Can you perceive it? Breakthrough for Nestle 4 finger shape mark – CJEU speaks on test for acquired distinctiveness

Study trade mark law, they said. It will be easy, they said …

Don’t you believe it.

We go on about it all the time here at IP Whiteboard: trade mark law is incredibly nuanced.

A recent example of this is the decision from Europe’s highest court (the CJEU) relating to our beloved Kit Kat 4-finger shape mark (shown below). This humble chocolate bar and its branding has been the centre-piece of some incredibly important trade mark litigation.

KitKat shape

In this case, Cadbury opposed Nestlé’s application to register the shape mark for (among other things) chocolate confectionery. As we all know, trade mark significance can arise from nature or nurture. One of the issues here raised relates to what the threshold test is for the “nurture” category. Is recognition of the mark enough, or must it be reliance on the mark (in each case, we are concerned with the mark alone)? Nestlé argued for the former, and Cadbury the latter.

Until now, things have augured pretty badly for Nestlé on the legalities. The opposition decision, Arnold J’s decision on appeal, and the subsequent opinion from Advocate-General Wathelet each favoured a test based on reliance.

The CJEU’s decision has taken us in a different direction, however, and it is good news for Nestlé, and for the owners of other marks (including shapes) needing to demonstrate factual distinctiveness. Rather than requiring reliance, the test posed by the CJEU relates to whether use (including in combined form or as part of a separately registered mark) has resulted in the mark applied for – as opposed to any other mark which may also be present – being perceived as denoting one source. This is a lower threshold test than reliance.

It is worth noting that the CJEU’s decision is not a final outcome. The CJEU is simply providing guidance on the law, which Arnold J in the High Court must now interpret by reference to the evidence and facts at hand.

Now read on …

We will concentrate on acquired distinctiveness.

Arnold J’s decision and reference

The case was a reference from a decision of Arnold J in 2014, discussed in our earlier post here.

We have noted previously the methodical approach deployed by Arnold J (see our note on the battle of the “e logos” here). In this case, he referred to a number of settled factors that are considered in assessing distinctive character (paragraphs 40 – 45, footnotes omitted):

  1. for a trade mark to possess distinctive character, it must serve to identify the goods or services in respect of which registration is applied for as originating from a particular undertaking and thus to distinguish the goods or services from those of other undertakings”;
  2. distinctive character of a trade mark must be assessed by reference to (i) the goods or services in respect of which registration is applied for and (ii) the perception of the average consumer of those goods or services, who is deemed to be reasonably well-informed and reasonably observant and circumspect”;
  3. the criteria for assessment of distinctive character are the same for all categories of trade marks, but nevertheless the perception of the relevant public is not the same for all categories of trade marks and it may therefore be more difficult to establish distinctive character in relation to some categories”;
  4. in assessing whether a trade mark has acquired a distinctive character the competent authority must make an overall assessment of the relevant evidence, which in addition to the nature of the mark may include (i) the market share held by goods bearing the mark, (ii) how intensive, geographically widespread and long-standing the use of the mark has been, (iii) the amount invested by the proprietor in promoting the mark, (iv) the proportion of the relevant class of persons who, because of the mark, identify the goods or services as emanating from the proprietor, (v) evidence from trade and professional associations and (vi) (where the competent authority has particular difficulty in assessing the distinctive character) an opinion poll” (the Windsurfing Chiemsee factors);
  5. with regard to the acquisition of distinctive character through use, the identification by the relevant class of persons of the product or service as originating from a given undertaking must be as a result of the use of the mark as a trade mark”;
  6. trade mark may acquire a distinctive character in consequence of the use of that mark as part or in conjunction with another trade mark (which may itself be a registered trade mark)” (this principle derived from an earlier case involving Nestlé’s HAVE A BREAK mark, in circumstances where that mark was always used in the context of the (separately registered) mark HAVE A BREAK, HAVE A KIT KAT).

The unresolved issue related to the threshold for acquired distinctive character. Is recognition sufficient, or must the consumer rely on the mark? The Hearing Officer in this case used the reliance test, and Arnold J preferred this view but considered that a reference to the CJEU was needed for clarity.

Nestlé argued that recognition was sufficient, but even if reliance was the test it met that threshold too. Arnold J disagreed with this assessment.

To resolve this, the following question was referred to the CJEU:

“In order to establish that a trade mark has acquired distinctive character following the use that had been made of it within the meaning of Article 3(3) of Directive 2008/95 …, is it sufficient for the applicant for registration to prove that at the relevant date a significant proportion of the relevant class of persons recognise the mark and associate it with the applicant’s goods in the sense that, if they were to consider who marketed goods bearing that mark, they would identify the applicant; or must the applicant prove that a significant proportion of the relevant class of persons rely upon the mark (as opposed to any other trade marks which may also be present) as indicating the origin of the goods?”


The CJEU’s decision on this point is short.

