Nestle has lodged a Federal Court appeal against a recent Australian Trade Marks Office decision not to register its popular KIT KAT chocolate bar as a shape trade mark.
The Registrar’s Delegate, Terry Williams found in favour of supermarket giant Aldi Stores who opposed the registration of Nestle’s four bar chocolate product pursuant to s.41, 59, 58 and s.62 of the Trade Marks Act 1995 (Cwth). Mr Williams took the view that the shape trade mark was “not a trade mark at all, it is a functional shape of the goods, one which the applicant does not use as a trade mark but is attempting to disguise as one for the purpose of this exercise”.
Nestle relied on the decision of the Intellectual Property Office of New Zealand in Societe des Produits Nestle S.A. v Horizon Biscuit Company Limited and Cadbury Confectionery Limited to argue that the four-bar shape did have capacity to distinguish the goods, and qualified as a trade mark. In that decision, although the Kit Kat shape was found to have some functional elements, it was not entirely functional and it was the other non- functional elements that could give the shape the capacity to distinguish. So the shape was held to meet the requirements of a trade mark.
In assessing whether the mark was capable of distinguishing, Mr Williams had regard to firstly, whether the trade mark was inherently adapted to distinguish chocolate confectionery, Mr Williams found Aldi’s evidence that various other chocolate products could be divided up into squares or small portions, showed the commercial desirability of being able to break portions into smaller portions. Moreover, whatever the reasons behind Nestle’s adoption of the shape in 1935 or 1948, Mr Williams said it must now be seen as a functional shape, and that consumers were aware of the convenient breakability of the mark. So the very feature that Kit Kat’s HAVE A BREAK advertising campaigns play on that is, the shape of the four ‘snapable’ finger like portions, was found not to be inherently capable of distinguishing chocolate confectionery pursuant to s.41(3) of the Trade Marks Act 1995 (Cwth).
In the alternative, Nestle argued the extensive use of the shape meant that it had acquired distinctiveness and should be accepted for registration pursuant to s.41(6) of the Trade Marks Act 1995 (Cwth). As well as relying on its sales and advertising of the product, Nestle relied on survey evidence to establish factual distinctiveness. Of the 300 people Nestle had, had professionally surveyed, 86% upon seeing a wax bar in a chocolate colour identical in size and shape to the Kit-Kat four-bar product (without the Kit Kat trade mark) recalled seeing a similar shaped product previously. 89% of those people also associated it specifically with Nestle’s Kit Kat. This equated to roughly 77% of the population associating the four-bar shape with Nestle.
However, whilst noting 77% this was an impressive number, Mr Williams found the responses of those who did not make the connection with Nestle but associated the shape with chocolate confectionery generally, or confused it with other brands of chocolate more compelling. He said it indicated that the shape was “generic or something very like it”, and was not prepared to find that the mark was factually distinctive on the basis of this evidence.
In any event, Aldi argued that the recognition of the trade mark was not important if the shape mark was not actually used as a trade mark. Nestle relied on its advertising and point of sale materials to show that the mark was used as a trade mark. However, whilst Mr Williams found use of a shape in advertising could amount to use as a trade mark, it did not in this case. In particular, Nestle’s evidence of its advertising campaigns, including the popular HAVE A BREAK campaign, emphasised the breakability of the chocolate bar and tended to show the four-bar or two-bar form of the Kit Kat broken into two pieces or a single piece. Mr Williams considered that this meant the public was not being educated to see the 4-bar shape as a trade mark, but rather that it was functional i.e. it could be snapped into single or 2-bar portions.
The shape mark was therefore found not capable of distinguishing chocolate confectionery and its registration refused.
Interestingly, Nestle’s application to register the two bar Kit Kat as a shape trade mark was abandoned after it was opposed.