Nestlé's struggle to register its four-finger bar as a shape mark has just suffered another blow as Advocate General Wathelet has recommended that the CJEU dismisses its appeal against the EU General Court's decision, which essentially found that it had not acquired distinctive character across the entire EU. In this blog we take a brief look at the opinion and what it may mean in practice to brand owners.
Quick recap of the case so far
In 2002, Nestlé applied to register as an EU trade mark the below three-dimensional sign, corresponding to its ‘Kit Kat 4 fingers’ product:
In 2007, Cadbury Schweppes (now Mondelez UK Holdings & Services) applied for a declaration of invalidity, which was initially rejected by the EUIPO. However in December 2016, the EU General Court annulled the EUIPO’s decision (see our blog here for the details of this decision). The court considered that the EUIPO had erred in law in finding that the mark at issue had acquired distinctive character through use in the EU, when Nestlé had proved this for only part of the territory of the EU.
Although Nestlé had demonstrated that the shape mark had acquired distinctive character through use in 10 countries (Denmark, Germany, Spain, France, Italy, the Netherlands, Austria, Finland, Sweden, and the UK), the General Court held that EUIPO could not validly conclude its examination without ruling on the relevant public’s perception of the mark in the other four member states (Belgium, Ireland, Greece and Portugal) and without analysing the evidence adduced in respect of those countries. (At the date of filing, the EU consisted of 15 member states.)
Key issue at the appeal
Nestlé argued that the General Court was wrong to hold that the owner of an EU trade mark must show that its trade mark has acquired distinctive character through use in each of the member states separately. It submitted that the General Court’s interpretation is incompatible with the unitary character of the EU trade mark and the very existence of a single market.
Interestingly MARQUES, the European Association of Trade Mark Owners, was granted permission to intervene and submit observations at the hearing in support of Nestlé.
Opinion of Advocate General Wathelet
Advocate General (AG) Wathelet spent some time looking at the CJEU's earlier decision in 2012 in Chocoladefabriken Lindt & Sprüngli v OHIM (concerning the shape of a chocolate rabbit) and said that this case would give the CJEU a further chance to clarify parts of that decision. In that earlier case the CJEU had said that it would be unreasonable to require proof of acquired distinctive character for each individual member state. The AG emphasised that this did not imply that the trade mark applicant could leave out entire regions and markets. In his view, account must be taken of the geographical size and the distribution of the regions in which acquired distinctive character has been positively established, to ensure that the evidence from which an extrapolation is made for the whole of the EU relates to a quantitatively and geographically representative sample.
The AG added that the existence of the single market within the EU does not imply the non-existence of national or regional markets. In this regard, evidence adduced for some national markets might suffice to cover other markets for which (quantitatively sufficient) evidence has not been adduced. To provide quantitatively and geographically sufficient evidence of the acquisition of a distinctive character through use throughout the EU, account must be taken, for each product or service, of this diversity within the EU. In that sense, a trade mark cannot be an EU trade mark with a unitary character if the relevant public in part of the EU does not perceive it as an indication of the commercial origin of the goods or services which it covers.
Turning to Nestlé's position, the AG noted that while Nestlé had provided market research for all member states (apart from Luxembourg), it was clear from the General Court’s decision that the information provided for Belgium, Ireland, Greece and Portugal was not sufficient to establish that the relevant public in those countries identified Nestlé as the commercial origin of the shape. Even though the General Court was, in principle, required to examine whether the acquisition of a distinctive character through use in those five member states could be extrapolated from the evidence provided for the other national or regional markets, Nestlé had not included such evidence in the case file. In the absence of such evidence, the General Court had had no option but to annul the EUIPO's decision.
Consequently, the AG proposed that the CJEU dismiss Nestlé's appeal. (See here for a link to the opinion).
Although the AG's opinion is not binding on the CJEU, it is likely that the court will follow his opinion and dismiss Nestlé's appeal. For Nestlé this will be a further set-back in its attempts to protect the four-finger shape mark. In May 2017, the UK Court of Appeal confirmed that the shape had not acquired distinctiveness and therefore could not be registered for the corresponding UK mark (see our blog here).
Of particular interest are the AG's comments in relation to acquired distinctive character and whether it is necessary for a trade mark owner to prove this in each and every member state across the EU. He seems to have adopted a more pragmatic approach taking into account in practice how goods are marketed across the EU. The example he gives is: if for goods/ services covered by a trade mark, Luxembourg is part of the same market as Belgium, France or Germany, and sufficient evidence has been provided for one of those countries, it would not be necessary to provide specific evidence for Luxembourg.
The AG's practical approach is a positive sign for brand owners and we hope that it can be adopted by the CJEU.