Nestlé loses yet another KitKat battle

The KitKat Kat

It will not have escaped readers that last week the Court of Appeal handed down its decision in Nestlé v Cadbury [2017] EWCA Civ 358, ie the KitKat trade mark dispute. 

Why?  Because every where you looked the mainstream media was pushing out the puns and mangling the IP rights.  

Roland Mallinson (Taylor Wessing) provides his comments on the recent decision:

Here's what Roland writes:

"The decision of the Court of Appeal not to accept Nestle's evidence of acquired distinctiveness in the UK conflicts with the acceptance of such evidence in the parallel EU action by the EU General Court only five months ago. As the Court of Appeal observed, it is bound by the rulings of the General Court on the interpretation of EU law but it is not bound to follow the latter's rulings of fact. It has deliberately chosen not to do so here. Not only that but, in the leading judgment, Kitchin LJ made observations to suggest that he considered the General Court had applied the wrong test as set out by the CJEU. In fact, the evidence in the two cases was not quite identical. Curiously, it was the seemingly more flawed initial survey evidence that was held to be sufficient by the General Court and yet the later "improved" version of the consumer survey was rejected by the Court of Appeal.

There seems to be somewhat of a trend for senior national courts and the EU courts to disagree about the perceptions of relevant consumers. The reverse occurred last summer when the EU's General Court held that the word NEUSCHWANSTEIN (the name of Ludwig II's fantasy castle in Bavaria) was inherently distinctive for merchandising goods throughout the EU (and so also in Germany), despite the fact that four years earlier the Bundesgerichtshof had held that, for German people, it emphatically was not. Indeed the EUIPO Cancellation Division and the Board of Appeal had likewise ruled contrary to this earlier ruling of Germany's most senior court on the matter.

Considerable semantics have been at play in this case. Nuanced interpretations of the words "perception" and "reliance" feature heavily in the judgments. The Court of Appeal has sided with Mr Justice Arnold in effectively applying a line of English cases that require evidence of acquired distinctiveness to show that consumers rely on the mark as an indicator of origin. This is despite the fact that, when answering Arnold J's questions referred to it in the same case, the CJEU had clearly declined to take the opportunity of endorsing the reliance test that Arnold J was propounding. To be fair, all three appeal judges took pains to deny that they were applying a test of reliance. The court's position is that evidence of such reliance clearly suffices and also that Nestle's evidence did not show reliance. Whilst the latter is not supposed to mean Nestlé loses, it is hard not to see this as having been the test in effect. The original registry decision by senior officer Allan James was held to be not open to challenge, although (without the benefit of Arnold J's reference and the CJEU ruling) it had the concept of reliance woven through much of it. Rather than repeating that, the Court of Appeal articulated the primary ground for its decision as being that Nestlé did not appear to have used the shape in a "trade mark sense". It weighed heavily on the judges' minds that the evidence showed no recent promotion of the shape in advertising or packaging (it seemingly stopped featuring in the 1960s). This meant the impressive survey results were not the result of any trade mark use and just reflected mere recognition and association arising from widespread non-trade mark use of the shape.

It means that with some concerted use in this manner and fresh evidence, the shape could still be registrable with a new application. However, it is probably easier and cheaper for Nestle just to appeal and that seems the likely course. It is certainly open to question whether the English courts are choosing to re-interpret the CJEU's ruling through Brexit-tinted glasses. This could be the first area of trade mark law where the EU and UK regimes start diverging."