Nestlé faces prospect of 'Kit Kat' copycats after trade mark ruling

The Court of Justice of the EU (CJEU) effectively revoked trade mark rights Nestlé has held for the shape of its Kit Kat bar.

The EU's Intellectual Property Office (EUIPO) previously ruled that the Nestlé mark was devoid of inherent distinctive character, but that the company had shown that the mark had acquired distinctive character through its use.

Marks which are devoid of distinctive character cannot be registered as trade marks under EU law. However, where a mark that is not inherently distinctive has been wrongly registered as a trade mark, trade mark owners can retain the rights given if the mark has "acquired a distinctive character in relation to the goods or services for which it is registered" through its use after registration.

To support its claims of acquired distinctiveness, Nestlé submitted evidence from 14 of the 15 EU member states that existed at the time its EU trade mark was registered in 2002. Nestlé did not present evidence of acquired distinctiveness in Luxembourg.

The EUIPO was happy that the evidence demonstrated that Nestlé's mark had acquired distinctive character through its use, but the EU's General Court overturned that decision following an appeal raised by Mondelez, the company behind the rival Cadbury brand.

The General Court held that while evidence from 10 of the 15 countries was sufficient to show that the shape mark had acquired a distinctive character through use in those countries, it said that in four of the countries – Belgium, Ireland, Greece and Portugal – the evidence was not sufficient to reach such a conclusion. It ruled that evidence of acquired distinctiveness must be shown across every EU country for a mark inherently devoid of distinctive character to remain as an EU trade mark and held that Nestlé could not rely on the evidence from the 10 states as proof that the mark had acquired distinctive character throughout the whole of the EU.

Trade mark law expert David Woods of Pinsent Masons, the law firm behind Out-Law.com, said that the CJEU had now confirmed that it is necessary to show acquisition of distinctive character on a 'global' basis throughout the EU and it is not enough just to show it in a substantial part of the EU.

The CJEU ruled, though, that although evidence of acquired distinctiveness throughout the entire EU is required by EU law, trade mark owners may not necessarily need to provide evidence of acquired distinctiveness in each individual EU member state to demonstrate this.

"It is not inconceivable that the evidence provided to establish that a particular sign has acquired distinctive character through use is relevant with regard to several member states, or even to the whole of the European Union," the CJEU said.

The court said rights holders may be able to extrapolate evidence of acquired distinctiveness across more than one EU country due to geographic, cultural and language reasons, or because they have "grouped several member states together in the same distribution network and have treated those member states, especially for marketing strategy purposes, as if they were one and the same national market".

The CJEU held, though, that the EUIPO had erred when it ruled that Nestlé's mark had acquired distinctiveness through use "without adjudicating on whether that mark had acquired such distinctive character in Belgium, Ireland, Greece and Portugal".

The CJEU said, though, that it is ultimately up to the EUIPO, or General Court if the decision of the EUIPO is appealed, to determine whether evidence provided is sufficient to demonstrate acquired distinctiveness.

"If the bodies of EUIPO or the General Court, after having assessed all of the evidence that has been submitted to them, find that some of that evidence is sufficient to prove the acquisition by a particular sign of distinctive character through use in the part of the European Union in which it is, ab initio [from the beginning], devoid of distinctive character and therefore to justify its registration as an EU trade mark, they must clearly state that that is the case in their respective decisions," the CJEU said.