What did EU law say about 3D shapes as trademarks before the CJEU ruled on the validity of the KitKat four-finger chocolate biscuit in September?
The provision dealing with 3D shapes as trademarks is Article 3(1)(e) of the Trademark Directive (2008/95/EC).
This provides that signs that consist exclusively of the following cannot be registered as a trademark: (i) the shape which results from the nature of the goods themselves; (ii) the shape of goods that is necessary to obtain a technical result; (iii) the shape which gives substantial value to the goods.
This is read in light of Article 2, which essentially confirms what has officially been recognised as the function of a trademark, namely that a trademark needs to be able to distinguish the goods/services of one undertaking from those of another.
Therefore, the considerations behind Article 3 are twofold: (i) there is the protection of the public interest by allowing the free use of shapes that are dictated by the nature of the goods, their technical result or the value which they attribute to the product in the market; and (ii) it strikes a fair balance between the legislative frameworks of trademarks, patents and design rights by ensuring their coherence. This means that the legislation on trademarks will not assist an applicant in gaining an unfair advantage with a 3D shape, which is essential to relevant markets and commercial circles, by allowing it to be registered as a trademark. Such a registration would offer the applicant a monopoly over the 3D shape for an indeterminable period of time, unless, of course, the 3D shape is in a position to satisfy that it does not come within any of the provisions of Article 3(1)(e) and is capable of functioning as a trademark.
What did the CJEU have to decide?
Justice Richard Arnold, sitting in the UK High Court, referred three questions to the Court of Justice of the EU, which may be summarised as follows:
- In terms of distinctiveness, is it sufficient that the relevant public recognises the mark and associates it with the applicant’s goods (but without associating the mark with their origin), or does the relevant public need to recognise the mark as an indication of the goods’ origin?
- Where a 3D shape consists of three essential features, must all of the features come within the same provision of Article 3(1)(e) before the shape can be refused or will the presence of one of these suffice for the shape to be rejected (in this case, particular reference was made to three essential features, one of which results from the nature of the goods themselves and two of which are necessary to obtain a technical result)?
- Should Article 3(1)(e)(ii) of the Trademark Directive (ie, the shape necessary to obtain a technical result) be interpreted as including the manner in which the goods are manufactured?
Therefore, the CJEU needed to decide on all of the above points of law.
The CJEU appears to have said that Nestlé cannot prove that its customers can recognise its KitKat chocolate biscuit shape without labeling or packaging—is that right?
References to the CJEU are restricted to points of law, not of fact. Therefore, the CJEU did not and could not have taken a direct or even indirect view on the case.
Nonetheless, this case is one of the cases where the CJEU could and was given ample opportunity to re-determine the lines of the law in favour of a more commercially biased approach. In our view, what the CJEU did was affirm and re-instate the law in an indisputable and clear manner, having considered the purpose of the relevant provisions in dispute. This is because the existence of trademarks is as old as trade and therefore (it can be argued) as old as time. The very foundations of trademarks are commercial and so no further commercialisation is required. Trademark law currently needs to draw a line as to what constitutes acceptable commercial practice and what is not based on current practices and the strict wording of the law.
In light of this, the CJEU stated that trademarks are used as a badge of origin. Although this is by no means the only function of a trademark (for example, trademarks can be used as a branding/advertising tool, a mark of quality, or as an indicator of a particular lifestyle), other functions are conditional on the trademark being able to distinguish the origin of the goods. This is where the real value of a trademark lies.
Further, the CJEU also clarified the important issue of the interpretation of “technical result” as found in Article 3(1)(e)(iii). The importance of this clarification lies in the fact that an inclusion of the “manner of manufacture” in this definition would have been: (i) against the literal interpretation of the provision per se; and (ii) against the purpose this aimed to achieve, which is a ban on any inventions/processes that should be protected by patents or designs, and therefore afforded protection for a specific period of time, being protected as trademarks.
Last but not least, the decision of the CJEU seems to also have made a careful statement of policy, especially when it is read in tandem with Justice Arnold’s referral. Justice Arnold was of the opinion that Nestlé’s application should fail in its entirety pursuant to Article 3(1)(e). This was definitely not ignored by the CJEU, especially because the issue of 3D shapes arises at a time where there is some controversy as to the extent of the application of the trademark protection criteria on such shapes.
What does the CJEU’s decision mean for Nestlé when the case returns to the UK court?
This will depend on the application of the CJEU to the facts of the case by the High Court. However, even if none of the provisions of Article 3(1)(e) apply to the entirety of the mark in question, it currently seems unlikely that Justice Arnold will find in favour of Nestlé.
The reason is that pursuant to the evidence laid before the UK Intellectual Property Office (IPO), the hearing officer was right to conclude that the shape of KitKat per se does not function as a trademark and therefore does not indicate the origin of the goods, but does allow the public to associate the goods with the mark. This is in addition to the fact that the High Court can only deviate from the decision of the UK IPO if there has been an error in the application of the law.
If anything though, it should come as a relief to Nestlé that the CJEU confirmed that the application of any one of the provisions of Article 3(1)(e) should apply to the entirety of the mark and not merely to a part. This could potentially mean that a targeted branding recognition strategy could work magic in the future.
What about 3D shapes generally in the EU? What should brands consider before attempting to register a 3D shape as a trademark?
The decision confirms what has always been assumed: the application of the criteria for the protection of 3D shapes is much stricter and fairly so. If a 3D shape is to be protected as a trademark then brand owners should make sure that their mark does not fall within the Article 3(1)(e) restrictions. This should be considered at the stage of designing the shape. Furthermore, what the CJEU decision suggests is that such 3D shape applications will be more positively apprehended in the event where they have already established some degree of brand recognition in the relevant market.
This is irrespective of whether 3D shapes are used in combination with 2D marks. If anything, a 3D shape used in combination with 2D marks will be more difficult to protect since evidence on its market recognition, marketing and branding will be difficult to be sufficiently distinguished from the 2D marks (unless of course the 3D and 2D marks are also marketed individually).
Nonetheless, one should also bear in mind that the time a 3D mark, provided it is capable of functioning as a trademark, will need to acquire distinctiveness is, inevitably, longer, as well as more costly, than a normal 2D mark. This doesn’t mean it cannot happen, but a 3D shape is very much a different animal.