In brief
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On 27 August 2008, a Delegate of the Registrar of Trade Marks upheld an opposition by Aldi Stores to an application by Societe Des Produits Nestlé S.A. to register the shape of its four-Bar Kit Kat confectionery product as a trade mark in Australia.
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A Kit Kat ”finger” consists of a long, thin wafer biscuit coated in chocolate, which Nestlé commonly sells in two or four finger ”bars”. Aldi argued that the shape of the bar was a functional shape, and therefore could not be registered as a trade mark.
Nestlé SA v Aldi Stores [2008] ATMO 76
Aldi submitted that the Kit Kat bar shape, being “four bars attached to one another by a thin base” was a functional shape incapable of trade mark registration because “the thin portions between the bars are provided to facilitate the user breaking the block into four bars”. The Delegate considered that the evidence of other chocolate blocks and bars that consisted of pieces joined together by a thin base demonstrated “the commercial desirability of being able to break portions into smaller portions”.
Nestlé argued that the shape of the Kit Kat bar was not the cheapest or simplest to produce, and so the shape could not be said to be “commercially desirable”. The Delegate rejected this argument, noting that the process Nestlé used produced a smooth finish on the surface of each finger, allowing Nestlé to emboss its KIT KAT mark on the top surface of each finger, which was not possible using more cost effective production methods.
The Delegate concluded that the shape of the Kit Kat bar, even if it had not been deliberately chosen by Nestlé for functional reasons, was nonetheless a functional shape and that consequently, it was not “inherently adapted to distinguish” Nestlé’s goods.
Factual distinctiveness
Section 41(6) of the Trade Marks Act 1995 (Cth) (Act) provides that a mark that has not been inherently adapted to distinguish particular goods may nonetheless be “factually distinctive” if the applicant can establish significant use of the mark before the filing date of the application.
Nestlé was able to demonstrate extensive use of the shape (which was not contested by Aldi) as well as significant “consumer recognition” of the shape amongst the Australian population. However, the Delegate was careful to avoid “the risk of an ‘unspoken and illogical assumption that use equals distinctiveness’” (British Sugar p.l.c. v James Robertson & Sons Ltd [1996] RPC 218 per Justice Jacob). Aldi argued that in any event, for section 41(6) to apply, Nestlé needed to establish that it had used the shape “as a trade mark”.
Use as a trademark
The Delegate commented that although Kit Kat bars are sold wrapped in aluminium foil and therefore the shape was not visible at the time of sale, this alone did not negate the use of the shape as a trade mark.
However, although Nestlé produced substantial evidence of advertisements featuring the shape, the Delegate concluded that the advertising only referred to the shape “for the purposes of emphasising that...the Kit Kat product has a functional shape, of which a frangible base allowing the snapping off of individual fingers is the key”. This conclusion was supported by examples of Nestlé’s advertisements featuring the phrase “Have a break, have a Kit Kat”, and other advertisements featuring puns involving the word “break”.
Consequently, the Delegate found that Nestlé had not used the shape as a mark, but rather to show that “the product may readily and conveniently be snapped into either single or two-bar portions”. Accordingly, the Delegate refused to register the shape as a trade mark.
Nestlé has appealed the Delegate’s decision to the Federal Court of Australia.
Lessons
This case demonstrate that under Australian trade mark law, a shape may be considered functional even where it has not been chosen with that function in mind. The case also demonstrates that extensive use of a shape over a long period of time is not of itself sufficient to establish “factual distinctiveness” for the purposes of section 41(6) of the Act.