Chocolate Wars: Nestlé loses trademark battle against Cadbury

chocolate-1491958Every kid, teenager, grown up, adult and senior is very well accustomed to the jingle, ‘have a break; have a KitKat’. Not just the jingle but the chocolate in question has a vivid impact in our minds creating a powerful visual imagery of a four finger chocolate bar with ‘KitKat’ engraved on each finger, its history dating back to 1935, when Nestlé, the U.K. chocolate confectionery produced it for the very first time.

The Hon’ble Court of Justice of the European Union (CJEU) recently finalised the much awaited decision in Société des Produits Nestlé S.A. v. Cadbury UK Limited.[i]Nestlé, had applied for the registration of the shape of their four-finger KitKat bar as a trademark, at CJEU which was opposed by fellow chocolatier rival, Cadbury, who dreaded that if the same was granted, Nestlé would establish a monopoly on all four-fingered chocolate products. In 2010, Nestlé had resolved to register the said trademark, initially being successful, but any further achievement was thwarted by Cadbury, who raised an objection further escalating the legal challenge to the High Court and eventually to the CJEU.

The CJEU in turn thoroughly examined the said shape, and after much deliberation, rejected the application. It is pertinent to mention that shapes, three-dimensional images and other non-conventional features can be registered as trademarks, for example the triangularly shaped Toblerone chocolate. The main contention by Nestlé, in support of their application, was the survey it conducted amongst the public, wherein an image of the four-finger shape was shown to the said public, asking them to identify the same. According to this, around 90% people who participated had recognised/mentioned ‘KitKat’ as their answers.

Despite this consuming public response, the application was rejected solely on two main grounds; one that the survey did not venture far enough to accommodate within the definition of a ‘trademark’, under Section 1(1) of the Trade Mark Act, 1994 (TMA) which states that “any sign capable of being represented graphically, capable of distinguishing goods or services of one undertaking from those of other undertakings”. Though the four-fingered shape was associated with Nestlé’s goods, nonetheless it could not warrant that the shape alone would be enough so as to distinguish the goods as being a Nestlé product. Whether shape could independently differentiate the goods as Nestlé’s, without using other visible trademarks, like the KitKat logo or shape of the bar or the well-known red and white packaging and italic lettering, was questioned.

Secondly the shape was barred from registration under TMA, as it was commonly accepted that KitKat had 3 main elements; rectangular shaped slab, divided trenches of the four-fingers and number of said trenches. Under the TMA, section 3(2) enshrines that a trademark cannot comprise solely of:

a)      shape resulting from nature of goods themselves; or

b)      shape of goods necessary to obtain technical result.

Finally, the CJEU considered that ‘obtainment of technical result’ included reference to the way the goods were manufactured and function; so as to prevent future manufacturing or obtaining monopoly on technical solutions or functional traits of goods. Further, the number and angle of the trenches were governed by explicit machinery and apparatus used to cast the chocolate bar thereby establishing that this fell under the possibility of ‘obtaining technical result.’

Hence, the CJEU assessed and ascertained if the application fell under the scope of section 3(2) of the TMA, further holding that the shape’s characteristics ensued from nature of goods, as chocolate bars are more or less rectangular shaped. They opined that the trenches existed to enable consumers to break and eat the fingers.

This decision proves Courts’ reluctance in allowing manufacturers to propagate monopolies with respect to trademarks, which are the results of technical solutions or mere functional characteristics of the product. However the same is granted protection, provided sufficient distinction and history of usage is proved.

 

[i] Case C-215/14, Société des Produits Nestlé S.A. v. Cadbury UK Limited.

 

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