Gimme a break?

No break for Nestlé in trademark row

On 25 July 2018, the European Court of Justice (ECJ) dismissed Nestlé’s attempt to overturn a ruling that it had not done enough to prove KitKat’s shape deserved legal protection.

The case was about whether the brand had become distinctive enough to deserve its trademark, meaning that its shape alone was how people recognise the snack.

The ECJ declared that it’s not enough to prove that a product has become iconic in “a significant part” of the EU – it has to be recognised throughout all 28 countries of the EU i.e. proven across all the markets of the bloc and not just some.

The ECJ instructed the EU Intellectual Property Office to reconsider its decision to grant Nestlé a trademark in the first place.

The ECJ sided with the makers of Kvikk Lunsj, a Norwegian snack that is a long-time favourite of hikers and skiers – and is shaped almost exactly like a KitKat. The decision will allow Mondelez, the maker of Kvikk Lunsj, to market and sell the chocolate bar more widely throughout the bloc.

 

How did we get here?

For 16 years Nestlé has been trying to trademark its KitKat four-finger shape in the EU, arguing that it’s a distinctive feature which deserves protection.

The ECJ is the latest battleground in the feud between the chocolate bars, which began when the company Freia first introduced the Kvikk Lunsj – “Quick Lunch” in English – to Norwegians in 1937, two years after KitKat hit UK shelves.

For 65 years, KitKat and Kvikk Lunsj co-existed – until 2002 when Nestlé applied for a trademark in Europe for Kit Kat.

Their battle intensified in 2006 when Nestlé secured a trademark for KitKat’s shape, only to be challenged by Kvikk Lunsj maker Cadbury, now owned by Mondelez.

In 2016, a lower EU court decided that Nestlé had to prove a Kit Kat was recognisable in every EU country – and no evidence had been provided for Belgium, Ireland, Greece and Portugal.

Nestlé and the EU’s trademark office appealed against the 2016 decision. If proof of distinctiveness had to be shown for every single member state, they argued, no company could ever reach that high standard.

Mondelez, meanwhile, argued that it was wrong to conclude that KitKat had “distinctive character” anywhere – including countries like the UK, Germany and France.

The European court threw out all those objections.

 

What does this mean for Nestlé?

For now, KitKat is set to lose its EU trademark, but there is still a fight to be fought.

Rather than cancelling the trademark the ECJ decided that it should never have been awarded at all on the basis of the evidence. This means the decision heads back to the EU trademark office. Assuming the EU Intellectual Property Office does not have evidence that the shape is distinctive across the EU, the trademark will be removed from the register. It is open to Nestlé to apply again, and to put stronger evidence in.

Nestlé are determined to keep fighting as they believe the “distinctive shape” of their KitKat is deserving of protection.

 

What does this mean for us?

Courts wish to ensure that they are not giving a monopoly to a company for a shape that’s needed to make a product. For example, a circle for a cracker can’t be trademarked.

As discussed in our previous article, establishing distinctiveness of a 3D shape is still a high hurdle to overcome.

In order to get trademark approval, you need to be able to show that your shape is distinctive enough and that it’s not merely  functional. When proving distinctiveness, carefully consider the evidence you plan to document in your application. Where it is possible to gather evidence of comparability in similar markets, expressly refer to it in your application.

 

If you have any queries regarding trademarks, please get in touch with Alison Marshall and Sophie Graham in our corporate team.

Technology & Intellectual Property

Glen Buchenbach – German Whisky, Glens, and GIs – Are you confused?

The background to this case concerns an action made by the Scottish Whisky Association against the Waldhorn Distillery in Germany requesting an order that would prevent the German Distillery from the marketing the Whisky Glen Buchenbach. The German whisky described on the label as a “Swabian Single Malt Whisky” is distilled near Stuttgart in the Buchenbach Valley, is labelled as made in Germany and used the word Glen as a play on words.

 

The Scottish Whisky Association claimed that use of the term ‘Glen’ infringes the registered geographical indication “Scotch Whisky”, in so far as it constitutes both indirect commercial use and an evocation of the registered geographical indication, as well as being a false or misleading indication, prohibited under Article 16(a), (b) and (c) of Regulation No 110/2008. The argument being that the word “Glen” the Gaelic word for valley, would mislead consumers into thinking the whisky was Scottish.

 

The District Court of Hamburg referred the following questions to the ECJ:

  • Whether “indirect commercial use”, within the meaning of Article 16(a) or “evocation” referred to in Article 16(b) of that regulation, requires that the protected geographical indication be used in an identical or phonetically and/or visually similar form, or if it is sufficient that the disputed element evokes in the relevant public some kind of association with that indication.
  • Whether, if the mere association of ideas is sufficient, account should be taken, of the context in which the term used to designate the product at issue is embedded and, in particular, of the fact that it is also accompanied by an indication, on the label, of the true origin of the product.
  • Lastly, it asks whether, when determining whether there is any ‘other false or misleading indication’ within the meaning of Article 16(c) of that regulation, the context of the disputed term should be taken into account.

The ECJ found that:

  1. Indirect use” of a FI requires the disputed designation to be indentical, phonetically or visually similar to the indication and it is not sufficient to evoke some kind of association to the relevant GI.
  2. For the “Evocation” of a GI there is no requirement for there to be a phonetic and visual similarity between the disputed designation and the indication in question. It is not, however, sufficient that the disputed designation is liable to evoke in the relevant public some kind of association of ideas with the protected indication or the geographical area. It is necessary to account for conceptual proximity between the GI and the disputed designation.
  3. for the purposes of establishing the existence of a ‘false or misleading indication’ prohibited by that provision, it is not necessary to take account of additional information found alongside the sign at issue in the description, presentation or labelling of the product concerned, in particular with regard to its true origin.
  4. There was doubt as to whether there was sufficient conceptual proximity between the GI and the designation.
  5. It is not a decision for the ECJ to assess the nature of the evocation.
  6. It was referred back to the National Court to make a decision, to determine whether, if the average European consumer  would  associated the word ‘Glen’, with that of ‘Scotch Whisky’.  Even if the referring court were to find that consumers systematically associate the word ‘Glen’ with whisky, the required close connection to Scottish whisky, and thus the necessary proximity to the indication ‘Scotch Whisky’, may be lacking.

All in all it’s quite a high threshold for the National Court of Hamburg to determine, as consumers may associate a glen with Scotland or with whisky, but whether it could be associated particularly with Scottish Whisky is yet to be determined.

If you have any questions regarding Intellectual Property, please speak to Sophie Graham and Alison Marshall in our corporate team.

 

No breaks for Nestlé – “4 Fingered” Kit Kat found not to be distinctive by CJEU Adviser

In light of the opinion delivered from Advocate General Melchior Wathelet, Nestlé is facing up to losing its EU trademark for Kit Kat due to lack of acquired distinctiveness across the EU.

Facts

  • This decision is the latest development of the legal battle between Nestlé and Cadbury and subsequently Cadbury’s new owner Mondelez.UK Holdings & Services Limited.
  • To recap, Nestlé applied in 2002 for European trademark protection of the three-dimensional shape of the “four fingered Kit Kat”, which was granted by the European Intellectual Property Office (EUIPO).
  • Cadbury filed an application seeking a declaration of validity, this was initially accepted by the cancellation division of the EUIPO, but on appeal their challenge was rejected by the second board of appeal of the EUIPO.
  • This was appealed before the EU General Court Registry in 2013 and the General Court annulled the EUIPO’s decision on the basis that the distinctive character through use in the European Union has only been proven for a part of the territory of the EU.
  • The EUIPO and Nestlé then appealed the decision on the basis that the General Court had infringed Regulation No 207/2009 by considering that the proprietor of an EU mark must show that the trademark has acquired a distinctive character through use in each member state separately.
  • The AG however found that Nestlé’s appeal should be dismissed

 

The reasoning behind the AG decision was as follows:

  1. Whilst Nestlé provided market research for the majority of the members states, it can be seen that the information provided for Greece, Belgium, Ireland and Portugal was not sufficient to establish that the relevant public in those countries identified Nestlé as the commercial origin of the four fingered Kit Kat,
  2. The General court did not examine whether, with regard to the product covered by the trademark at issue, the acquisition of a distinctive character through use in those 5 member states could be extrapolated on the basis of the evidence provided for the other national or regional markets and Nestlé had not included evidence in the file that the evidence from the other member states could be extrapolated to the other 5 member states and therefore prove the distinctive character.
  3. Nestlé had not established in respect of the product, the comparability of the Belgian, Irish, Greek, Luxembourg and Portuguese markets with some of the other national markets for which it had provided sufficient evidence, therefore the General Court had no option but to annul the decision of the EUIPO.

Lesson to be Learned

  • Establishing distinctiveness of a 3d shape is still a high hurdle to overcome
  • Carefully consider the evidence that you will provide in order to prove the distinctiveness
  • If it is possible to extrapolate evidence for comparability from similar markets, then this should be expressly referred to.

If you have any queries regarding trademarks, please get in touch with Alison Marshall and Sophie Graham in our corporate team.

Life after Brexit: The impact of the Trademark System: what you need to know

2016 has been an eventful and turbulent year, with some unexpected events making for interesting times.

As we approach of the new year, we are filled with uncertainty of what 2017 will hold, especially with the triggering of Brexit looming.

If you make any resolutions for 2017, make it PLANNING! Businesses will have to start make contingency plans for how they will adapt in this ever uncertain environment.

One thing that is often put on the back burner is intellectual property. At the moment (and up until Brexit takes place) a UK trademark can be obtained by applying to the UK IPO or through the EU IP Office. The latter was usually the favourite for businesses since this dealt with EU and UK trademarks in one fell swoop. If you hold an EU trademark or are thinking of registering one, then here are some points to consider:

  • At the moment, your rights and protections under UK and EU law, are unaffected
  • After Brexit, EU trademarks will cease to have effect in the UK
  • There may be a conversion process to enable EU trademarks to convert UK trade marks – however this is still unclear
  • There may be separate fees to be paid in order to protect both the UK and EU trademarks once renewal of trademarks are triggered
  • If the existing trademarks have only been used in the UK, then your trademark runs the risk of revocation
  • Any existing seniority claims based in the EU trademark based on national rights in the UK will cease to have effect after Brexit
  • If you apply for an EU Trademark after Brexit, you will have to prove you have a real and effective commercial reason for establishing a trademark in the EU
  • If you are a UK company planning on filing a trademark, then we advise you either 1) file an EU application before Brexit takes effect, or 2) simply file a UK registration only (if you only intend to have a commercial reach in the UK).

We expect that this will mean yet more increased cost for businesses and their customers, but forewarned is forearmed. Watch this space for further developments.

Comment: Let’s focus on the best people, not the cheats

In business, as in sport, there is dishonesty and cheating. However, the bad guys get the headlines in sport and business cheats very rarely make the news at all. In sport, an athlete might later receive a medal once a doper is disqualified, but in business the victims of the cheats are rarely even identified, let alone compensated. Alison Marshall writes in The Scotsman to explore these issues and suggests we should champion the good guys both in sport and the business world.

http://www.scotsman.com/news/comment-let-s-focus-on-the-best-people-not-the-cheats-1-4134993

What SMEs need to learn from Netflix’s latest advancements

Not so long ago, the idea of the provision of online content in a legitimate manner good enough to impact online piracy in any way seemed a pipe dream. However, Netflix’s latest moves to expand its services to a global offering marks great strides towards a viable alternative. Legal jurisdictional problems loom large for them in terms of further progress, but steps taken to date suggest they will find a way.

Read more in Alison Marshall’s article in The Scotsman: Netflix is fast-forwarding to further expansion

Magic, Oh Magic: EU Data Protection Regulation

Eurovision is something that is often sniggered at in the UK, but it is held in a quite different regard in many other European states. In some countries, it highly regarded and by many it is seen as a springboard to an international music career – and it has been just that to many past acts. However, the broadening of the number of countries participating has also led to some challenges, with which other European organisations are all too familiar.

The reactions to last year’s Eurovision winner, Conchita Wurst, tended to show the shared views of EU states compared to its nearby neighbouring states. Russia had a particularly strong reaction against this winner, while the EU member states tended to show more acceptance and indifference towards the less traditional character.

Although countries within the EU have a lot in common compared to other parts of the world, even compared to very close neighbours, the differences between the individual member states is still quite stark in some regards. This makes it very tricky for the EU legislators when trying to draft new laws for EU harmonisation.

The new Data Protection Regulation is a good example of this. The relevant committees have been working on this for many years already, but still have a considerable way to go. Use of personal information in the various member states is very different, even under the current EU Directive regime, and compromises are hard to reach.

One crude example of differing attitudes in very close-by states is in Scandinavia. There, individuals’ tax returns are published and are available for inspection by anyone. Such an approach would be subject to outrage in the UK and in many other member states. Although the issues slowing progress with the Regulation are more technical that that, with such polarised attitudes in mind, it is a wonder any harmonised legislation succeeds at all.

However, there are many significant and beneficial measures proposed, and the work on the Data Protection Regulation continues. Some notable provisions are expected to be:

  • The new regime will apply to non-EU bodies offering goods or services to those in the EU.
  • Fines of up to €100m or 2% of global turnover for breaches.
  • The right to be forgotten (or the right of erasure).

If the Regulation passes within the next year, which it is currently (although doubtfully) expected to, there will be a two year transitional period until it becomes firm law. As it is a Regulation, it will apply to each state directly, without the need for national legislation.

So, as with Eurovision, the show will relentlessly go on, and soon you will have to be “Making your mind up” whether to snigger or celebrate at the result.

Alison Marshall is an experienced lawyer and business adviser offering Intellectual Property advice to SMEs in Fife, Edinburgh and across Scotland.

A War on Trade Mark Cons

Now is the time for spring cleaning and to take control over your junk mail. Anyone who has registered a trade mark in recent years will be all too familiar with the scam notices that follow asking for additional fees to be paid. What typically happens is that, after you have registered your mark, you receive a notice which looks like a formal invoice requesting payment. If you read the small print, it will often say something like “upon payment your trade mark will be entered on the XYZ trade mark register”. This might very well be true, but being on the XYZ register doesn’t actually mean anything or protect your mark in any way.

The Institute of Trade Mark Attorneys released a report recently saying that this issue could cost small businesses some £1.25m per year and that there has been a rise of 45% of instances between 2013 and 2014.

This seems to be replacing the previous practice of false renewal reminders (down 29%), against which the Advertising Standards Authority and the UK Intellectual Property Office have been having some success in recent months.

However, there is some difficulty in taking action against the unofficial trade mark registers, as they are potentially providing exactly what they claim to be. The best way to combat this is therefore awareness.

Our top tips to wage war on these scams are:

  • If you have a trade mark attorney or solicitor (agent) acting for you, almost every piece of official correspondence should be sent to them and not directly to you, so be suspicious immediately when you receive a notice direct.
  • If in doubt, show the notice to your agent, as they should be able to tell you within moments of seeing a notice if it is unofficial.
  • It may be in legalese, but read the small print – many notices aren’t dishonest and tell you exactly what they will do for their fee (i.e. very little).
  • Contact the UK Intellectual Property Office to report the scam or fraud, as they (in conjunction with Action Fraud) keep records to help them combat these problems.
  • Finally, simply throw the scam notices straight into the bin!

Alison Marshall is an experienced lawyer and business advisor providing Intellectual Property and IT advice to SMEs in Fife, Edinburgh and across Scotland.

Will Fifty Shades do the law a favour?

With success come various burdens. It is often said that imitation is the sincerest form of flattery, but such flattery is often a colossal problem for successful creative artists. This has been the case in recent years for the author of Fifty Shades of Grey, E.L. James.

She joins the ranks of many best-selling authors, such as J.K. Rowling and Dan Brown, who invest heavily in the enforcement of their rights to protect their works. These cases often address very contentious and novel points of law and, although they may be seen as publicity stunts, often clarify important principles of law that might not otherwise be considered by courts due to the common lack of resources of copyright holders to take such cases to court. The problems which E.L James has encountered are no exception.

One problem that blights her regularly is the ripeness of the books for parody. Parody is a category of copyright usage that is treated differently in various jurisdictions. A recent change to UK law has created new exceptions from copyright infringement for parody, caricature and pastiche. They are now permitted when previously the permission of the rights-holder was required. This new law was scheduled to come into force in July 2014, but was delayed until October 2014. Unfortunately for some creative comedians, their production of a parody of the novels called “50 Shades! The Musical” was due to premiere in the UK at the Edinburgh Festival in August. It was therefore met with a legal challenge, as various other parodies of the books have in recent years.

However, the new exception will potentially cover any future parodies in the UK, subject to some safeguards. The main safeguard is the “fair dealing” requirement, which is notoriously controversial and difficult to define. Should this year’s Festival throw up another 50 Shades parody, as it surely will, a legal challenge by E.L James would be very much welcomed by legal commentators to test and clarify the new law and its components. However, the poor parody-makers might well be deserving of a break at last.

The Fifty Shades series is well-known to have derived from fan fiction written in honour of Stephanie Meyer’s Twilight series. The issues surrounding fan fiction, derivative works and copyright infringement are a labyrinth and have distinct nuances in different legal jurisdictions. In the UK, these issues were addressed in a case surrounding the Dan Brown book, The Da Vinci Code, which was challenged as infringing an earlier work by non-textual copying. The claimant listed various similarities between the works, but the case ultimately failed, as would most such cases given the difficult test involved.

However, this issue has been raised in a US case relating to a pornographic film made of the Fifty Shades novels. The producer of the film, Smash Pictures, claimed that E.L. James’ rights were unenforceable, as the Fifty Shades novels themselves lacked copyright due to (a) them being derived from the Twilight books; and (b) the intermediate fan fiction version being placed in the public domain. Although this case was settled out of court, it does raise some interesting issues that might be raised in the future in the USA, which has different laws from the UK relating to derivative works. Such a case could help clarify the position of the rights in fan fiction, which is a growing phenomenon in recent years. However, unless Stephanie Meyer decides to raise a case, it would seem quite unlikely such a case would get very far.

What is certain for E.L. James, especially with the upcoming release of the film adaptation of the books, is that there will be further enterprising people that will seek to capitalise on her success. This will lead to further legal action and, hopefully, the clarification of a few more problematic legal niggles.

Orange isn’t the new black? Specsavers v Asda trademark dispute

Orange isn’t the new black?

The final outcome of the Specsavers v Asda trademark dispute saga has finally been decided and the point concerning the validity of the use of marks in colour which have been registered in black and white comes into play again.

Previously, if you registered a trademark in the UK or EU in black and white, but then used the same mark in colour (like the specsavers logo), the mark in colour was automatically protected by the mark registered in black and white – but not anymore!

Back in April this year, the trade mark offices of the EU opened a can or worms by publishing a “common communication on the Common Practice of the Scope of Protection of Black and White Marks” which concluded the following:

  • A trade mark in B&W is not identical to the same colour unless the differences in colour are insignificant (an insignificant difference means a difference that a “reasonably observant consumer” will only perceive only upon side by side examination of the marks).
  • Priority cannot be claimed either unless the difference is insignificant.
  • A change only in colour does not alter the distinctive character of the trade mark as long as the following requirements are met:
    • the word/figurative elements coincide and are the main distinctive elements;
    • the contrast of shades is respective;
    • colour or combination of colours does not possess distinctive character in itself; and
    • colour is not one of the main contributors to the overall distinctiveness of the mark.

This new approach took effect in the European Office on 2nd June and in the UK on 15th July.

If you have a UK trade mark already registered before 17th July, you should be safe from this new application of “practice” (unless you are unlucky enough that someone takes proceedings against you).

If you are going to register a trade mark in black and white in the UK or EU with the intention to use it in different colours take care and ask yourself… is the change insignificant?

– See more at: http://www.ccwlegal.co.uk/law-news/orange-isnt-the-new-n10242-s11.aspx#sthash.PTv3d5sM.dpuf