Societe Des Produits Nestle SA v Cadbury UK Ltd

An inherently non-distinctive mark acquires distinctive character where, following its use, a significant proportion of the relevant consumers perceive goods designated exclusively by that mark as originating from one undertaking. The mark may have been used with another mark, but it must itself function as a badge of origin.

Mere recognition of a product shape and association with a familiar branded product are insufficient. Actual past transactional reliance is sufficient evidence of acquired distinctiveness, but it is not a legal precondition. The tribunal may consider whether consumers would rely on the mark if used alone. Survey evidence must be assessed with all relevant circumstances and is not necessarily decisive.

Nestlé applied to register the unbranded three-dimensional shape of its four-finger Kit Kat product as a UK trade mark. Cadbury opposed registration on the ground that the shape lacked distinctive character under section 3(1)(b) of the Trade Marks Act 1994. Nestlé contended that the shape had acquired distinctive character through use.

The hearing officer found that many consumers recognised the shape and associated it with Kit Kat, but that the shape had not become an indication of trade origin. Following a preliminary ruling from the Court of Justice in Case C-215/14, Arnold J dismissed Nestlé’s appeal: [2016] EWHC 50 (Ch).

The issue before the Court of Appeal was whether acquired distinctiveness required consumer reliance upon the shape and whether recognition, association and the survey evidence established that the shape itself designated goods from a single undertaking.

1. The appeal was dismissed unanimously. The hearing officer had applied the correct legal approach and was entitled to find that the shape had not acquired distinctive character before the application date.

2. An inherently non-distinctive mark acquires distinctive character under Article 3(3) of Directive 2008/95/EC where a significant proportion of the relevant class perceives goods designated exclusively by the mark, rather than by another mark which may be present, as originating from a particular undertaking. The mark itself must function as a badge of origin. Its use need not have been independent and may have occurred as part of, or in conjunction with, another registered mark.

3. Per Kitchin LJ, consumer reliance is a behavioural consequence of perceiving a mark as an indication of origin. Evidence that consumers have actually relied upon a mark is sufficient to establish acquired distinctiveness, but past transactional reliance is not an essential condition. A tribunal may legitimately consider whether consumers would rely on the sign as denoting origin if it were used alone. Floyd LJ agreed that the ultimate question is whether the mark, used alone, has acquired the ability to demonstrate exclusive trade origin.

4. Mere recognition and association are insufficient. Consumers may recognise a familiar product shape or associate it with a branded product without understanding the shape itself as indicating exclusive trade origin. That distinction is particularly important for product shapes because registration confers an exclusive right even where another trader’s use would cause no actual confusion.

5. The hearing officer properly assessed all the evidence. The shape had not appeared in relevant advertising, the product was sold in opaque branded packaging, its fingers bore the Kit Kat logo, and similar finger-shaped products existed. Although at least half of the survey respondents apparently identified the image as a Kit Kat, their answers could indicate resemblance or association rather than exclusive origin. Survey results were not dispositive and required assessment alongside the other evidence.

6. The General Court’s conclusion concerning the corresponding EU mark did not bind the Court of Appeal on the factual issue. Its reasoning did not undermine the governing rule and appeared in places to treat recognition and association as sufficient, contrary to the Court of Justice’s ruling.

1. Court of Appeal (Civil Division): By [2017] EWCA Civ 358, unanimously dismissed Nestlé’s appeal and upheld the conclusion that the shape had not acquired distinctive character.

2. High Court, Chancery Division: By [2016] EWHC 50 (Ch), Arnold J held that the hearing officer had applied the proper approach and dismissed Nestlé’s restored appeal.

3. Court of Justice of the European Union: In Case C-215/14, answered the preliminary question by requiring proof that the relevant public perceived goods designated exclusively by the mark applied for as originating from a particular company.

4. High Court, Chancery Division: By [2014] EWHC 16 (Ch), Arnold J rejected inherent distinctiveness and referred questions concerning acquired distinctiveness to the Court of Justice.

5. Registrar of Trade Marks: The hearing officer held that the shape lacked acquired distinctive character and refused registration for the material goods.