When taking a Break is not having a Kit Kat…

US Court of Appeal sides with Nestlé

IN TRADEMARK law, the saying “put your money where your mouth is” should rather be reinterpreted as “put your marketing expenditure where your legal mouth is”.

Lest you misinterpret this, I’m not suggesting companies should reallocate their marketing budget to legal needs.

On the contrary, I’m suggesting if marketing departments budget to support a cause or claim that the company is willing to fight for in court, then (a) the court proceedings may not be necessary in the first place and (b) in the event of such proceedings, the company would be in a far better position.

I illustrate this by referring to the Kit Kat case that Nestlé has been fighting worldwide for many years.

The South African leg has been finalised with an Supreme Court of Appeal judgment.

The issue has reared its head again in a UK High Court judgment, handed down on January 20, criticising a ruling of the EU Court of Justice and found against Nestlé, meaning an appeal is inevitable.

I shudder to think how many millions of Swiss francs Nestlé has spent fighting this trademark battle. I’m intrigued to know how this legal expenditure compares tto Nestlé’s marketing budget for Kit Kat.

Kit Kat is undoubtedly the well-known trademark of a type of chocolate confectionery. What type, you may ask. Is it a chocolate bar, like a Bar One, balls like Whispers, or a slab like Cadbury Dairy Milk?

Of course most of you know the answer.

While you may use other words, Kit Kat can be described as a four-fingered wafer-shaped chocolate.

There are also other versions, such as those with two fingers and the chunky-single finger. If you didn’t know this, you clearly aren’t a consumer relevant to the trademark dispute.

The disputes have arisen because Nestlé doesn’t rely only on the trademark “Kit Kat” on the distinctive red wrapping of its chocolates.

The name “Kit Kat” appears in a special script in an oval device and is embossed on the chocolate- wafer fingers, to distinguish its blockbuster chocolate from its competitor’s products.

Not satisfied with all these indicia aimed at guaranteeing that the four- fingered wafer chocolate presented to the consumer emanates from a single source, Nestlé claims that the shape of the unembossed four fingers is so special that it is a trademark in its own right.

This places Kit Kat chocolate in a league of its own, because the trademark rights supposedly reside in the shape of the chocolate, as opposed to such chocolate confectionery as a Bar One bar, Whispers balls and Cadbury Dairy Milk slab.

In a close parallel to the Kit Kat saga, Cadbury is claiming, with limited success, exclusive rights to the particular shade of purple used for its dairy milk chocolate.

In other words, Nestlé’s claim is that its chocolate, independent of the words “Kit Kat” and red packaging, is so special and distinctive that the mere shape is a trademark.

Once I have established, as I believe I have, that the vast majority of readers who eat chocolate would immediately recognise a four-fingered wafer chocolate as a Kit Kat, surely that would be the end of the enquiry?

Unfortunately for Nestlé, and other trademark proprietors, the word “recognise” does not appear in the Trade Marks Act. The legal term used is “capable of distinguishing”.

Our courts have found that the essential function of a trademark is to guarantee to consumers the origin of the goods.

“Guarantee” sets the bar higher than mere recognition.

If you were to see on a shop shelf a four- fingered wafer chocolate called Break, would you be confused into believing the product came from the same source as Kit Kat?

Alternatively, would you think this was another wafer, fingered product, clearly inspired by and copying the well-known Kit Kat product, without being confused into thinking it came from the same source?

For the record, our Supreme Court of Appeal has found in favour of Nestlé, but the issue is very much an open question in the UK.

The true test for an inherently weak trademark to be a guarantee of origin, is that – absenting any other indicia such as the word mark “Kit Kat”, red wrapper, and so on – the feature in question, the fourfinger wafer shape in this case, must serve as a badge of origin.

What I find surprising in the Kit Kat saga is that, while Nestlé has argued the legal principle at considerable expense in numerous jurisdictions, to the best of my knowledge the company has not tested what it has claimed in court in the marketplace.

If Nestlé’s marketing team, which must surely be as good as, if not better than, its legal team, truly believed its claim, why has Nestlé not sold and marketed a four-fingered, wafershaped chocolate in clear packaging without the word mark Kit Kat or any of the other of the Kit Kat indicia?

Regulatory information could appear on a cardboard sleeve at the base of the product.

All the consumer would then see in the supermarket would be the four- fingered wafer shape, Nestlé’s claimed guarantee of origin.

Had Nestlé invested in marketing its four-fingered, wafershaped trademark before embarking on its legal campaigns, its legal position would undoubtedly have been much stronger. ● Webster is a partner at Spoor & Fisher