“Shape of goods” is one of the types of trade mark specifically mentioned in the opening sections of Regulation 2017/1001/EU (the Regulation) and Directive 2015/2436/EU (the Directive).
Having been specifically provided for in the legislation, one would have thought that shape marks ought not to be impossible to obtain (or, having obtained them, impossible to keep). Further, the recent removal by the EU-wide trade mark reforms of the requirement for graphical representation of trade marks signals, loud and clear, that new, unusual and/or non-traditional trade marks ought to be registerable. If consumers recognise a feature as indicating the origin of the goods, perhaps that ought to be enough?
But most of the recent decisions on shape marks have been bad news for their owners. They have also attracted comment in the popular press – perhaps because, in denying protection for well-known, established shapes, the courts’ decisions appear to consumers to be inconsistent with their behaviour and understanding of the trade mark system. KitKat. Rubik’s Cube. The London taxi. To consumers, each shape is easily recognisable as an indication of source of origin. But in each case, the trade mark was found not to be valid.
It may be that it is those famous shape marks that are refused that get the most airtime, and that we simply do not hear about the many quiet successes. However, Donatienne Moreau and Ioanna Diakomichali have undertaken a detailed empirical review of registration rates for shape marks, concluding they have a low prospect of success (see “Distinctiveness of three-dimensional trade marks”, Moreau and Diakomichali, Managing IP, August 24 2017). Case law since then indicates that prospects for brand owners have not improved. While every case is explicable on its facts, it is the overall trend that is worrying – a trend against registerability of shape marks.
Shape marks will usually be found to be lacking in inherent distinctive character – unless they depart significantly from the norms and customs of the sector concerned: Freixenet (Joined Cases C-344/10 P and C-245/10 P).
In The London Taxi Corporation Limited v Frazer-Nash Research Limited and another  EWCA Civ 1729, the Court of Appeal of England & Wales upheld the findings of Arnold J that an EUTM and a UKTM for the shape of a London taxi were both invalid for lack of distinctive character. In doing so, the Court of Appeal noted that it did not consider acte claire the question of whether it is enough for a mark to depart significantly from the norms and customs of the sector, or whether something more is required. The taxi company argued that if a mark does depart significantly from the norms and customs of the sector, then that alone is sufficient – the shape mark is inherently distinctive, and is registerable. In the end, the Court of Appeal did not need to refer the question to the Court of Justice, because it found that the marks did not depart significantly from the norms and customs of the sector. The marks had also not acquired distinctive character through use. The trade marks were invalid.
It therefore remains an open question as to whether proof of significant departure from the norms and customs of the sector concerned is enough, or whether something further is required. If a significant departure from the norms and customs is a necessary but insufficient requirement, then the hurdle is set even higher for shape mark owners.
Proving acquired distinctiveness throughout the EU
If a trade mark is devoid of distinctive character, that can be remedied by proving that the “trade mark has become distinctive in relation to the goods and services for which registration is requested in consequence of the use which has been made of it”. Similar provisions apply in relation to claims for invalidity of registered trade marks.
For a shape mark that is held to be devoid of distinctive character for the whole EU, how does its owner set about proving acquired distinctiveness? Surveys are the usual method – and until July 2018, it was thought that national surveys in a good representation of member states ought to be sufficient. The Court of Justice has recently disabused practitioners of that notion in Nestlé v Mondelez (Joined Cases C-84/17 P, C-85/17 P and C-95/17 P).
As is well known, Nestlé had an EUTM registration for a four-fingered chocolate biscuit: Mondelez applied to invalidate it on the grounds of lack of distinctive character. Nestlé presented evidence (including survey evidence) from 10 of the then 15 EU member states covering 90% of the population. Was this sufficient?
The Court of Justice held that it was not – relying on the unitary character of EUTMs, the Court held that acquired distinctiveness needs to be proved for the whole territory of the EU. At first blush, this sets brand owners a Herculean task – having to survey consumers in all 28 EU member states, at huge expense, effectively putting shape marks out of reach of all but the largest companies. Trade mark owners will instead lean towards national rights, which are more readily obtained, dividing the single market on the basis of national borders, a position which is inconsistent with the unitary nature of European Union trade marks.
But in what may become a lifeline to brand owners, the Court emphasised (at paragraph 80 and 83 of its judgment) that it is not necessary to provide “separate evidence” for each member state. How might a trade mark owner do that for a fast moving consumer good that is available across the EU? Traditionally, survey companies have undertaken separate surveys for separate member states, in part because that is how it has been done for national applications/registrations. The Court’s decision suggests that the way forward may instead be to submit a survey of “EU consumers”, not broken down by member state, but of a suitable number to suggest that it is representative. This would need to be combined with information from the survey company that the survey involved recipients from all EU member states, as well as evidence that the product concerned had been sold in all EU member states (because the acquired distinctiveness needs to be owing to the use made of the mark for the goods concerned). If there truly is a single, EU-wide market for a product, then a single, EU-wide survey ought to suffice to prove acquired distinctiveness.
So, while ostensibly setting the bar higher, the Court of Justice’s KitKat decision does offer a way forward, and it will be interesting to see how the EUIPO amends its guidelines and practices in light of the judgment.
While every case is explicable on its facts, it is the overall trend that is worrying – a trend against registerability of shape marks
A further hurdle for brand owners is apparent from the decision of the Court of Appeal of England & Wales in parallel KitKat litigation – Nestlé v Cadbury UK Limited (No 2)  EWCA Civ 358. The UKIPO had refused registration as a UKTM for Nestlé’s four-fingered chocolate biscuit, despite a substantial proportion of consumers surveyed identifying the mark applied for as a KitKat. The UKIPO hearing officer held that that of itself was insufficient, and he was upheld by the High Court and, following a reference to the Court of Justice, by the Court of Appeal. The Court of Appeal held that it is not sufficient that a significant proportion of consumers recognised and associated the shape with Nestlé’s products, or that the four-fingered chocolate bar had become very well known. Rather, consumers must perceive the shape alone as exclusively indicating origin – as opposed to another mark or marks which might be used alongside the shape. The Court noted that Nestlé had been able to prove recognition and association, but had failed to prove acquired distinctiveness.
Constructing a survey to test this proposition is challenging. Having shown the consumer the mark, and asked for a response, the evidence before the UKIPO was that a substantial number of consumers would say “KitKat” as part of their response. A follow up open question, such as “why do you say that?” is likely to elicit the response “because it’s a KitKat”. Consumers are unlikely to respond “I perceive the shape alone as exclusively indicating origin”. No doubt, survey methodologists are already working on questions to push consumers beyond mere recognition and/or association. But, as with any survey, the danger is that questions that lead the respondent will be held to be invalid, and the survey results found not to be persuasive.
Other absolute grounds for refusal
Article 7(1)(e) of the Regulation and Article 4(1)(e) of the Directive have recently been amended to provide the EUIPO and national offices with broader grounds to refuse shape marks – the amendments are shown below in bold:
“the following shall not be registered or, if registered, shall be liable to be declared invalid: … signs which consist exclusively of:
(i) the shape, or another characteristic, which results from the nature of the goods themselves;
(ii) the shape, or another characteristic, of goods which is necessary to obtain a technical result;
(iii) the shape, or another characteristic, that gives substantial value to the goods.”
These objections cannot be overcome through proof of acquired distinctiveness. Even if consumers recognise the shape as an indication of source of the goods, that will not be sufficient.
Each exclusion operates as a further hurdle for brand owners seeking to register shape trade marks. At present, there is no case law on what “another characteristic” might be.
The exclusion for shapes resulting from the nature of the goods themselves and for shapes necessary to obtain a technical result have been dealt with elsewhere: see, for example, Hauck v Stokke (C-205/13), Remington (C-299/99) and Lego Brick (C-48/09). But it is worth briefly discussing the exclusion for shapes (or other characteristics) which give substantial value to the goods. Advocate general Szpunar has opined in relation to this exception to registerability that it “is not worded clearly” (Hauck v Stokke, Case C-205/13).
The advocate general’s second opinion in Louboutin v Van Haren Schoenen BV (Case C-163/16) provides some relief for trade mark owners. The case mostly concerned the question of whether or not the claimed red sole consists exclusively of a shape.
No disrespect is meant in noting that this question was of no general importance by the time the case reached the Court of Justice, because the legislation had already been changed as set out above. Even if not a “shape”, a red sole is clearly “another characteristic” – and so is now caught by the amended legislation in any event.
But within his second opinion, the advocate general noted as follows:
(As an aside, the Louboutin case is of procedural interest for the treatment it was given by the Court of Justice. The Court sat as a Grand Chamber of 15 judges. There were two opinions from Advocate General Szpunar. Six member states and the Commission submitted observations. This was unusual, particularly given that amendments to the legislation meant that the question referred was, by the time of the hearing, no longer of general interest.)
Where does that leave brand owners?
Brand owners seeking to register a shape mark in the EU ought to consider the following:
· Shape marks are specifically provided for in the Regulation and the Directive – they no longer need to be graphically represented. It is therefore worth continuing to try to register shapes as trade marks.
· Most shapes, however, will not be inherently distinctive – they will need to depart significantly from the norms and customs of the sector – and will perhaps need to do even more than that.
· When proving acquired distinctiveness, proof of recognition, fame or association is not enough – the sign alone must be perceived as denoting the origin of the goods. A survey to test this will need to be more in depth (and therefore more expensive) than those used to date in the KitKat litigation.
· For EUTMs, proof of acquired distinctiveness must be for the whole EU, but not necessarily any particular member state within the EU – this opens up the possibility of EU-wide surveys, rather than going member state by member state – but the costs will remain high. National (or Benelux) trade mark rights may be easier (and cheaper) to obtain.
· There are further potential blocks for shapes – now broadened also to include “other characteristics” – if they result from the nature of the goods, are necessary to obtain a technical result and/or give substantial value to the goods.
· On the last of these, the Louboutin case confirms that the substantial value is not to be assessed on the basis of the reputation of the mark, but only on the basis of the inherent value of the shape (or other characteristic).
The climb to registerability of shape marks remains steep, and plagued with traps. While some hope is to be gained from recent case law, owners should set aside a significant budget for surveys and other evidence, particularly if seeking EU-wide trade mark rights.
© David Stone. He is global head of brands at Allen & Overy, based in the London office. The opinions expressed are his own