The Court of Justice of the European Union (CJEU) did not take a break on Nestlé as it dismissed its appeal against the General Court's decision on its Kit Kat shape mark.
The CJEU held that the General Court was right to annul the decision of the EUIPO Board of Appeal which declared the shape of the chocolate bar a valid trademark.
The CJEU held that in assessing whether the shape of the Kit Kat chocolate bar had acquired distinctive character through use in the EU, Nestlé had to prove the acquisition of distinctiveness in every part of the EU in which it did not, ab initio, have such character.
This does not mean that proof of acquired distinctiveness had to be provided for each individual member state. It is sufficient that evidence is relevant with regard to several Member States, or even the whole of the EU, taking into account the homogenous market strategies for comparable markets. Cross-border markets could, for example, be established as a result of geographic, cultural and linguistic proximity.
While the EUIPO Board of Appeal properly established that, according to the evidence provided by Nestlé, the Kit Kat shape mark had acquired distinctiveness in 10 of the then 15 member states of the EU (being Denmark, Germany, Spain, France, Italy, the Netherlands, Austria, Finland, Sweden and the UK), it failed to sufficiently answer the question whether such distinctiveness had been acquired in Belgium, Ireland, Greece, Portugal and Luxembourg.
The consequence of the judgment of the CJEU is that the case is now referred back to the Boards of Appeal of the EUIPO. The establishment of acquired distinctiveness in 10 member states makes a strong case for Nestlé to pursue national trademark registrations in those countries if the matter were to result in a declaration of invalidity. However, if the Boards of Appeal confirm the validity of the shape mark, Nestlé would have succeeded in obtaining monopoly rights in the shape mark in the now 28 member states of the EU, while only having had to proof acquired distinctiveness in 15 countries (which the EU consisted of at the time of filing the trademark application).
Alexander Heirwegh has written a commentary article on the judgment in WIPR, explaining the implications for companies wishing to register the shape of their products in the EU. You can read the article on WIPR's website.