Break Me Off a Piece of That Trademark Suit

By: Stephen DeGrow *

chocolatesAround wintertime, shape is on everyone’s mind. There are holiday pounds, gym memberships, and weight loss commercials. As January progresses, worries mount over broken resolutions and dusty dumb bells. For just about everyone, shape is a challenge. Except for Nestlé. On December 19, 2012, Nestlé won an appeal against Cadbury that secures a trademark for the shape of its Kit Kats.

The Kit Kat battle began in 2002 when Nestlé applied for a three-dimensional trademark in the European Union. Four years later, the Office for Harmonization in the Internal Market granted a trademark for a class of goods covering sweets, bakery products, pastries, biscuits, cakes, and waffles.

After the trademark was registered, Cadbury filed a request for declaration of invalidity. The company received a favorable decision when the Cancellation Division declared the trademark invalid. The court reasoned that the trademarked shape was “determined by demands for simple, swift and convenient eating.” As a result, “the shape of the contested mark [did] not deviate significantly from the norm of the sector” and therefore “lack[ed] [the] inherent distinctiveness” needed for a valid mark.

On March 9, 2011, Nestlé appealed the decision. The company argued, among other things, that the trapezoidal shape of each bar is “unique and unprecedented” and “deviates significantly from the norm of the market.” Nestlé also objected to the Cancellation Division’s conclusion that the shape was “determined by demands for simple, swift and convenient eating.” According to Nestlé, the use of similar shapes “shows the large extent of the reputation of the four-finger shape and the desire of the market to take advantage of that reputation.”

The appellate board rejected some of Nestlé’s arguments and said that “the Cancellation Division rightly concluded that the sign lacks any distinctive character . . . and that the relevant consumers will be unable to recognize it as an indicator or origin.” However, the board eventually upheld the trademark because it “has acquired distinctiveness through use in the European Union.”

UntitledThe Kit Kat decision represents the continued battle between Nestlé and Cadbury. Not too long ago, the companies fought over the color purple. In that suit, Cadbury secured a trademark for Pantone 2865c, “the unique purple color of its chocolate bar wrappers.” Nestle challenged that trademark but lost both the initial suit and its appeal. On appeal, the judge said, “the evidence clearly supports a finding that purple is distinctive of Cadbury for milk chocolate.”

BottleNot surprisingly, the color and candy wars extend beyond Europe and into the United States. And no product is out of reach. Eriez, headquartered in Erie, Pennsylvania, recently trademarked the color orange for certain industrial machines. Of course, the most famous shape trademarked in the U.S. may be Coca-Cola’s bottle.

With more products receiving trademarks for shape and color, attorneys are recommending that some companies consider trademark applications. If the registration is successful, the new asset can “add significant value” to a business. Given that every brand inside the top 50 most valuable brands is worth over ten billion dollars, a new trademark could certainly add value.

*Stephen DeGrow is a second-year student at Wake Forest University School of Law and holds a Bachelor of Arts in Economics from Cornell University.