26 July 2018
The CJEU has ruled on the geographic spread of the evidence needed to prove acquired distinctiveness for an EU trade mark that has been held inherently non-distinctive throughout the EU. The ruling is significant because:
What is essential is that the evidence is at least capable of showing acquired distinctiveness in the Member States for which specific single-country evidence may not have been provided. This part of the ruling will be welcomed by MARQUES, the association of European trade mark owners, which had made amicus submissions in support of Nestlé as an intervener*.
Also, as explained below, the widespread reports that this spells the end of the Kit Kat shape trade mark are premature. There is still at least one more decision on this to follow.
The issue arose in the long-running dispute between Nestlé and Mondelez (formerly, Cadbury Schweppes) over the former's pan-EU trade mark registration for the shape of its four-finger KitKat bar. The mark was accepted by the EUIPO and registered in 2002 but Cadbury (as it was then) applied to cancel it in 2007. Nestlé submitted evidence of acquired distinctiveness but the registration was cancelled at first instance before the Cancellation Division. Nestlé won on appeal, with the Board of Appeal accepting that the evidence was sufficient as regards the EU as a whole.
In December 2016, the General Court (Case T-112/13) overturned that, holding that the evidence did not show that the sign had acquired distinctive character throughout the whole region where it was inherently non-distinctive, namely the whole EU. It accepted the evidence was sufficient for 10 countries (Denmark, Germany, Spain, France, Italy, the Netherlands, Austria, Finland, Sweden and - interestingly since the UK Court of Appeal thought otherwise in the parallel UK national trade mark case - the UK). The General Court was not satisfied with the proof for Belgium, Ireland, Greece, Portugal or Luxembourg. (Only 15 Member States were in contention because the trade mark had been filed pre-EU expansion.)
Nestlé and the EUIPO (with the support of MARQUES, as an intervener) challenged this at the CJEU. They argued that it should not be necessary to prove acquired distinctiveness in all EU Member States and that the General Court’s interpretation was incompatible with the unitary character of the EUTM.
The CJEU has now upheld the General Court's ruling that acquired distinctiveness must be shown across - and not just for a substantial part or majority of - the EU. Acquired distinctiveness cannot be said to be shown if the evidence of use fails to cover a part of the EU, be it insubstantial or even just a single Member State.
The CJEU made it clear that this does not necessarily mean that separate evidence needs to be submitted in respect of each individual Member State. It ruled that evidence can be submitted globally for all Member States or for individual Member States or (importantly) for groups of Member States. Drawing from the Advocate General's opinion in this case, the CJEU said that, if the applicant treats a particular group of Member States as a single market for distribution or marketing purposes, the evidence of use within such a cross-border market is likely to be relevant for all Member States concerned. Likewise, where, due to a geographic, cultural or linguistic proximity between two Member States, the relevant public in the first Member State has a sufficient knowledge of the products and services present on the national market of the second Member State, evidence of use from the first Member State should suffice.
Whilst the CJEU does not expressly use the word, it seems one can extrapolate the evidence from one Member State to another provided there is evidence of market comparability, as suggested by the Advocate General in his Opinion.
The case will now be referred back to the Board of Appeal. This was the tribunal that had accepted the evidence of acquired distinctiveness in 10 Member States and at least some evidence relating to four more (Belgium, Ireland, Greece and Portugal). It considered this evidence overall to be enough to merit continued registration of the trade mark and did not see an absence of specific evidence for Luxembourg as fatal.
So Nestlé has an opportunity to argue before the same tribunal that the evidence already submitted meets the test now set out by the CJEU. It may even seek to adduce further evidence.
The mainstream media has been reporting widely about the demise of the Kit Kat shape as a trade mark. This may be somewhat premature. It depends on what the Board of Appeal thinks of the evidence and its decision on that could potentially be subject to further appeal by either party. Given that the Board of Appeal was the one EU forum where Nestlé had previously been clearly successful, a negative outcome in the next round may not be a foregone conclusion. Those lining up to manufacture and sell copycat products may want to hold fire, at least for a little longer.
Société des produits Nestlé v Mondelez UK Holdings & Services Joined Cases C‑84/17 P, C‑85/17 P and C‑95/17 P
Full judgment here
* Roland Mallinson in our London office assisted in the MARQUES amicus intervention