Chocolate wars - has Cadbury broken Kit Kat?

Today the English High Court issued its decision in the long running dispute between Nestle and Cadbury about Nestle's trade mark application for the 3D shape of the 4-finger Kit Kat chocolate bar. Mr Justice Arnold applied the September 2015 decision from the Court of Justice of the European Union (CJEU) (see previous blog here) and ruled that the Kit Kat shape cannot be registered as a trade mark in the UK.

This victory for Cadbury stems from Nestlé's application to register the shape of the 4-finger bar as a trade mark in 2010. That application was opposed by Cadbury and in June 2013, the UK Intellectual Property Office refused to register the trade mark as it had not acquired distinctive character and the shape was necessary to obtain a technical result (the snapping of the fingers).

In 2014, Mr Justice Arnold provisionally agreed with the refusal to register the shape, but decided to seek clarification of the law from the CJEU on 3 questions. The first question concerned the test that a brand owner must meet to show that a shape has acquired distinctiveness and questions 2 and 3 dealt with the tests relevant to assessing whether a shape is necessary to obtain a technical result.

Following the CJEU ruling, the only matter remaining in dispute between Cadbury and Nestle related to whether the bar shape satisfied the test for acquired distinctiveness. That is the issue which Mr Justice Arnold decided today. Whilst critical about the CJEU's reformulation of the acquired distinctiveness question referred to it and the subsequent ambiguity of the answer, Mr Justice Arnold considered that a further reference back to the CJEU was not likely to produce a materially different result.

The CJEU ruled that a trade mark applicant has to prove that the mark alone (in this case the 4 fingered shaped bar) as opposed to any other trade mark which may also be present (for example, Nestle and Kit Kat branding on the bar or the packaging) identifies Nestle as the company from which the goods originate. In other words, the shape of the chocolate bar must in itself be sufficient to allow consumers to identify it as being an original Nestle Kit Kat, without any regard to the packaging or other branding.

Not surprisingly, Mr Justice Arnold today concluded that, "in order to demonstrate that a sign has acquired distinctive character, the applicant or trade mark proprietor must prove that, at the relevant date, a significant proportion of the relevant classes of persons perceives the relevant goods or services as originating from a particular undertaking because of the sign in question (as opposed to any other trade mark which may also be present)."

It was noted that a number of other confectionery competitors produced a number of similarly shaped products, which pointed against the 3D shape of the Kit Kat bar as having acquired distinctive character. It is not enough for consumers to simply associate the shape with Kit Kat/Nestle, but instead it has to be shown that consumers rely on the shape mark in order to identify the source of the goods as Nestle.

This decision is consistent with existing case law which has seen failed attempts to register the shapes of various products such as dishwasher tablets, soaps and even a torch. Each case will still be interpreted on its own facts, but it is clear that brand owners will continue to face a high bar when demonstrating that a shape mark has sufficient distinctive character to merit protection. Indeed, if the 4-fingered Kit Kat shape cannot be registered after almost 80 years of use in the UK, it seems that any other applications to register shapes as a trade mark will be challenging.

Given the huge commercial market and the criticisms made of the guidance from the CJEU, it may well be that Nestle are not prepared to have a break and may well appeal the decision. Therefore, the "chocolate wars" may well be coming to an Appeal Court near you soon...!