Following the recent decision of Arnold J in the High Court, we can now provide you with an update on the progression of Nestlé’s KIT KAT trade mark application. Our initial briefing following the CJEU’s ruling in September 2015 provides more detail on the questions referred to the CJEU and commentary on its reasoning and decision. Further to the hearing early in the year, the judgment applying the CJEU’s decision was handed down on 20 January 2016 (case reference  EWHC 50 (Ch)).
As mentioned in our earlier briefing, three questions were referred to the CJEU. Arnold J reported that, since the CJEU decision, the application of the answers to questions two and three (regarding the exceptions to registration under Article 3(1)(e)(i) and (ii) of Directive 2008/95/EC) had been accepted by both parties, and therefore did not warrant further discussion.
The parties disagreed, however, on the effect of the CJEU’s answer to question one regarding acquired distinctiveness, which stated:
“In order to establish that a trade mark has acquired distinctive character following the use that had been made of it within the meaning of Article 3(3) of Directive 2008/95/EC (the Directive), is it sufficient for the applicant for registration to prove that at the relevant date a significant proportion of the relevant class of persons recognise the mark and associate it with the applicant’s goods in the sense that, if they were to consider who marketed the goods bearing the mark, they would identify the applicant; or must the applicant prove that a significant proportion of the relevant class of persons rely upon the mark (as opposed to any other trade marks which may also be present) as indicating the origin of the goods?”
As we anticipated in our previous note, the judge therefore had difficulty in applying the teachings of the CJEU judgment. Arnold J stated that, in his view, the CJEU “as it so often does” had reformulated the question he referred and that he was tempted to refer the question again.
After considering at length the CJEU’s ruling and the Advocate General’s Opinion (see our comment here), including an analysis of the specific meaning of the various tests for acquired distinctiveness posed at the various judicial levels, Arnold J concluded that:
“in order to demonstrate that a sign has acquired distinctive character, the applicant or trade mark proprietor must prove that, at the relevant date, a significant proportion of the relevant class of persons perceives the relevant goods or services as originating from a particular undertakings because of the sign in question (as opposed to any other trade mark which may also be present”.
Arnold J also noted that it would be legitimate, when making this assessment, to consider whether such persons rely on the sign as denoting the origin of goods if it were used on its own, even if in reality this is never the case.
In relation to the present case, Arnold J explained that the fact that a majority of people were able to name KIT KAT does not prove that they perceived the trade mark as exclusively designating the trade origin of such products, any more than the fact that a majority of consumers of cars may be able to name a car manufacturer as a source of cars of a particular shape shows that they perceive that shape as identifying the origin of such cars.
Concluding, Arnold J dismissed Nestlé’s appeal and held that the hearing officer at the UK Intellectual Property Office had applied the law correctly. Nestlé has already indicated its intention to appeal to the Court of Appeal.
Reading the judgment reveals some frustration from Arnold J that the specific wording of question one was largely ignored, despite the fact that “the question was worded with precision”. Indeed, it is arguable that the matter should have been referred to the CJEU again, given that in order to reach his decision the judge has been forced to undertake significant lexical analysis.
One difficulty with the CJEU decision is that, when posed with two alternatives (as in question one), although the first alternative is dismissed as incorrect, a third option is presented as the answer without explicit reference as to whether the second alternative is right or wrong. In the circumstances, we agree with Arnold J that a second reference would have “no realistic prospect” of yielding a different result, but Nestlé’s indication that it will appeal the decision is hardly surprising.
The decision of Arnold J stipulates that the “because of” test is clearly a higher threshold than mere association, as argued by Nestlé as being sufficient for acquired distinctiveness, leading to the dismissal of the appeal. The fact that a majority of consumers could name “KIT KAT” when looking at the mark applied for did not prove that because of the four-finger bar shape, consumers perceived the product as coming from Nestlé.
The judgment suggests that, essentially, when consumers are presented with the shape of the four-finger bar, and that mark alone, that the majority of those consumers must perceive Nestlé as the only possible source for the product in question. Although Arnold J has suggested that acquired distinctiveness in this way may be possible where, in reality, the mark is never used alone (as here), to date, the Court states that Nestlé has not been able to prove that.
As an aside, if Nestlé was looking to make any further applications in the future, it is unfortunate that, as a result of the ongoing litigation, more attention has been brought to the “Kvikk Lunsj” – a four-finger chocolate bar produced by Kraft Foods sold in Norway and Denmark. It is easy to make a cynical connection between the increased press for the Kraft Foods product, as Kraft Foods is a subsidiary of Mondelez International, along with Cadbury. It is anticipated that the more well-known this product becomes, the less likely it is that Nestlé will be able to achieve successful registration in the EU national registries.