|Not everyone agrees with|
the media on IP matters
I agree with your poster, Thomas Farkas -- as he did with my earlier one commenting on the Advocate General’s opinion (here). The mainstream media seem to have been reading an entirely different CJEU judgment in the Nestlé v Cadbury "Kit Kat" case than the one published in Curia here (Case C-215/4). How can The Daily Mail and The Guardian, in particular, report the decision with the following headlines?* "Kit Kat copy cats are OK, says court: Cadbury kills off bid by Nestlé to trademark distinctive four finger shape of the chocolate bar": report here* "Kit Kat goes unprotected as European court rejects trademark case. Nestlé failed to convince European court of justice that four-fingered version of its chocolate bar should be protected by law": report here
Even the BBC's report "Kit Kat battle sees legal setback for Nestlé" does not align with reality (see report here) [this Kat's not sure why Roland writes "even", since he lost faith in the BBC's accuracy and neutrality many years ago. A Google search for BBC + bias will yield over 18 million hits. Even the weather forecast isn't what it used to be ...].
It seems there is a PR battle playing out separately from the reality of the legal one. The same happened in the aftermath of the Puffin/Penguin case [United Biscuits v Asda, noted here]. Both Asda and United Biscuits claimed victory following the latter's passing off win. One headline ran: "Puffins Rule the Roost in High Court Battle" [this Kat can understand why Asda claimed victory: he recalls that, while Asda lost the infringement action, they had to make only minimal changes to their branding, were given time to sell the remaining infringing stock and gained vast publicity in all the popular media for the fact that they were selling a cheaper version of the Penguin biscuit].
Certainly the considered view of a number of those attending the MARQUES conference with me in Vienna earlier this month -- when the judgment was issued -- was that the CJEU ruling favours Nestlé, and all the more so, given the less than favourable Advocate General's opinion issued in June (see here). In addition, the MARQUES Amicus Curiae Team, of which I am member, was pleased to see the CJEU decision align with our submission on Question 1 (here).
The reality is that the decision is unlikely to have been welcomed by Cadbury. It appears to make it hard, if not impossible, for Cadbury to pursue its claims based on functionality (Questions 2 and 3) and likewise for future English judges and tribunals (including Arnold J) to require that evidence of acquired distinctiveness has to show that consumers rely on the shape to verify the origin of their purchase (Question 1). Had the CJEU decided otherwise on either point, then the press references to the Kit Kat trade mark being "killed off" would have been more accurate. Instead, the current headlines probably ought to have been more along the following lines:· "Nestlé's Kit Kat gets a break: European court creates potential for shape trade mark"· [or playing on the Requiem title of my posting on the Advocate General's opinion] "The Lazarus ruling: shape marks potentially resurrected by CJEU after AG's death-knell opinion."
So what has been decided?
As with the Advocate General's opinion, the CJEU devotes a number of unnecessary paragraphs, and specific words within its ultimate answer, to clarify that only the sign applied for and no other branding is to be considered. However, that does not appear to have been in issue. Nestlé's surveys were done using an otherwise unbranded shape of a Kit Kat. It seems the CJEU was more alive to this than the AG. When cross-referring to the Advocate General's opinion, the CJEU refers to paragraphs 48 to 52 and notably omits referring to his paragraph 43 in which he had wrongly portrayed Nestlé's case as relying on a combination of the shape and other branding.Nothing definitively yet. The CJEU has just ruled on the interpretation to be placed on the Article 3(1)(e)(i) and (ii) of the Trade Mark Directive grounds of objection, respectively that the shape results from the nature of the goods and the shape is necessary to obtain a technical result, and, separately, on what needs to be proved to show acquired distinctiveness. The case will now return to the High Court, England and Wales, perhaps later this year. It will now either decide the case in the light of that ruling or might remit it to the UK Intellectual Property Office (UKIPO) for its decision on the merits [the sidebar poll on what readers think the referring court should do closes in four days. Do vote, says Merpel].No "mix and match" of the functionality objectionsThe CJEU confirmed that its earlier Hauck decision (regarding the Tripp-Trapp chair, C-205/13) had effectively already answered Arnold J's Question 2. That asked whether a shape was unregistrable if it has various elements, some of which might fall foul of Article 3(1)(e)(i) and others of which might fall foul of Article 3(1)(e)(ii) and yet where the shape as a whole does not (or at least all of its essential elements do not) fall foul of either provision. Many thought that Hauck had answered this. The Advocate General did not, but the CJEU said it had.As a result of the CJEU's answer, it is clear that the courts and tribunals cannot make a "hybrid finding" that involves a "mix and match" of the separate and distinct Article 3(1)(e) grounds of objection to the separate essential elements of the shape. In Kit Kat, the UKIPO Hearing Officer, Allan James, had identified that the shape has three essential elements: (A) the rectangular slab shape, (B) the presence and depth of the grooves along its length, and (C) the number of such grooves to create four 'fingers. Mr James and Arnold J in the High Court have concluded that neither one ground of objection nor the other applies to all three of the Kit Kat's essential shape elements. Their collective view was that shape element (A) fell foul of Article 3(1)(e)(i) and shape elements (B) and (C) fell foul of Article 3(1)(e)(ii), but that neither Article 3(1)(e)(i) nor (ii) applied to all of (A), (B) and (C) together. With that already decided, I agree with Thomas Farkas that it is now difficult to see