June 1, 2015
Singapore High Court revokes Nestlé's trade mark registrations for KIT KAT shape trade marks
Traditionally, it has been difficult for shapes to be registered as trade marks as consumers do not usually perceive a shape as denoting the trade origin of goods. The recent KIT KAT decision sheds light on the future of shape marks in Singapore and this article focuses on some of the key issues considered.
The Plaintiffs, Societe Des Produits Nestlé SA and Nestlé Singapore (Pte) Ltd ("Nestlé"), are the manufacturers and sellers of KIT KAT chocolate wafers. The Defendants, Petra Foods Limited and Delfi Singapore Pte Ltd ("Delfi"), are also manufacturers and sellers of chocolate wafers under the trade mark "Take-It" or "Delfi Take-It".
Nestlé sued Delfi for trade mark and copyright infringement based on the shape and overall packaging of Delfi's chocolate wafers. Nestlé asserted rights in the following:
- Two trade mark registrations ("the Two Fingers Shape" and "the Four Fingers Shape," and collectively, the "Registered Shapes");
- An unregistered trade mark (the "Two Fingers Composite Mark" ); and
- An artistic work ("the Artistic Work" ).
Nestlé alleged that the shape and packaging of Delfi's Take-It products infringed their intellectual property rights (trade mark infringement, infringement of well-known trade marks and copyright infringement) and the table below illustrates Delfi's allegedly infringing goods.
Delfi brought counterclaims to invalidate/revoke Nestlé's registered trade marks on the grounds that Nestlé's marks:-
- were not capable of distinguishing the goods for which they were registered;
- were devoid of any distinctive character;
- were not put to genuine use in the course of trade in Singapore within five years from registration;
- the use of which, was suspended for an uninterrupted period of five years;
- consist exclusively of a shape that results from the nature of the goods themselves;
- consist exclusively of shapes that are necessary to obtain a technical result; and
- consist of a shape that gives substantial value to goods.
Delfi also counterclaimed that Nestlé's threats for infringement of a registered trade mark were groundless.
Findings Of The High Court
The High Court found in Delfi's favour and revoked Nestlé's trade marks for the Registered Shapes.
In coming to its decision, the Court first considered whether the Registered Shapes consisted exclusively of shapes that were necessary to obtain a technical result. The Court held all of the following to be essential characteristics of the Registered Shapes: (1) The rectangular slab shape; (2) The presence, position, and depth of the grooves, which divided the chocolate bar into detachable "fingers"; and (3) The number of grooves that determined the number of "fingers" in the chocolate bar. In light of this analysis, the Registered Shapes were deemed invalid, and all claims of infringement against Delfi based on the Registered Shapes would resultantly fail.
Next, the Court considered whether the Registered Shapes were precluded from registration as the shapes resulted from the nature of the goods themselves. To achieve its function of looking appetising and tasting good, chocolate bars could take any shape (subject to manufacturing restraints) and the Registered Shapes, while relatively simple, did not result from the nature of the chocolate bars. This is because the configuration of the grooves of the Registered Shapes was not inherent to the generic function of the chocolate products (i.e. looking appetising and tasting good). As a result, the Registered Shapes were not invalidated on these grounds.
The Court also considered whether the Registered Shapes should be invalidated as they consisted exclusively of shapes that gave substantial value to the goods (the "Substantial Value Exception"). To fall within this exception, the shape must be one that raises the value of the goods in question relative to competing products and on the facts, it was not enough that the Registered Shapes added to the aesthetic appeal of the KIT KAT bars, since it was unlikely that other traders in the confectionary market would choose a shape for competing goods without any aesthetic merit. In light of this, the Substantial Value Exception did not apply.
Delfi also argued that the Registered Shapes were incapable of distinguishing the goods for which they were registered and that they were also devoid of any distinctive character. In agreeing with Delfi, the Court held that the Registered Shapes were not inherently distinctive because they did not possess any characteristics sufficiently unique to function as badges of origin to the average consumer of chocolates. Finally, the Court also rejected Nestlé's survey evidence for being flawed and concluded that the Registered Shapes had also not acquired distinctiveness.
Finally, the Court also agreed with Delfi in finding that the Registered Shapes were not used in a trade mark sense (i.e. the KIT KAT bars were merely sold in opaque wrappers and the Registered Shapes, which were never used on their own, had no actual trade mark significance at the point of sale) and that they should be invalidated on this ground.
In light of the above findings and revocation of the trade marks for the Registered Shapes, the Court held that there could be no possibility of trade mark infringement.
Nestlé also asserted rights in its Two Fingers Composite Mark which was unregistered and argued that it was well known in Singapore. In rejecting this argument, the Court held that the average consumer would not rely on the Two Fingers Composite Mark as indicating the origin of goods. The Court also rejected the survey evidence adduced by Nestlé as being flawed and insufficient to show that the consumers relied on the Two Fingers Composite Mark as a badge of origin.
The Court also dismissed Nestlé's claim in copyright based on the Artistic Work since Nestlé was unable to prove, evidentially, that it owned the Artistic Work.
This case is significant as it is the first Singapore High Court decision to address the registrability of shapes as trade marks. The judgment also offers prospective registrants of shape marks guidance on how the Court may view their registrability. Also, from a public policy perspective, the Court held that even if Delfi "did copy" the shape of the Kit Kat bars, it was not wrong and that "Imitation is no less valid a business strategy than innovation. There is nothing unconscionable about competition…". The Court appears to be signaling that no matter how arresting, original, unusual or memorable a shape is, it may nevertheless not qualify for trademark protection if the shape serves as an embodiment of design rather than an indication of trade origin.
UK and South African Decisions
The registrability of Nestlé's KIT KAT shape marks was not only considered in Singapore. In United Kingdom, Cadbury had successfully opposed Nestlé's application to register the three-dimensional shape of the KIT KAT chocolate wafer as a trade mark. The reasons cited by the Courts were largely similar to the grounds in the Singapore decision. In upholding the UKIPO decision, the High Court did however find it necessary to refer some questions to the Court of Justice of the European Union (CJEU) for determination. The issues referred were (1) the threshold to be met by a prospective applicant of a shape mark in order to show acquired distinctiveness through use, (2) whether the objections to a shape mark (essential features which result from the nature of the goods and are necessary to obtain a technical result) must apply to all the essential features of the mark, and (3) whether a shape application should be refused where the shape is necessary to obtain a technical result with regard to the manner in which the goods are manufactured as opposed to the manner in which the goods function. The reference of these questions to the CJEU, particularly (1), is long overdue as the issues have yet to be ventilated in the EU. Given the persuasive value of the EU trade marks regime, the decision of the CJEU on the above questions may lend guidance to the Singapore Court of Appeal**.
This case was also interesting in that the South African Supreme Court had ruled differently from the Singapore decision (i.e. in Nestlé's favour) and held that International Foodstuffs' Tiffany Break chocolate ( ) had infringed Nestlé's shape trade marks.
**N.B. We understand that the above Singapore High Court decision may be the subject of an appeal and any appeal would be heard by the Singapore Court of Appeal in the coming months. We have no knowledge on the status of the South African proceedings or when the CJEU will issue its decision.