing date and would not have been perceived as signifying that the bar originated with a particular company and that Nestlé had not shown that consumers relied on the shape of the KitKat to identify the origin of the goods. Arnold J in the High Court referred the issue of perception of origin versus reliance to the CJEU but was unhappy with the reply which, he said, did not directly address this point. Another way of looking at the CJEU decision is that it simply restated the settled test that the shape must have come to signify the origin of the goods/services in order for it to be registrable. The Court of Appeal agreed with the High Court that it is relevant that were the mark to be used alone, the relevant consumers would perceive the goods as originating from a particular undertaking and rely upon it for that purpose in making or confirming their transactional decisions. If they have done so, it will have acquired distinctiveness. Kitchin LJ went on to state that it may be difficult to show that consumers have relied upon a mark where it has been used in conjunction with a registered trade mark and where the mark cannot be seen at the point of sale (as in this case). Even though the Hearing Officer had concluded that at least half the people surveyed for Nestlé had thought that the picture shown to them was a KitKat, he was still entitled to consider all the evidence before him in the round. The introduction of the concept of reliance in the consumer’s transactional decisions does not have any clear basis in the European case law and arguably adds in an additional factor to what should be a simple test of whether the mark has come to signify the origin of the goods for which it is registered. Indeed, Nestlé’s equivalent EU trade mark is faring better on the issue of acquired distinctiveness in other courts around Europe.

Shape exclusions

There are also provisions in the TMA that deny protection to certain shape marks if one of them applies fully to all of the essential features of the shape. Thus, a sign may not be registered if: (1) the shape results from the nature of the goods themselves (2) the shape is necessary to obtain a technical result (for this reason the Lego brick was not protectable); or (3) the shape gives substantial value to the goods (see section 3(2) TMA). Examples of the third exclusion have included the shape of Bang and Olufsen speakers, the London black cab, and the Stokke Tripp Trapp chair. The rationale behind these exclusions is to deny protection to shapes which would otherwise grant a monopoly over technical solutions that a user is likely to seek in a competitor’s product and to shapes which are otherwise covered by design law for which there is a deliberately limited duration.

Conclusion

There is a view amongst some academics that the European approach to non-traditional trade marks, such as shape marks, is incompatible with the traditional English view of the “intellectual common”. In 1909, the Court of Appeal denied protection to the word ‘Perfection’ for soap. Farwell LJ stated that if we failed to prevent it, “them large and wealthy firms whom smaller folk are unwilling to litigate could divide amongst themselves all the ordinary words of description and laudation in the English language”. The same could be said as regards ordinary shapes, such as that of a chocolate bar. Are we witnessing a soon to be “liberated” English court that is “taking back control” of the outer limits of trade mark protection and protecting the “intellectual common” or did Nestlé just fail to get sufficient evidence that the shape of its bar (invisible at the point of sale) distinguished the origin of its goods?

If English courts are to diverge from European jurisprudence on the issue of non-traditional marks post-Brexit, what advantages or disadvantages will we see from a slightly different regime from that on the Continent? The new EU Trade Marks Directive 2016 emphasises in its recitals the importance of a single market for intellectual property rights to meet increased demand from stakeholders for faster, higher-quality, more streamlined trade mark registration systems that will have a positive impact on competitiveness and growth. By adopting a different approach, the English courts will arguably be diverging from some of these aims and, in particular, from what big brand owners want. In doing so they probably hope to encourage more competition. Whether they achieve that and to what (if any) positive ends, remains to be seen.