how Article 3(1)(e)(i) or (ii) can be applied by the High Court to block this registration.Prompted by the Advocate General, the CJEU also went on to hold that this interpretation of Article 3(1)(e) does not preclude applying the sub-paragraphs "cumulatively". What this adds and why it needed to be ruled upon is unclear since the key point is that at least one of those sub-paragraphs must fully apply to the whole shape being registered. That is not the case for the Kit Kat shape.No consideration of functionality at the manufacturing processArnold J had asked whether the Article 3(1)(e)(ii) grounds of objection (technical function) falls to be assessed both when the consumer purchases or uses the goods and at the time of their manufacture. This was only relevant to the shape element (B) above (the depth of the grooves of Kit Kats) but not elements (A) or (C). As a result, the answer to this Question 3 could only have been relevant if the answer to Question 2 had allowed the "mix and match" approach. As it did not, Question 3 became irrelevant and the CJEU could have avoided answering it. Unusually, it chose to do so anyway. Again, this was favourable to Nestlé and unexpectedly so, bearing in mind that the CJEU chose not to follow the Advocate General on this point. It concluded that the method of manufacture is not decisive to the consumer and so not relevant to the test.Identifying origin are the keywords for acquired distinctivenessThis was the first question referred by Arnold J and only fell to be answered if the answers to Questions 2 and 3 still left room for the Kit Kat shape to survive any functionality-based attack under Article 3(1)(e). Unlike the functionality objections of Article 3(1)(e), the objections based on inherent non-distinctiveness or descriptiveness (Articles 3(1)(b) and (c)) can be overcome with evidence of acquired distinctiveness. As per my previous post, Arnold J had framed his question so as to give the CJEU only two options for what the evidence needs to prove. Unhelpfully, the CJEU has largely followed the AG on this answer, which does not expressly favour one of Arnold J's options over another. These were [with my emphasis added]:Option 1: that consumers recognised and associated that shape exclusively with the applicant or its goods/services, i.e. if asked who marketed the goods they would identify the applicant or its related brand names just from seeing the shape; orOption 2: as per Option 1 but also that consumers rely on the shape on its own as indicating trade origin (what "rely" is to mean precisely is not clear but Arnold J used the term in the context of consumer using the shape to "confirm the authenticity of" the goods)?The CJEU, like the Advocate General, does not mention the words "rely" or "reliance" once in its ruling. Instead it preferred to reformulate Arnold J's two options in such a way that Option 2 was not considered and Option 1 was seemingly re-cast as two options, with nuanced variations. The latter drew on the CJEU decision in Colloseum Holding (Case C-12/12), among others. What seems clear is that the CJEU's reluctance to even use the word "rely" will leave the courts and tribunals in little doubt that they can no longer set the threshold as high as needing to prove reliance or anything to confirm the authenticity of goods.
From the CJEU's answer to Question 1, we now know that the evidence needs to show that"the relevant class of persons perceive the goods or services designated exclusively by the mark applied for, as opposed to any other mark which might also be present, as originating from a particular company" [emphasis added].It is hard to see how this differs to any material degree from Arnold J's Option 1 threshold, which is made up of two parts (a) recognising and associating the sign exclusively with the applicant; and (b) the consumer, if asked who marketed the goods, would identify the applicant as a result of the use of the sign applied for.
This Kat thanks Roland for his comment, wondering why it is that he hasn't been receiving any responses or offers of guest posts from those of the Cadbury persuasion. Could it be that Roland and Thomas Farkas are right?The fact that Arnold J conjoined and equated (b) with (a) in his referred Question 1 could be material for when the case returns to the High Court for his consideration. This is because he noted and did not overrule Mr James's finding of fact that the evidence proved part (a) of his Option 1 (consumer recognition and association). With the survey results showing that approximately 50% of UK consumers identify just the shape with Nestlé and/or Kit Kat and bearing in mind Arnold J's linking of (b) with (a), it is again hard to see why the evidence would not now be accepted as meeting the CJEU's threshold. In what respect are those 50% of respondents not perceiving the chocolate bar, as identified purely from the plain unbranded image, as originating from Nestlé or the makers of Kit Kat?Potential redundancy of UK decisionNestlé also owns a CTM for the same mark but with a slightly narrower specification. If that survives Cadbury's pending cancellation action, Nestlé's UK application and the UK decisions acquire a degree of redundancy. The CTM was cancelled by OHIM's Cancellation Division on the grounds that the evidence did not show acquired distinctiveness in the pre-expansion 16 Member States. The Second Board of Appeal reversed that and the matter is now with the General Court, which suspended its action pending the CJEU's decision.What next?So now we have both the General Court and the High Court for England and Wales applying the same CJEU decision in their respective parallel actions concerning the identical mark and a very similar specification. The outcome of either of those decisions could also be subject to appeal by either party. As a result, there is still the prospect of yet more case law coming out of this to clarify what exactly the threshold for proving acquired distinctiveness is and the parameters of the functionality exclusions. Not only is there a risk of some conflicting judgments to come, but we may yet see more nonsensical media headlines.
Nestlé's Kit Kat: a one-sided debate? Reviewed by Jeremy on Sunday, September 27, 2015 Rating: