How does Nestlé bounce back after KitKat case?

The latest blow to Nestlé in its battle to trademark its KitKat product will perhaps come as little surprise to those of us within the legal profession; we’ve seen Nestlé and its bitter rival Cadbury lock horns numerous times in the past, but few have been so fraught and drawn out as this particular case.

After ten years of court battles, the European Court of Justice has upheld a ruling made by a lesser EU court in 2016 to deny a trademark on KitKat’s “distinctive character” – or not, as was  actually found – in all EU member states. This is proving to be one of the most significant problems of this case for the manufacturer, as although they have been able to provide justifiable evidence for the majority of these countries, no evidence had been provided for Belgium, Ireland, Greece and Portugal.

What has made this feud particularly interesting is the complexity of the trademarking issue, and simplest reason for this is that Nestlé is trying to claim ownership of a shape, the “four trapezoidal bars aligned on a rectangular base” (to which the KitKat has been referred), rather than a logo or other more specific intellectual property.

This case should serve as a timely reminder of the need to protect company assets from as early a stage as possible. The fact that similar products now exist in other markets across the EU member states have no doubt made it more difficult for Nestlé to prove that KitKat’s shape is truly distinctive. Had they acted before copycat products had been released, it is probable the outcome would have been different.

However, like many organisations looking to protect its assets, Nestlé faced a typical chicken and egg scenario early on: KitKat could never have been considered distinctive before it became popular, so may not have been deemed worthy of seeking trademarking protection early in its lifecycle, but in order to demonstrate distinctiveness and uniqueness in the market, the manufacturer would have had to have dedicated significant and costly marketing power behind the brand, a risk which may not have paid off.

The case of KitKat is an example of how important it is to keep matters such as this under regular review. The fact that copycat products are now exploiting KitKat’s brand loyalty with the consumer, will of course be of concern to Nestlé, and sales of the product, but the complacency that the manufacturer has shown having not applied for any sort of trademarking until 2002 – more than 60 years after the product was first on the shelves – has now left them in this difficult position.

Where Nestlé intends to go from here remains to be seen. An option it may wish to consider is applying for individual trademarks in each EU member state that it has been able to provide sufficient evidence for, rather than re-appeal the decision as a whole. However, this would come at a significant cost and the manufacturer will have to seriously consider how important this really is to them and how much these so-called copycat products are really damaging the KitKat brand. No doubt both Nestlé and Cadbury’s legal teams are carefully considering their next moves as the case of KitKat rumbles on.