When Sweet Treats Create Bitter Disputes: Trademark Clashes are No Stranger to Chocolate

Written by: Andrew J. Koopman

This article first appeared in the October 3, 2018 edition of the Legal Intelligencer.

When it comes to chocolate, taste is king, but appearance is not far behind.

International candy manufacturer Nestlé S.A. has suffered a setback in its long-running effort to obtain trademark protection throughout the European Union for the shape of its famous Kit Kat® bars.  For many of you that shape requires no description: four aligned trapezoidal bars connected by a rectangular base.  Throughout Europe, however, the familiar chocolate bars may not be so iconic.

Nestlé’s efforts began back in 2002, when it applied to the European Union Intellectual Property Office (EUIPO) to register the appearance of its Kit Kat® bars as a trademark.  Though the EUIPO granted Nestlé a trademark registration in 2006, it was promptly challenged by fellow European candy maker Cadbury (since acquired by Mondelez International).  The EUIPO eventually rejected Mondelez’s invalidity request in 2012.

Our confectionery chronicle does not end there.  Mondelez followed its loss at the EUIPO with an action before the European General Court.  And in 2016, Mondelez was finally victorious, winning a ruling by the General Court annulling the EUIPO’s decision in favor of Nestlé.  Both Nestlé and the EUIPO appealed to the European Court of Justice (ECJ).

This July, the ECJ dismissed the appeals of Nestlé and the EUIPO, and upheld the General Court ruling in favor of Mondelez.  The ECJ summarized the candy clash as involving “a mark, the three-dimensional shape of a chocolate product, that has no inherent distinctiveness.”  Société des Produits Nestlé SA v. Cadbury UK Ltd, Case No: A3/2016/0539, at ¶ 78 (25 July 2018).  Looking to its prior case law, the Court noted that such marks “can only acquire a distinctive character if the maker or supplier of the product concerned uses the mark in such a way that it comes to guarantee to consumers that the product originates from a particular undertaking.”  Id. at ¶ 18.

The ECJ upheld the General Court’s conclusion that, while Nestlé had proven such “acquired distinctiveness” in a number of EU member states (among them Germany, Spain, France, and the UK), it had failed to prove such distinctiveness in all EU member states, or across the European market as a whole.  Id. at ¶ 93.  Lacking such proof, Nestlé was not entitled to a trademark registration for the Kit Kat® shape.

The ECJ decision leaves open the potential for Nestlé to return to the EUIPO and present further evidence of the distinctiveness of the Kit Kat® shape.  But let’s not sugar coat it; the ECJ’s requirement of proof throughout the entire European market is a significant burden.

Nestlé would have no easier path to trademark rights here in the United States.  In Wal-Mart Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205, 120 S.Ct. 1339 (2000), the Supreme Court took on the issue of trademark rights for the design or appearance of products.  The Wal-Mart Court held that a product’s design could never be inherently distinctive of the product’s origin, noting that “product design almost invariably serves purposes other than source identification.”  Id., 529 U.S. at 213.  Looking to the minds of the public, the Court commented “[c]onsumers are aware of the reality that, almost invariably, even the most unusual of product designs…is intended not to identify the source, but to render the product itself more useful or more appealing.”  Id.  On this basis, the Court held that a product’s design could be protected under U.S. law only upon a showing that the product’s design had acquired secondary meaning in the minds of consumers, as primarily signifying the source of the product.  Id. at 216.

Typically, “acquired distinctiveness” is proven under United States law through direct evidence of public perception, i.e., through consumer surveys or testimony, or through a period of five years of substantially exclusive and continuous use.  See 15 U.S.C. § 1052(f).  Other circumstantial evidence, such as advertising expenditures, sales, or long use in commerce, are relevant to this distinctiveness analysis.  While Nestlé introduced survey and sales evidence in seeking its European trademark, this evidence was largely limited to the UK market, and not probative of the Kit Kat’s® distinctiveness throughout the European Union.

While Nestlé has an uphill battle in Europe, it is not in completely untested waters.  Nestlé still maintains trademarks for the Kit Kat® shape at the national level in a few European nations, including France, Germany, and Spain.  And Mondelez itself holds European trademark registrations covering the triangular shape of its Toblerone® chocolate bar.  Mondelez’s opposition to Nestlé is grounded not in principle, but in business: it sells a chocolate bar in Norway under the name “Kvikk Lunsj” which bears a striking resemblance to Nestlé’s Kit Kat® bars.

The ECJ’s ruling against Nestlé serves as an important reminder when it comes to product design.  The best product designs are those which, by their unique or unusual quality, are readily recognizable to the consuming public to which they are directed.  Through consistent use and promotion, such product designs can become entitled to the same trademark protection as a product’s brand name.  Product design trademarks can be particularly powerful in the food industry, where advertising is predominated by depictions of the food sold.  With respect to Nestlé’s chances of obtaining trademark rights for its Kit Kat® bars, it remains to be seen whether the ECJ ruling is a minor setback—or if it’s death by chocolate.

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