The long-running conflict between Nestlé and Cadbury (now Mondelez) with regard to registration of the Kit Kat shape mark as characteristic for chocolates is still bringing us interesting rulings by the courts on the question of the acquisition of distinctive character by trade marks through use.
Recapitulating, first came the refusal of the trade mark in the United Kingdom, which resulted in a referral for a preliminary ruling, addressed by the Court of Justice of the European Union in its judgment of 16 September 2015 (Case C-215/14). Counter to what many had expected, that decision did not move the British High Court of Justice to find in favour of registering Nestlé’s trade mark. Quite the opposite, in his judgment of 20 January 2016 Mr. Justice Arnold’s interpretation was that the CJEU had held that the association between the image of the confection and the Kit Kat chocolate bar by a large majority of people surveyed did not suffice to consider that the shape had acquired distinctiveness as a trade mark. In his opinion, it would have been necessary to show that consumers perceived the product as having a given undertaking as its business origin on the basis of the sign in question alone, without considering any other marks that may also be present. As a result, the refusal of the British trade mark was ultimately upheld.
On the other hand, Nestlé had succeeded in registering the shape of the Kit Kat chocolate bar as a three-dimensional European Union trade mark in 2006. The following year Cadbury filed a request asking the EUIPO to invalidate the registration on grounds that the sign was devoid of distinctive character. The EUIPO’s Board of Appeal held that even though the sign was initially devoid of distinctiveness, Nestlé had proven that it had acquired distinctive character through use. That decision was set aside by the General Court by its judgment of 15 December 2016 on grounds that the findings of the Board of Appeal did not address the acquisition of distinctiveness by the mark in part of the European Union (specifically, in Belgium, Ireland, Greece, and Portugal).
In essence, the issue in dispute was the geographical extent of the evidence of acquisition of distinctive character through use. While Nestlé and the EUIPO maintained that it sufficed to show that the mark had acquired distinctiveness in a significant portion of the European Union, the General Court ruled that this had to be shown in the entire territory of the EU, not just in a substantial part or in the greater part of that territory.
On appeal, by its judgment of 25 July 2018 (Joined Cases C-84/17 P, C-85/17 P, and C-95/17 P), the Court of Justice upheld the General Court’s decision. The CJEU found that Article 7.3 European Union Trade Mark Regulation requires proving distinctiveness in the European Union to have been acquired wherever the sign was not distinctive ab initio. Where this is the case throughout the European Union, the proof needs to encompass the territory of the EU as a whole; evidence dealing with a substantial part of the EU does not suffice.
The Court has clarified, though, that the evidence does not have to consist of separate evidence for each individual EU Member State but that evidence may instead be produced globally for various Member States combined. However, the evidence, whether individual or global, must cover the entire territory of the European Union. In consequence, the Board of Appeal’s decision was vitiated by an error in law in failing to adjudicate on the acquisition of distinctive character by Nestlé’s trade mark in Belgium, Ireland, Greece, and Portugal.
The Court of Justice has set a very high bar for evidence. It should be noted that both the EUIPO and the General Court had deemed Nestlé to have proven acquisition of distinctive character in 10 EU Member States, including the largest ones (Germany, Spain, France, Italy, and the United Kingdom). It would thus seem that owners who, in the event of a challenge, wish to rely on the acquisition of distinctive character through use to defend the validity of their European Union trade marks had best be prepared to embark on a laborious and costly process of compiling evidence.
Author: Carlos Morán
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