In its formulation of the question posed (and quite distinctly from the question referred by Arnold J), the CJEU left out the word “reliance” and instead asked whether an applicant “… must prove that the relevant class of persons perceive the goods or services designated exclusively by that mark, as opposed to any other mark which might also be present, as originating from a particular company, or whether it is sufficient for that applicant to prove that a significant proportion of the relevant class of persons recognise that mark and associate it with the applicant’s goods.”

The CJEU took the view that the fundamental condition is that as a consequence of use (whether as part of or in conjunction with another mark) the sign alone serves to identify that the goods come from a particular undertaking in the minds of the relevant class of persons.

Shape-specific exclusions

Briefly, in line with its earlier Hauck decision (which was handed down after Arnold J’s decision), the CJEU has ruled that the objections under article 3(1)(e) cannot be “mosaicked”. In order to apply, the specific provision must be “fully applicable” to the shape at issue. As regards 3(1)(e)(ii) (does the mark consist exclusively of the shape of goods which is necessary to obtain a technical result), the CJEU has ruled that this matter is assessed by reference to the manner in which the goods function, and that the manner of manufacture of the goods is not relevant.

This is an important finding, as it is not clear that any one of the 3(1)(e) limbs is “fully applicable” to Nestlé’s mark (and as an objection under article 3(1)(e) would have obviated Nestlé’s case on acquired distinctiveness under Article 3(3)).


The headline point is that there is no “outcome” at this point. All we have is guidance from the CJEU on the law that must now be interpreted by reference to the specific facts of the case, namely the evidence of Cadbury and Nestlé. To the extent that any media reports have handed victory to either side, that can be filed under “Lies, damned lies and social media coverage of trade mark disputes …” (our earlier article here).

The next step is for the court to assess whether the evidence filed by Nestlé sufficiently meets the requirements of factual distinctiveness (and to assess whether any of the 3(1)(e) exclusions is fully applicable). Would the mark applied for – as a result of prolific use of that same mark with “Kit Kat” embossed on the fingers – be perceived by consumers as being/identifying Nestlé’s product?

My personal view – expressed previously – is that I would recognize (and identify) this specific bar as a Kit Kat without needing to see the packaging, or the words Kit Kat embossed on the fingers.

An interesting question is just how many people must be considered to share that view in order for Nestlé to meet the CJEU’s requirements? This brings to mind the decision of Geoffrey Hobbs QC (sitting as a Deputy Judge of the High Court in Electrocoin) in which he stated that “a mark does not have to be universally distinctive in order to be registrable; it is sufficient for it to be distinctive according to the perceptions and recollections of a significant proportion of the relevant class of persons” (footnoting the CJEU’s decision in Windsurfing Chiemsee). This suggests that something less than 100% distinctiveness in fact is enough. This has to be correct.

It also raises the issue as to whether exclusivity is required (“significant proportion” suggests not), and – if not – just how much third party use would eat away (sorry) at the perception of the shape on its own as being perceived as denoting Nestlé’s goods. One would have thought in this case that if the primary position by reference to the evidence is that the shape identifies Nestlé’s goods, then the evidence of third party use would need to be more than merely sporadic in order to dislodge that.

Finally, there is the question that goes to the heart of issues of distinctiveness and functionality as posing obstacles to the registration of shapes as trade marks: what are the motives of other traders in adopting a shape for their own chocolates that imitate the Kit Kat? As set out in the recent article by Associate Professor Michael Handler, “there are a number reasons why other traders might wish to use a particular sign or close variant”. Those of us who deal with trade mark matters day-to-day (or even those who in dip in occasionally) will be well aware that those other traders may be motivated by a number of factors, including the desire to trade off the reputation of the earlier mark.

Impact on Australian and New Zealand law?

The issue under article 3(3) of the Directive at issue in Nestlé, namely whether a mark is distinctive in fact as at the filing date, has clear similarities to the assessment of a mark under section 41(3) (formerly section 41(6)) of Australia’s Trade Marks Act. Doubtless if the requirements of the CJEU are met then that should also be relevant to whether use or intended use satisfies the lower threshold provision section 41(4) (formerly section 41(5)). Australian case law has also recognized (as with the CJEU’s early decision in HAVE A BREAK), that “a sign may be registrable as a trade mark even though it is used together with another trade mark, and that there can still be use of a mark where it is a component of a larger composite mark”: Sports Warehouse, Inc v Fry Consulting [2010] FCA 664, [133].

Under New Zealand law, the decision is also relevant (see our earlier notes regarding Coke v Pepsi here, and Keds’ stripe mark here). New Zealand’s acquired distinctiveness provision, section 18(2), is not identical to article 3(3) of the Directive. It provides that “the Commissioner must not refuse to register a trade mark under subsection (1)(b), (c), or (d) if, before the date of application for registration, as a result of either the use made of it or of any other circumstances, the trade mark has acquired a distinctive character”. New Zealand’s Court of Appeal expressly referenced Windsurfing Chiemsee factors in its decision in Fredco.

What do you think? Drop us an email at [email protected] and let us know.

You can see the detailed IP Bulletin from KWM’s London office here.