Trade marks can be of exceptional value to a business for many reasons, the two most prominent of which are related:
- A trade mark allow a business to distinguish its goods and services from those of its competitor(s); and
- A trade mark confers on its proprietor a monopoly right to the use of that mark in respect of the goods and services for which it is registered to the exclusion of all others.
However, not all trade marks are registrable. Registration can be refused in the UK due to what are known as absolute and relative ground. Relative grounds relate to conflicts with the pre-existing rights of others; absolute grounds will preclude registration on the basis of the mark itself.
An application for registration will fail if the mark applied for is devoid of distinctive character: this is one of the absolute grounds on which registration can be refused and a concept that has been explored at some length in the litigation between Nestle and Cadbury.
In 2010, Nestle applied to register a trade mark for the three dimensional four finger shape.
Cadbury opposed the application on various grounds: by the time the case was before the Court of Appeal (having first been heard at the IPO and the High Court, with a referral to the European Court of Justice for good measure) the battleground was solely whether the mark had, as at the date of application for registration, acquired distinctive character.
If it had, the registration should proceed; if not, it would be refused.
The Court of Appeal, like the hearing officer of the IPO and the High Court before it, held that the trade mark had not acquired distinctive character and as such, the mark should not be registered.
In so doing, the Court confirmed that it is not sufficient for an applicant to show that a significant proportion of the relevant class of persons (that is, consumers of the goods or services to which to trade mark is to be applied) recognise and associate the mark with the applicant’s goods; instead the applicant must show that there is a perception that the goods designated by the mark originate from a particular business. Whilst there was no requirement that an applicant show that the mark has been relied upon as denoting origin, the Court held that reliance is a behavioural consequence of the perception to be established.
The evidence showed that the shape for which Nestle sought protection had been used by third parties prior to the date of the application. Further, the product shape did not feature in promotional or advertising material and the product had only ever been sold in an opaque wrapper: the shape relied on was not visible until after such time as the product had been purchased and opened. In addition, each of the fingers for the product were embossed with the KitKat logo – although not fatal to the application, it was acknowledged that in such cases it might be more difficult to show reliance on the mark applied for, as opposed to the pre-existing registered mark. Finally, the survey evidence was said to demonstrate only an association of the shape with KitKat.
Nestle had therefore established a recognition of the shape and an association with the product but it had not demonstrated that the relevant class of persons perceived that the 3 D shape designated the goods in question as a KitKat. Consequently, it was unable to show that the mark had not acquired distinctiveness through use.
Comment
The case is an interesting one not least because, as the Court of Appeal recognised, the distinction between recognition/association on the one hand and perception on the other could be considered to be elusive. Further, whilst reliance is said not to be necessary, it features in the judgement as exemplifying the required perception. This begs the question of how else to show perception, if not by showing reliance.
However, the case flags an important point which is the value of a trade mark: had the trade mark been granted, it would have permitted Nestle to prevent third parties from using the same shape for the same product. Such cases of double identity (where trade mark and the goods it is registered for are the same as the third party mark and goods) do not require the trade mark owner to show that there is a risk of confusion: it is, therefore, an outright monopoly to exploit that particular shape in that particular product.
However, if there is no actual perception amongst the public that the mark designates a KitKat then the rights afforded are surely too great.