Nestlé v Cadbury: on mixing and matching grounds for exclusion under Article 3(1)(e) Trade Marks Directive

Mr Justice Arnold's referral to the CJEU of certain questions regarding the application of the Trade Mark Directive in the dispute between Nestlé and Cadbury over Nestlé's application for a trade mark in the shape of its "KitKat" chocolate bar has already been the subject of a number of posts on IPKat (Will Kit Kat shape monopoly last forever? Another Arnoldian reference for the CJEU, What the ...! Wathelet gives Nestlé application a bit of stick, A premature requiem? Proving acquired distinctiveness of shape marks, Acquired distinctiveness of product shape marks: AG Wathelet does not “rely” on the UK approach – but on what else?)

The last two contributions have focused on the first question referred to the CJEU which concerns how to prove acquired distinctiveness in shape marks. In this post, I would like to take a closer look at Attorney General Wathelet's opinion on the second question, which is:

Where a shape consists of three essential features, one of which results from the nature of the goods themselves and two of which are necessary to obtain a technical result, is registration of that shape as a trade mark precluded by Article 3(1)(e)(i) ["nature of the goods"] and/or (ii) ["technical necessity"] of [the Trade Marks Directive]?

This question arises because according to the referring court, the to be trade marked shape consists of three essential features, two of which are technically necessary and one of which results exclusively from the nature of the goods themselves:

• the basic rectangular slab shape: results from the nature of the goods (Article 3(1)(e)(i)),
• the presence, position and depth of the grooves running along the length of the bar: necessary to obtain technical result (Article 3(1)(e)(ii)),  
• the number of grooves, which, together with the width of the bar, determine the number of ‘fingers’: necessary to obtain technical result (Article 3(1)(e)(ii)).

For the readers with good memories that believe to remember that the CJEU has answered a very similar question recently - yes indeed it has, in Hauck v Stokke (EU:C:2014:2233). There, the CJEU held that Article 3(1)(e)(ii) and (iii) Trade Marks Directive, i.e., the "technical necessity" and "substantial value" grounds for exclusion, could not be applied cumulatively. Specifically, the Court stated (emphasis added):

37 By its third question, the referring court asks, in essence, whether Article 3(1)(e) of the trade marks directive is to be interpreted as meaning that the grounds for refusal of registration set out in the first and third indents of that provision may be applied in combination.

38 According to that provision, signs which consist exclusively of the shape which results from the nature of the goods themselves, the shape of goods which is necessary to obtain a technical result, or the shape which gives substantial value to the goods are not to be registered or, if registered, are liable to be declared invalid. 

39 It is clear from this wording that the three grounds for refusal of registration set out in that provision operate independently of one another: the fact that they are set out as successive points, coupled with the use of the word ‘exclusively’, shows that each of those grounds must be applied independently of the others.  

40 ...  

41 In that regard, the fact that the sign in question could be denied registration on the basis of a number of grounds for refusal is irrelevant so long as any one of those grounds fully applies to that sign.  

42 In addition, it must be pointed out that — as the Advocate General indicated in point 99 of his Opinion — the public interest objective underlying the application of the three grounds for refusal of registration set out in Article 3(1)(e) of the trade marks directive precludes refusal of registration where none of those three grounds is fully applicable. 

43 In those circumstances, the answer to the third question is that Article 3(1)(e) of the trade marks directive must be interpreted as meaning that the grounds for refusal of registration set out in the first and third indents of that provision may not be applied in combination.

Advocate General Szpunar, in his opinion in Hauck, states at the referred to passage (emphasis added):

99. In my opinion, the answer to that question is clear to a certain degree from the substantive structure of Article 3(1)(e) of Directive 89/104 which contains three alternative grounds, each of which independently precludes registration. That structure of the provision would appear to rule out its application to a situation where none of those three grounds is fully applicable. 

100. This view is also substantiated by a literal interpretation. According to the wording of that provision, each of the three alternative grounds contained in Article 3(1)(e) of Directive 89/104 concern signs which consist ‘exclusively’ of the shapes referred to in the relevant indents. 

101. If regard is had to the teleological interpretation of Article 3(1)(e), then — as I have already noted — that provision serves a single, general purpose. Each of the three grounds contained in the individual indents serves to prevent a situation where an exclusive right to a particular sign would result in the monopolisation of the essential features of a product which are reflected in its shape. 

102. The interpretation of Article 3(1)(e) which I am proposing means that application of the criterion laid down in the first indent does not preclude the product concerned from having various shapes and application of the criterion laid down in the third indent does not preclude the product performing another function in addition to an aesthetic function which is equally important to the consumer. 

103. On that interpretation of Article 3(1)(e), joint application of the grounds at issue does not appear to me to be necessary to attain the objective sought by that provision. 

104. In the present case, since the national court found that the shape of the Tripp Trapp high chair gives substantial value to it within the meaning of the third indent of Article 3(1)(e) of Directive 89/104, and thus as a whole satisfies the requirements for application of that ground, the fact that that shape also provides other characteristics, such as safety and ergonomic requirements, which could additionally be considered from the point of view of the ground contained in the first indent of Article 3(1)(e), is irrelevant.

105. Therefore, the interpretation of Article 3(1)(e) of Directive 89/104 which I am proposing does not preclude a parallel assessment of the same circumstances to determine whether one or more of the grounds referred to in the individual indents obtains. A trade mark can be refused registration or declared invalid only if at least one of those grounds obtains in full. 

