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Monday, 21 September 2015

Kit Kat quandary: have the media and the majority got it wrong?

Something in common: both Kit Kat and LEGO
have come up before the CJEU for a trade mark
ruling. LEGO definitely lost.  But 
Nestlé ?
At the very end of August, this weblog hosted a guest comment by a German attorney, Thomas Farkas, in which he gave a strikingly positive slant to the deeper meaning of Advocate General Wathelet's Opinion in the controversial Nestlé v Cadbury dispute over registration of the three-dimensional shape of the Nestlé Kit Kat chocolate biscuit bar.  Last week the Court of Justice of the European Union (CJEU) gave its definitive ruling, noted by fellow Kat Eleonora here. The media instantly concluded that it's the end of the road for Nestlé's quest for registration, and the uncertainties as to what precisely the Court meant have led to this blog's sidebar poll on what the referring judge, Mr Justice Arnold, should do.  Meanwhile, Thomas Farkas has sprung up again to offer a further, highly positive interpretation of the words of the CJEU, arguing that the Nestlé application should now be allowed to succeed.  This is what he writes:
"There have been a number of controversial comments on the interpretation of last Wednesdays‘ judgment of the Court of Justice of the European Union (CJEU) on the KitKat shape (judgment of 16 September 2015, C-215/14). Some comments even view the judgment as a setback for Nestlé (see eg BBC here and City AM here). This guest contributor believes that those commentators have misunderstood the judgment.

First, the CJEU clearly strengthens the position of owners of non-traditional trade marks by confirming in the answer on question 2 that the registration of a shape can only be refused if one of the grounds of refusal of Article 3(1)(e) of the Trade Mark Directive (TMD) is fully applicable, thereby rejecting the position that a shape consisting of three essential features can be denied registration if feature 1 results from the nature of the goods and features 2 and 3 are necessary to obtain a technical result.

Further, the CJEU answers question 3 in favour of the trade mark owner. The CJEU clearly holds that the manufacturing method is not decisive in the context of the assessment of the essential functional characteristics of the shape of the goods either. The CJEU ruling is therefore that trade marks for product shapes cannot be denied registration under Article 3(1)(e)(ii) TMD on the ground that the shape is necessary to obtain a technical result with regard to the manner in which the product is manufactured.

With those answers to questions 2 and 3 the CJEU removes two obstacles of registration of Nestlé’s KitKat four-finger shape construed by the UK IPO.

Finally, on question 1 the CJEU rephrased the question of Mr Justice Arnold without any reference to the “reliance” criterion and it answered without any reference to “reliance” either. In this way, the court made clear that the reliance criterion is not a requirement which is relevant under harmonized trade mark law. In answering the question, the CJEU restated the principles established in its earlier jurisprudence, in particular the Colloseum case (judgment of 18 April 2013, C-12/12). I had indicated already in my comment of 30 August 2015 on the opinion of AG Wathelet, that Colloseum is the key to this case too. 
A read of paragraphs 64-66 of the KitKat judgment now reveals, that, as in Colloseum, it will suffice that the mark for which registration is sought is – in real life – one of multiple indicators of origin. A product shape mark will have acquired distinctiveness if it is demonstrated that the mark enables the consumer to attribute the product to a particular manufacturer. If, in the case before the UK IPO, the survey taken related to the mark applied for on its own, with a picture of the four-finger shape in the absence of any markings other than the shape, and a relevant proportion of the consumers were able to identify the product in the that shape as coming from one particular company, the proof as required by the CJEU in its answer to question 1 should be established."

4 comments:

iPuffin said...

Quite.. I've been saying the same since it came out!

AK said...

Even if Thomas Farkas is right re reliance (which is quite possible), I would not be so sanguine about Nestlé's chances for success. When deciding the case, Richard Arnold will also have to take account of what the CJEU said in Hauck v. Stokke about shapes resulting from the nature of the goods - the Court's concept seems to be broader than what has been applied before by the UK IPO. Thus, taking Hauck seriously, it is not only the slab form that results from the nature of the goods, but also the indents between the fingers that allow breaking the slab into segments. This is a feature inherent in the function of such goods – being consumed in handy portions - that consumers would also be looking for in the products of competitors. The fact that the indents could also be arranged differently - e.g. in squares, or in different numbers- does not count. As under this reading the shape in its entirety would be excluded for resulting from the nature of the goods, it is irrelevant that the Court considered the exact shape of the indents not to be falling under article 3(1)(e) (ii) TMD.

Anonymous said...

Really? The way this was played out by the Member States who opined was that it was between German law vs UK law without anyone actually saying that expressly. It appeared to be that UK law won out. This is often the case, without anyone ever saying that expressly.

Juris said...

I don't think the judgment has been misunderstood by the majority. How Arnold approaches it given he failed to spot that distinctiveness through use should never have arisen at all is anyone's guess. The UK lower Courts often do odd things to rulings of the CEU (applying arcane defences, becoming disgruntled because the CJEU did not do x or y). Here though, the judgment is more English than not. The CJEU does not like shape marks, much to the chagrin of the German legal establishment which does and which hopes that the CJEU will see the light. It won't at this rate. OHIM is also fairly partial to shape marks as well and will have to adapt. But this CJEU (not the lower General Court)has competition considerations uppermost in its mind when it see a shape mark. Things can only get worse for shape marks after this. In this sense, the CJEU veers towards the UK position, and UK law rather than German law.Suggest you read the judgment in French -it is much clearer.

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