The correct call in the KitKat case

Nestlé has had its latest attempt to trademark the shape of its famous four-fingered KitKat bar thrown out by the High Court after judges felt its reliance on “distinctiveness through use” fell short. Here’s an explanation of the case…

Nestle, chocolateThe purpose of a trade mark (TM) is to allow consumers to distinguish products as coming from different trade origins without possibility of confusion. To qualify for TM protection, a sign must have ‘distinctive character’. This is satisfied by either inherent distinctiveness; for example, made up words such as ‘Kodak’, or, by having acquired distinctiveness through use; for example it took Nestlé over 40 years to acquire distinctiveness through use to register the word mark, ‘Have a Break‘ for confectionery.

How can a shape acquire distinctiveness?

If a mark is inherently indistinct, the applicant for registration must show that, as a result of the use of the mark, consumers have come to rely upon the mark alone as denoting the exclusive origin of the goods. Immediate recognition of the shape itself and association of it with a particular brand will help but the key hurdle is reliance.

Nestlé produced survey evidence showing that an overwhelming number of people, when shown a picture of a four-finger shaped wafer chocolate bar, identified it as a KitKat. At first instance, Arnold J held, however, that consumers relied only on the word mark and other branding to denote trade origin and that consumers tend to be influenced more by a brand name and outer packaging of a product rather than its shape alone.

On appeal, Nestlé contended that there is no basis in law for the requirement of ‘reliance’ and instead, association and recognition were sufficient to show that consumers identified the mark as coming from Nestlé. The Court of Appeal disagreed.

It believed that average consumers are not in the habit of making assumptions about exclusive origin of the product on the basis of its shape alone. The shape ‘bringing to mind’ the product and brand name with which consumers have become familiar is not distinctiveness; it’s mere recognition and association. As discussed below, this does not, however, render all 3D marks as unregistrable.

Has the KitKat shape become distinctive enough for consumers to identify all such bars as KitKats?

No. The Court of Appeal was influenced by the existence of third party products on the market. For example, Tesco sell a four-finger product, as do Asda and Sainsbury’s. There is also a niche gluten free Glutano Break Bar and a Norwegian bar, ‘Quick Lunch’, made in 1937 and available in the UK, which has the same four-finger shape wafer bar (see below). There was no evidence that consumers believed that such competitor products were KitKats.

KitKat’s lack of uniqueness is analogous to Lindt’s failed attempt at registering their chocolate bunny shape. There, the combination of shape, colours, ribbons and bell was insufficiently different from the wrapping of other chocolate rabbits. The same reasoning can apply here: Nestlé’s four-fingered shape is insufficiently different from that of competitors. It is necessary to prove that the shape of a product alone is enough to guarantee product origin in the mind of the consumer, absent any get-up and logos.

Whether the mark is visible at the point of selection is relevant as to whether the evidence shows that the public have come to rely on the mark in the course of trade. It is essential that consumers do or could use the mark in their transactional decisions, i.e. when purchasing the goods. Consumers had not relied on the shape of the product to confirm its authenticity; hence why ‘KitKat’ is stamped onto the chocolate. Without there being a connection in the mind of consumers between the shape and origin of the goods, the KitKat shape is incapable of fulfilling the TM function.

Regardless of distinctiveness, TM law will not allow for a technical monopoly to be granted to one company where the shape arises from the technical purpose of the product itself. For example, in Philips v Remington, a three-headed electric shaver was held to be necessary to achieve a technical result and did not signify trade origin to qualify for TM protection. Achieving TM registration for a 3D mark is a high threshold as courts are wary of granting any perpetual technical monopoly.

Arguably, the shape of a KitKat helps facilitate the break off of separate fingers; a ‘technical function’. This would leave nothing more than a rectangular shaped chocolate bar, much like the rest of them.

How is it possible to reconcile the KitKat decision with the TM registration of the 3D Toblerone bar and Coca-Cola bottle?

Not easily! Arguably, the Toblerone bar is inherently distinctive (and therefore is not required to acquire distinctiveness through use). It is an unusual (‘made-up’) shape when applied to chocolate, unlike KitKat’s rectangular shape which is an easy, cheap and common way to manufacturer a chocolate wafer bar. Furthermore, KitKat is sold in an opaque wrapper which does not show and nor is it suggestive of the shape of the content, unlike a Toblerone bar. Nestlé are not using the mark as a trade mark because the KitKat shape is not visible at the point of sale.

By contrast, the KitKat shape is within the norms and customs of the sector and only a mere variant on a common shape. It is indistinct. It follows that the more closely the 3D mark resembles the shape most likely to be taken in the market; the greater the likelihood the shape will be devoid of distinctiveness. The hurdle, therefore, is a high one. Unlike the KitKat bar, the Coca-Cola bottle is intricately designed, visibly used in extensive global advertising, visible at the point of sale and inherently distinctive of one trader.

If 75 years on the market and tens of millions of pounds spent in advertising is not enough, can the KitKat shape ever acquire distinctiveness?

Unless or until consumers come to not only identify but rely on the shape of the KitKat bar as indicating that all such bars come from Nestlé, acquired distinctiveness will be elusive. Nestlé is and will continue to be required to add its branding and trade dress in order to attain consumer reliance.

Courts will not be swayed by general, abstract data and consumer survey percentages, however great that percentage becomes. Survey evidence is only one factor to be taken into account in all the circumstances of establishing distinctiveness. Survey evidence also has inherent problems of leading questions and inviting speculation.

Leaving aside the methodology and probative value of survey evidence, the fact that a majority of people were able to name KitKat did not mean that they perceived the TM as exclusively designating the origin of such products. Arguably, KitKat was merely the most brought to mind brand.

As Floyd LJ stated, surveys must conclude that the goods in question are the goods of one undertaking and no other. A perception that they looked like KitKats is not enough because acquired distinctiveness must carry with it an indication of exclusive trade origin.

Further, the courts will not provide legal protection if it believes that the 3D sign is providing a technical monopoly over a customary rectangular shape.

In summary…

The distinction between ‘reliance’ as opposed to ‘recognition’ and ‘association’ is a thin one. No one will be surprised if Nestlé seek leave to appeal, for their 3D mark has already achieved registration in countries such as Australia, South Africa and Canada to name a few.

The margins are minimal but the magnitude of TM protection is mammoth, as unlike other IP rights, a TM gives its owner a potentially infinite monopoly.

The author is a future trainee at a City firm.