106. That being said, I would like finally to add one proviso to the proposed interpretation of that provision. 

107. I would like to point out that the joint application of the grounds contained in Article 3(1)(e) of Directive 89/104 must be permitted in the case of signs which are perceived by consumers merely as a collection of different shapes. By that I mean signs which are a combination of several separate objects such as, for example, a sign reflecting the layout of a petrol station or the décor of a retail outlet, and which do not therefore represent the shape of the goods but rather a physical reflection of the circumstances in which a service is provided.

Read together with the Advocate General's opinion which it cites approvingly, the CJEU's decision in Hauck seems quite clear: the sign must consist exclusively of the shapes falling within the scope of any one of the grounds for exclusion according to Article 3(1)(e) Trade Marks Directive. It is not permissible to "mix and match", so to speak, unless the sign to be registered is a collection of individual signs (the situation referred to in para. 107 of Szpunar's opinion). This interpretation seems quite sensible to this Kat: an industrial designer will choose a feature of a product either because it is aesthetically pleasing (giving the product substantial value) or because it is technically necessary. An interpretation of Article 3(1)(e) that allows "mixing and matching" means that only ugly and superfluous shapes can be registered as trade marks, which seems to go against the express provision of the Trade Marks Directive that shapes can serve as marks (see Article 2 Trade Marks Directive).


Attorney General Wathelet, in his opinion in the Nestlé case, reads the Hauck decision differently, however. He distinguishes between "combined" and "cumulative" application of the grounds for exclusion of Article 3(1)(e), and concludes that the Hauck decision only excludes the combined application, but not the cumulative application:

65. [...] Although the Court concluded in Hauck that Article 3(1)(e) of First Directive 89/104 had to be interpreted as meaning that the grounds for refusal of registration set out in the first and third indents of that provision could not be applied in combination, it does not follow that the grounds for refusal laid down in Article 3(1)(e) of that directive (or of the Trade Marks Directive) may not be applied cumulatively to the same shape. 

66. In the reasoning for its conclusion, the Court starts by stating that the three grounds for refusal of registration set out in Article 3(1)(e) of First Directive 89/104 (and, therefore, also the Trade Marks Directive) operate independently of one another. That means that each of those grounds must be applied independently of each of the other two. Next, the Court infers from this that if any one of the criteria listed in that provision is satisfied, a sign consisting exclusively of the shape of the product or of a graphic representation of that shape cannot be registered as a trade mark. The Court points out, in that regard, that the fact that the sign in question could be refused registration on the basis of a number of grounds for refusal is irrelevant so long as any one of those grounds fully applies to that sign. 

67. As suggested by Advocate General Szpunar in his Opinion in Hauck (C‑205/13, EU:C:2014:322), that interpretation of Article 3(1)(e) of the Trade Marks Directive ‘therefore … does not preclude a parallel assessment of the same circumstances to determine whether one or more of the grounds referred to in the individual indents obtains’. What is ruled out, however, is the application of that provision to a situation where none of the three grounds set out in that provision is fully applicable. 

68. This does mean, therefore, that the various grounds for refusal set out in Article 3(1)(e) of the Trade Marks Directive can be applied cumulatively to the same shape, provided that each of the grounds, or, in any event, at least one of them, ‘fully’ applies to that shape. 

69. Any other interpretation would be contrary to the objective pursued by Article 3(1)(e) of the Trade Marks Directive, which is, as the Court has consistently held and as it reiterated in the judgment in Hauck (C‑205/13, EU:C:2014:2233, paragraph 19), to prevent trade mark protection from granting its proprietor a monopoly on technical solutions or functional characteristics of a product which a user is likely to seek in the products of competitors or, more broadly, to prevent the exclusive and permanent right which a trade mark confers from serving to extend indefinitely the life of other rights which the EU legislature has sought to make subject to limited periods. 

70. As stated by the Polish government in its written observations, each of the grounds for exclusion set out in Article 3(1)(e) of the Trade Marks Directive is intended to prevent the grant of a monopoly on features connected in different ways to the shape of the goods (by the nature of the goods themselves, by the need to obtain a technical result or by their substantial value). Consequently it would be paradoxical to interpret that provision as prohibiting the cumulative application of those grounds since this would amount to claiming that the possibility of distinguishing, in one shape, more than one feature eligible for protection under Article 3(1)(e) would eliminate the need to protect any one of those features, or all of them.

In my opinion, the wording of Article 3(1)(e) Trade Marks Directive precludes this interpretation, as AG Szpunar has noted. If the sign consists of several features that fall under different grounds for exclusion, it obviously does not consist exclusively of shapes that fall within a single ground for exclusion as Article 3(1)(e) requires. None of the grounds applies "fully", i.e. with respect to the entire sign.


I also do not believe that this result is "paradoxical". The fact that the individual features of the sign fall under the scope of different grounds for exclusion indicates that the overall appearance of the sign is quite complex, complex enough allowing competitors to use a number of alternative shapes. While the CJEU has explicitly refused application of the "multiplicity of forms" test for technical necessity, you cannot harp about "monopolies" conferred by trade mark rights without stating what the monopoly is for. If there are numerous equally practical alternative shapes available, then the "monopoly" does no harm, but - if it prevents consumer confusion - it confers a benefit.