Another blow for the Swiss food and beverage company Nestlé in their bid to permanently monopolize the shape of the KitKat candy bar by means of trademark protection: on December 15, 2016 the General Court has annulled the decision of the Board of Appeal of EUIPO that granted trademark protection to the shape of the candy bar.
The cancellation action, filed by Mondelez (formerly: Cadbury), was initially upheld by the Cancellation Division. Nestlé successfully appealed this decision with the Board of Appeal which annulled the Cancellation Division’s decision and held that the shape of the well-known candy bar had acquired distinctiveness through use. Mondelez on its turn appealed this decision and convinced the General Court to annul the decision of the Board of Appeal.
A sign must have distinctive character in the entire European Union to be accepted on absolute grounds. A lack of distinctive character in part of the European Union is sufficient for an application to be rejected according to Article 7(1)(b) EUTMR. The latter mainly applies to word marks, which are often considered distinctive in just a part of the European Union due to lingual reasons. It is unlikely on the other hand that the shape of a product will ab initio carry distinctive character in parts of the European Union only. In fact, shape marks will usually be perceived the same way by the public in the entire European Union. This means that in general a shape has to acquire distinctiveness in the entire European Union in order to become eligible for protection.
In its decision of December 11, 2012 the Second Board of Appeal of EUIPO concluded that the shape of the KitKat candy bar had acquired distinctive character through use. Nestle showed that in 2007 around 45% of the public in seven Member States immediately recognized the shape of the candy bar as a source of origin. At the time, those seven Member States represented almost 90% of the population of the European Union. This was sufficient according to the Board.
Unfortunately for Nestlé, the General Court did not share the Board’s view. Even though the evidence showed that a substantial portion of the public perceived the shape of the candy bar as a source identifier, the General Court ruled that this was not sufficient. Instead the relevant question, according to the General Court, is whether it is proven that throughout the European Union a significant proportion of the relevant public perceives the mark as an indication of the commercial origin of the goods designated by the subject mark:
- 142. However, that criterion is incorrect: the relevant question is not whether it was shown that a substantial proportion of the public in the European Union, merging all the Member States and regions, perceived a mark as an indication of the commercial origin of the goods designated by that mark, but whether, throughout the European Union, it was proved that a significant proportion of the relevant public perceived a mark as an indication of the commercial origin of the goods designated by that mark. A lack of recognition of the sign as an indication of commercial origin in one part of the territory of the European Union cannot be offset by a higher level of awareness in another part of the European Union.
In other words, according to the General Court one should not merge all member states within the European Union and assess the proof filed for the Union as a whole to determine whether a substantial part of the public of the Union perceives the mark as an indication of commercial origin (a substantial percentage of the population of the EU). Instead, it appears one should study the proof filed on a country by country basis, assessing whether or not the relevant public in each subject Member State perceives the shape as a source identifier.
In the Judgement of May 24, 2012, Chocoladefabriken Lindt & Sprüngli v OHIM, C-98/11 it was decided that it would be unreasonable to require proof for each individual Member State and that instead acquisition must be “sufficiently” proved in quantitative terms. What is considered to be “sufficiently” proved in quantitative terms however has yet to be defined. So far the Court has held that there was insufficient proof of acquired distinctiveness through use of a mark throughout the entire European Union where evidence was missing for 12 of the 27 Member States (Judgement of April 21, 2015, Representation of a grey chequerboard pattern, T-360/12) and where evidence was missing in 24 of the 28 Member States (Judgement of March 16, 2016, Työhönvalmennus Valma v OHIM (shape of a game box with wooden blocks) (T-363/15).
In the present case the General Court agreed with the Board of Appeal that Nestlé successfully showed that the candy bar has acquired distinctiveness through use in France, Italy, Spain, United Kingdom, Germany, the Netherlands, Denmark, Sweden, Finland and Austria. From the decision of the Board of Appeal it appears that no evidence was filed for the remaining EU members at the time of filing the subject trademark registration, i.e. Belgium, Ireland, Portugal, Greece and Luxembourg. The General Court concluded that as it is not proven that the trademark has acquired distinctiveness through use in these Member States, the evidence does not suffice to show acquired distinctiveness in quantitative terms. The decision of the Board of Appeal is annulled.
The decision of the General Court once again confirms how difficult it is to successfully register and maintain a shape mark in the European Union. Even when you can prove the trademark is perceived by a substantial percentage of the public as an indication of the commercial origin (in the present case: almost 50% of the public of the Member States representing almost 90% of the population), these figures are not sufficient to show acquired distinctive character through use in the entire European Union.
It goes without saying that Nestlé and the other party Mondelez UK Holdings (formerly known as Cadbury) are not finished with each other yet, since Nestlé filed an appeal against the decision on February 15, 2017. Hopefully the Court of Justice will address what is to be defined as “sufficiently proved in quantitative terms” and will give trademark owners and trademark attorneys more clarity on this subject.