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This briefing note is only intended as a general statement of the law and no action should be taken in reliance on it without specific legal advice.

Inside IP: KitKat - Court of Appeal sets high bar for acquired distinctiveness
 Briefing 
Author
Sally Britton & Nina O'Sullivan
Date
18 May 2017

Inside IP: KitKat - Court of Appeal sets high bar for acquired distinctiveness

Most people in the UK would recognise the KitKat shape. Yet, in the long-running dispute between Nestlé and Cadbury, the Court of Appeal decided that the shape of Nestlé's four-finger chocolate bar does not have the necessary acquired distinctiveness to qualify for protection as a UK trade mark. The decision demonstrates how high the hurdles are for those seeking to establish distinctiveness in relation to inherently non-distinctive marks, such as the shapes of products and packaging. 

In the decision, the Court of Appeal has stressed the significant distinction between recognition and association on the one hand (which is not enough), and perception as to exclusive origin on the other. 

Nestlé had relied upon a survey which indicated that, when shown a picture of the product, and asked questions relating to source, at least half the respondents gave answers to the effect of "It's a KitKat". Whilst many might understandably consider this sufficient to demonstrate that the shape had acquired distinctiveness, the Court of Appeal agreed with both the trial court and the UKIPO (UK Intellectual Property Office) hearing officer that this evidence only demonstrated that consumers recognised and associated the shape with KitKat - and therefore with Nestlé, but no more than that. It did not satisfy the proper test to be applied, which had been laid down by the European Court of Justice (CJEU), namely whether consumers would perceive the shape as originating from a particular undertaking, and not from others. 

Establishing the relevant perception in each case will depend upon how the mark has been used. Going forward, businesses will need to consider very carefully the use they make of a particular mark - such as a shape - in order to promote a product. This will put them in a position to compile the necessary evidence to demonstrate that the shape qualifies for trade mark protection through acquired distinctiveness, including in any survey evidence they rely upon. 

Of course, whilst the test for acquired distinctiveness has been laid down by the CJEU (and is therefore, as noted by Floyd J, now settled), it is possible that Nestlé will seek permission to appeal further to the Supreme Court.

COURT OF APPEAL DECISION

Nestlé had appealed the UKIPO's rejection of its application to the High Court which led to Arnold J referring a question to the CJEU as to the proper test to be applied when assessing whether a mark which is inherently non-distinctive has nevertheless acquired a distinctive character through use. Many - including Arnold J himself - raised concerns about the opaque nature of the CJEU's decision, handed down in September 2015.  However, the main appeal judge, Kitchin LJ, said it was 'tolerably clear and consistent with its earlier judgments'. 

Specifically, the test to be applied is as follows: the trade mark applicant must prove that, as a result of the use they have made of the mark, a significant proportion of the relevant class of persons perceive the goods designated by that mark, as opposed to any other mark which might also be present, as originating from a particular undertaking. This means that the mark must have come to identify the relevant goods as originating from a particular undertaking and so as to distinguish those goods from those of other undertakings. It is not enough to show that a significant proportion of the relevant class of consumers recognise the mark and associate it with Nestlé's goods. 

In circumstances where a shape has been sold in large numbers under and by reference to a brand name which is inherently highly distinctive, that shape may become very well known. However, that does not necessarily mean that the public has come to perceive the shape as a badge of origin such that they would rely upon it alone to identify the product as coming from a particular source. They might, for example, instead regard the shape as a characteristic of products of that kind, or they might consider it brings to mind the product and brand name with which they are familiar. In the Court's view, that is an example of recognition and association and does not amount to acquired distinctiveness. 

The Court of Appeal also considered the boundary between 'reliance' and 'perception' in applying the CJEU's test. Whilst it was not necessary to show that the public had relied upon the trade mark, it was legitimate to consider whether a significant proportion of the relevant class of persons would rely upon the sign as denoting the origin of the goods or services if it were used on its own. Further, if it was shown that consumers had come to rely upon the mark as an indication of origin, then this would establish that the mark had acquired distinctiveness. Accordingly, evidence of reliance will have a significant part to play.

Interestingly, the Court of Appeal declined to follow certain findings of the General Court in a separate dispute relating to Nestlé's EU trade mark for its four fingered bar, which had also been challenged by Cadbury. The General Court had found that Nestlé had not shown acquired distinctiveness in all relevant Member States, and so this issue will now return to the EUIPO (EU Intellectual Property Office). The EUIPO is now likely to re-examine the evidence of distinctiveness in the Member States that it had not dealt with (the decision is also under appeal at the CJEU). However, Nestlé pointed to the fact that the General Court had found that, for the UK, the evidence did demonstrate acquired distinctiveness, albeit recognising that the goods were defined in a slightly different way. The Court of Appeal considered this point carefully but accepted Cadbury's argument that the General Court had taken into account the results of a survey that the UKIPO had considered could not be relied upon. It had also, in places, clearly regarded recognition and association with KitKat as being sufficient, contrary to the CJEU's decision.

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