By now, the fate of the four fingered KitKat shape mark is old news - Joined Cases C‑84/17 P, C‑85/17 P and C‑95/17 P Rumours of the mark’s death have been greatly exaggerated - it is now for the EUIPO to reconsider the evidence in light of the CJEU's ruling and reach a decision as to whether or not the mark is valid. Whilst the press may have put the cart before the horse, the CJEU’s decision does suggest that the mark will not remain registered long term. But this case has stickier and more sickly consequences for EU trade marks than a single chocolate bar. The real question is...
What does this mean for acquired distinctiveness in the EU?
It is not disputed that the shape mark (see above) is not inherently distinctive. Therefore, in order to avoid the mark being invalidated, Nestle had to show that it had acquired distinctiveness through the use that had been made of it in a sufficient part of the EU at the 2002 filing date. The EUIPO’s Board of Appeal considered the evidence and determined that:
Nestle had submitted sufficient evidence of distinctiveness in 10 of the 15 Member States (at that time) including Germany, France, Italy, Spain and the UK; and
as it had examined and found distinctiveness in a sufficiently large proportion of the EU, it did not need to consider the public perception of the mark in the five remaining Member States: Belgium, Ireland, Greece, Luxembourg and Portugal.
The General Court and the Advocate General’s opinion favoured a more rigorous approach. Essentially, they favoured a threshold whereby sufficient evidence of acquired distinctiveness through use was provided for every Member State. This approach was not without controversy. The concerns can broadly be split between the practical and the philosophical. From a practical perspective, if evidence of distinctiveness (likely in the form of a survey) is required for each Member State, the costs of protecting non-traditional marks will spiral. The philosophical concerns turned on the question of what does is the unitary character of the EU trade mark mean? In Nestle's view, unitary character meant that segmenting the EU on a Member State basis was the wrong approach as the whole point of unitary character was that borders between Member States were not considered. The CJEU reasoned that the unitary character of the EU trade mark actually strengthened the importance of showing distinctiveness across the whole EU and not just part of it. It reached this conclusion following a fairly detailed review of the case law and some nimble footwork to distinguish earlier CJEU rulings... There are no breaks on the horizon for Nestle's legal team
In Leno Merken (C‑149/11, EU:C:2012:816), the CJEU determined that in order to assess genuine use of an EU trade mark (in relation to Article 15(1)) it is necessary to disregard the territorial borders of the Member States and in some circumstances use in a single Member State may be sufficient to establish genuine use .
In Colloseum Holding (C‑12/12, EU:C:2013:253), the CJEU considered that the question of genuine use in Article 15(1) is analogous to the issue of acquired distinctive character through use in Article 7(3) i.e. the test in Leno Merken. The CJEU sidestepped these earlier rulings on the basis that Colloseum only considered the possibility that genuine use could be established when it was a registered mark in specific circumstances associated with a composite mark . They concluded that Colloseum did not establish that the territorial scope required to determine registration must be the same as that required to preserve granted rights which are subject to a non-use challenge. I am not convinced that this justifies having two different standards for use of the EU trade mark or that such an outcome is helpful or desirable. Particularly given that applying two different philosophies to the concept of an apparently unitary right is confusing and contradictory. The CJEU also noted, more persuasively, that the question of acquired distinctiveness does not have an analogous provision to Article 7(2) which essentially states that it cannot be assumed that there is no genuine use of a mark simply because the mark has not been used in part of the European Union. In Storck v OHIM (C‑25/05 P, EU:C:2006:422), the CJEU held that a sign can only be registered if evidence is provided that it has acquired distinctive character through use in any parts of the EU where the mark lacked inherent distinctive character . Therefore if a mark lacks distinctive character in all Member States, the mark can only be registered if it has acquired distinctive character in the whole of the European Union (Lindt & Sprüngli v OHIM, C‑98/11 P, EU:C:2012:307,  and ). It does not necessarily follow that distinctive character needs to be proven in each Member State. Indeed, in Lindt, the Court specifically noted that it was not necessary to provide evidence of acquired distinctiveness through use for each Member State where the mark lacked inherent distinctiveness . The CJEU distinguished between acquiring distinctive character through use of a sign and proving the same. The court accepted that the Regulation does not require evidence of acquired distinctiveness in each individual Member State. Therefore, the evidence provided to establish that a particular sign has acquired distinctive character through use may be relevant to several Member States, or even to the whole of the European Union.
It's crunch time: what does this mean in practice?
The distinctive character acquired through use of a mark must be throughout the European Union. The evidence of this acquired distinctive character may be produced:
globally for all the Member States concerned; or
separately for different Member States or groups of Member States.
Importantly, it is not sufficient to provide evidence of acquired distinctiveness that does not cover part of the EU, even a part consisting of only one Member State. The type of evidence and the way in which it has been gathered will be crucial to successfully proving acquired distinctiveness.
Groups of Member States
There are two ways of looking at regions within the EU. The first is on the basis of marketing strategy and the second is on geography, culture and language. In practice, there will be considerable overlap. Where goods or services have been grouped together, especially for marketing strategy purposes, it is possible to provide evidence of use in one of these regions rather than for each country in this region. In these circumstances, the evidence of the use of a sign within such a cross-border market is likely to be relevant for all Member States concerned. Where a region has a sufficiently shared geography, culture or language for two Member States to have a sufficient knowledge of the products and services that are present on each other’s market, it may not be necessary to provide evidence in each Member State but rather for the region. So whilst it is not necessary to provide evidence of use in each and every Member State, the evidence submitted “must be capable of establishing such acquisition throughout the Member States of the European Union”. Therefore, in order to be safe when submitting evidence of acquired distinctiveness, it is wise to gather as much evidence as possible of use in every geographic region and ideally each Member State. As the CJEU noted, the question of evaluating the adequacy of the evidence provided is primarily one for which the EUIPO is responsible. This case is no different, the Kitkat case is now back with the EUIPO to assess whether the mark had acquired distinctive character in Belgium, Ireland, Greece and Portugal. (Strangely enough the fifth Member State, Luxembourg, is excluded from this list for reasons unknown.) We will get a break from the KitKat mark eventually but that date is still some way away.