No break for Kit-Kat from the EUIPO

A Freeths lawyer discusses the Attorney General's Opinion in joined cases C-84/17 P, C-85/17 P and C-95-17 P[1] concerning Nestlé's trade mark for its ‘Kit-Kat' product. If followed by the CJEU, the evidential burden on applicants for non-distinctive marks in the EU will be eased, though the present case is unlikely to provide much comfort to Nestlé.

Nestlé has had a number of well-document battles around the world as it seeks to register the shape of its ‘Kit Kat' chocolate bar as a trade mark, often with competitor Cadbury bringing objections. It's fair to say that Nestlé's fortunes have been mixed, with success in some countries and failure in others. At the EUIPO, the struggle has rolled on for over 16 years. In the latest development in this legal tale, the Attorney General's opinion delivered on 19 April 2018, marks a considerable set back to Nestlé's goal of joining the exclusive club of shape mark owners within the confectionary market. The Attorney General adopted a more pragmatic approach when assessing whether a trade mark had acquired distinctive character through use across the EU. If this approach is adopted by the CJEU, brand owners will not have to prove acquired distinctiveness in every Member State so long as sufficient and applicable evidence has been provided of acquired distinctiveness in the relevant market (which may transcend borders).

 

The Background

Nestlé applied to register a three dimensional mark for its Kit-Kat four finger product as an EU trade mark back in 2002. Nestlé's trouble with Cadbury (now Mondelez) began in 2007. Cadbury applied to invalidate the EU trade mark registration which was subsequently declared invalid on the grounds of lacking any distinctive character. Pressing on, Nestlé appealed to the EUIPO's Board of Appeal and submitted evidence of use relating to 14 out of 15 Member States and survey evidence relating to ten of these (at the time of filing of the trade mark, the EU consisted of 15 Member States). Although the Board of Appeal agreed that the mark lacked distinctive character, it concluded that on the evidence provided, the mark had acquired such character through use and was in effect registrable.

Unsurprisingly, Mondelez appealed to the EU General Court which annulled the Board of Appeal's decision, finding that the EUIPO had erred in law by stating that the mark had acquired distinctive character through use in the EU when Nestlé had proved this only for a part of the EU territory. Although Nestlé submitted evidence from 14 Member States (no evidence was submitted for Luxembourg), the General Court felt that the information provided for Belgium, Ireland, Greece and Portugal was not sufficient to establish that the relevant public in those countries regarded Nestlé as the origin of the Kit-Kat product.

The General Court found that the EUIPO Board of Appeal could not have concluded the matter without taking into account the other four Member States. The General Court further reasoned that since the lack of inherent distinctiveness exists in every Member State, acquired distinctiveness had to be proved in each Member State; absence of such evidence would render the sign non-registrable.

 

Appeal to the CJEU

Nestlé appealed and argued that the General Court was wrong to find that an owner of an EU trade mark must show that its mark has acquired distinctive character in each of the Member States separately. Further, Nestlé contended that such interpretation was ‘incompatible with the unitary character of the EU trade mark and the very existence of a single market'. Mondelez argued that it is not sufficient for an EU trade mark to be distinctive in a substantial part of the EU's territory if it is not distinctive in all of the Member States (even if the distinctiveness cannot be proven in only one Member State). Mondelez further contended that such argument would lead to a paradox whereby a mark lacking inherent distinctiveness in one Member State could be registered as an EU trade mark and enforced there.

 

Attorney General's Opinion

Attorney General Wathelet in his opinion given on the 19 April 2018 examined the CJEU's earlier decision from 2012 in the Chocoladefabriken Lindt v OHIM[2] case (concerning the shape of a chocolate rabbit) which established that it would be unreasonable to require proof of acquired distinctive character for each individual Member State. The Attorney General emphasised that it did not mean that an EU trade mark applicant could ignore entire regions and markets within the EU when producing evidence of acquired distinctiveness. The Attorney General argued that consideration must be given to the geographical size and the distribution channels within the regions in which acquired distinctive character of an EU trade mark has been established. He reasoned that evidence adduced for some national markets might suffice to cover other markets for which (quantitatively sufficient) evidence has not been submitted.

To exemplify the above, he argued that if Luxembourg is part of the same market as Belgium, France or Germany for goods/services covered by a trade mark, and sufficient evidence has been provided for one of those countries, it would not be necessary to provide specific evidence for Luxembourg in those circumstances as, given the similarity between the markets, the existing evidence could be simply extrapolated. This is a more pragmatic approach which takes into account how goods and services are marketed and distributed across the EU in practice. Applying this legal reasoning to Nestlé's case, the Attorney General stated that although Nestlé had provided market research for all Member States save for Luxembourg, it was clear from the General Court's decision that information provided for five of the relevant Member States was not sufficient to establish acquired distinctiveness through use. Although the General Court was, in principle, required to analyse whether such evidence could be extrapolated from the information submitted for other national or regional markets, Nestlé did not provide any evidence on this point. Consequently, the General Court was left with no other choice but to annul the EUIPO's decision. Accordingly, the Attorney General recommended that the CJEU dismisses Nestlé's appeal.

 

Conclusion

Although the Attorney General's decision is not binding on the CJEU, the court is likely to dismiss Nestlé's appeal in line with his recommendation. This decision is yet another obstacle on Nestlé's path to obtain trade mark protection for its shape mark in the EU. Interestingly, in May 2017 the UK Court of Appeal confirmed that the shape had not acquired distinctiveness in the UK and could not therefore be registered. Overall, the Attorney General's more pragmatic approach afforded to brand owners is a positive step which will require the analysis of the relevant market within the EU, without the unnecessary constraints of the Member States' geographical borders.

 

If this approach is adopted by the CJEU, brand owners will not have to prove acquired distinctiveness in each Member State so long as sufficient and applicable evidence has been provided and can be extrapolated.

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[1] Joined Cases C-84/17 P Société des produits Nestlé SA v Mondelez UK Holdings & Services Ltd, formerly Cadbury Holdings Ltd and EUIPO, C-85/17 P Mondelez UK Holdings & Services Ltd, formerly Cadbury Holdings Ltd v EUIPO, and C-95/17 P EUIPO v Mondelez UK Holdings & Services Ltd, formerly Cadbury Holdings Ltd[2] Chocoladefabriken Lindt & Sprungli v OHIM (C-98/11 P, EU:C:2012:307)