For more than ten years, Nestlé has fought to maintain its EU trademark registration of the three-dimensional mark, which consists of four trapezoidal chocolate bars aligned on a rectangular base, i.e. Nestlé’s “Kit Kat” product.
However, in a judgment dated 25 July 2018 , the CJEU dismissed Nestlé’s appeal and found that Nestlé had failed to prove that the mark had acquired a distinctive character throughout the EU. Accordingly, the European Union Intellectual Property Office (EUIPO) will have to re-examine its decision to register the three-dimensional mark.
The case originates in Nestlé’s application for registration with EUIPO in March 2002 of a three-dimensional mark in the shape of a four-finger chocolate bar pursuant to the registered design. In July 2006, the trademark was registered within the EU  for goods in Class 30 . The following year Mondelez filed an application with EUIPO for a declaration of invalidity in respect of the registration, which EUIPO’s Cancellation Division approved in January 2011. On appeal by Nestlé, the Second Board of EUIPO annulled the decision of the Cancellation Division and took the view that although the trademark was indeed devoid of any inherent distinctive character in relation to the goods for which it was registered, Nestlé had shown that the trademark had acquired such a distinctive character in relation to those goods as a consequence of use.
However, in a judgment from December 2016, following an appeal by Mondelez, the General Court annulled the Second Board of EUIPO’s ruling in its entirety due to the fact that the Board had incorrectly failed to examine whether the trademark had acquired a distinctive character in, inter alia, Belgium, Ireland, Greece and Portugal. Moreover, the Board had also failed to assess the evidence submitted by Nestlé in relation to these Member States. The General Court declared that the Cancellation Division’s decision to annul the trademark registration was correct, and instead annulled the Second Board of EUIPO’s decision.
On appeal by Nestlé, Mondelez as well as EUIPO, the CJEU was called upon to address the issue of acquisition of distinctive character of a trademark, and the proof required on the basis of Article 7(3) of the now repealed Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trademark. (the Community Trademark Regulation) .
In its judgment, the CJEU held, referring to previous cases , that in relation to the issue of acquired distinctive character as a consequence of use the applicant must show that the distinctive character has been acquired through use in those parts of the EU where the mark does not have an inherent distinctive character. This may be the case both in relation to one single Member State – and if the mark lacks inherent distinctive character in all Member States – throughout the EU. In light of the aforesaid, the CJEU confirmed that the General Court’s assessment was in accordance with Article 7(3) of the Community Trademark Regulation. Furthermore, the CJEU stated that in those cases where a trademark lacks inherent distinctive character throughout the EU, evidence must also be adduced which shows that the distinctive character has been acquired as a consequence of use throughout the EU, and not only in a specific or predominant part of the EU. Accordingly, the party which bears the burden of proof in relation to acquired distinctive character cannot successfully rely on evidence which omits parts of the EU, even if this part would only concern one Member State.
Furthermore, CJEU stated that there is no provision in the Community Trademark Regulation which governs what proof is required in order to show a mark’s acquisition of distinctive character. Accordingly, proof of acquisition of distinctive character as a consequence of use may be relevant for some Member States and, in some cases, throughout the EU.
The judgment’s significance for trademark registrations in the future
In January 2018, the European Trademark Directive 2017/1001 entered into force in Sweden. The current provision has not caused any material changes and in this context it is likely that the CJEU’s clarification in this case will also be applicable to future trademark registrations. Although there are still challenges in relation to the registration of shapes and product packaging which possess a low degree of distinctiveness, the CJEU’s judgment provide some guidance in relation to the scope of the evidence necessary to show acquired distinctive character and that such evidence does not necessarily have to relate to each specific Member State and thus it may be possible by adducing evidence from one Member State to show acquired distinctiveness in several Member States.
Nestlé has stated that this may not be the final parting shot and we will have to wait and see whether this protracted litigation will continue.
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