Breaking Chocolate News: Shaping the Law on Registrability of Trademarks

Breaking Chocolate News: Shaping the Law on Registrability of Trademarks

Under Singapore law, three-dimensional shape marks may be registered by proprietors as trademarks for goods and/or services. The issue of registrability of shapes as trade marks in Singapore, was recently examined in the case of Societe Des Produits Nestlé SA v Petra Foods Ltd [2014] SGHC 252.

Background

In December 2012, Nestle and its local subsidiary (“the Plaintiffs”) commenced legal proceedings (“the Suit”) against Petra Foods Limited and its subsidiary ( “the Defendants”), alleging that the shape and packaging of the Defendants’ “Take-It” chocolate wafer confectionery infringed their trade mark registrations for its two and four finger Kit Kat bars (“the Registered Shapes”).

New Nestle Production Line

The Defendants responded by denying all of the Plaintiffs’ claims, and counterclaimed for: (1) the invalidation and/or revocation of the Registered Shapes; and (2) groundless threats of trade mark infringement. While a number of arguments were raised by the Defendants in the Suit, this commentary will focus only on the issues relating to the registration of shape marks. For further details, please refer to the full text of the judgment, which can be found here.

The decision 

The Technical Result Exception

One of the key issues before the High Court was whether the Registered Shapes should be declared invalid. If so, all of Nestle’s claims in respect of registered trade mark infringement would necessarily fail.

The main thrust of the Defendants’ counterattack was section 7(3)(b) of the Trade Marks Act (“TMA”), which prohibits the registration of signs which consist exclusively of the shape of goods which is necessary to obtain a technical result (“Technical Result Exception”). In that respect, while the Defendants did set out a number of other grounds arguing for the invalidation of the Registered Shapes, this article will focus on the Court’s decision relating to the Technical Result Exception.

In its decision, the High Court set out the following considerations in assessing whether a shape contravenes the Technical Result Exception.

(a)        The underlying public interest for the Technical Result Exception is to prevent trademark law from granting monopolies (which can potentially last forever) on technical solutions or functional characteristics of a product. Technical solutions are capable of protection under the law (as a patent or registered design) for only a limited period, so that they may subsequently be freely used.

(b)        No amount of acquired distinctiveness (through use of the sign) can cure a trade mark which falls foul of the Technical Result Exception.

(c)        A sign cannot be refused registration as a trade mark if the shape of the goods at issue incorporates a major non-functional element, such as a decorative or imaginative element which plays an important role in the shape.

(d)        A shape may still be considered necessary to obtain the technical result even if the same technical result may be achieved by various solutions, such as alternative shapes. This is especially where the solution incorporated in the shape in question is the technically preferable solution.

(e)        In assessing whether a shape offends the Technical Result Exception, a court must identify the essential characteristics of the shape – i.e. the most important elements of the sign, which are identified by the court on a case-by-case basis. After the essential characteristics are identified, the court must determine whether they all perform the technical function of the goods at issue. Although the presumed perception of the average consumer is not decisive, it is relevant in identifying the essential characteristics.

(f)         The test of whether a shape falls foul of the Technical Result Exception is an objective one. Although the subjective intentions of the designer of that shape may be relevant, it is not determinative.

(g)        The Technical Result Exception applies to exclude shapes which are necessary to obtain a technical result with regard to the manufacturing process, as well as shapes which have a useful functional feature in the goods in terms of how the goods themselves function.

Applying these principles, the Court found the essential characteristics of the Registered Shapes to be as follows: (a) the rectangular slab shape of the Registered Shapes; (b) the presence, position and depth of the breaking grooves arranged along the length of the bar, which divide the bar into detachable fingers; and (c) the number of such breaking grooves which, together with the width of the bar, determine the number of fingers.

Next, the Court considered the issue of whether all of the essential characteristics of the Registered Shapes are functional. The Defendants’ case, supported by expert evidence, on each of the three essential characteristics was as follows.

(a)        First Essential Feature: the rectangular slab shape of the Registered Shapes is necessary to create a shape that can be manufactured and packed at the speed required for commercial production.

(b)        Second Essential Feature: although the manufacturer can choose where and how to run the grooves in the product, the presence of breaking grooves is fundamentally necessary to allow the product to be broken down for consumption, and the angle of those grooves would be dictated by the position and depth of these grooves.

(c)        Third Essential Feature: the number of breaking grooves and fingers is necessary to achieve the technical result of providing the customer with a desired portion size.

The Judge agreed, and found that on the evidence, each and every one of the essential characteristics of the Registered Shapes was necessary to achieve a technical result. Accordingly, the Registered Shapes were found to be invalid in that they each offended the Technical Result Exception under section 7(3)(b) of the TMA.

Nature of goods and/or substantial value

Apart from relying on the Technical Result Exception, the Defendants also argued that each of the Registered Shapes consisted exclusively of a shape which results from the nature of the goods themselves under section 7(3)(a) of the TMA (“Nature Exception”); and/or consisted exclusively of a shape which gives substantial value to the goods under section 7(3)(c) of the TMA (“Substantial Value Exception”).

However, the Court did not accept these arguments.

On the Nature Exception, it was found that chocolate coated bars or wafers could conceivably take any shape, subject to manufacturing restraints. As such, while the Registered Shapes were relatively basic and simple, the Court was not prepared to say that they result from the nature of these chocolate coated products.

As for the Substantial Value Exception, the Judge found that the evidence as to the aesthetic appeal of the Registered Shapes was lacking. The Judge did not think that the evidence showed the Registered Shapes to be particularly eye catching in relation to other competing products in the market, to have given the shapes substantial value over the others on account of their aesthetic design.

Conclusion 

All told, this decision is a highly significant one: it is the first High Court decision on the registrability of shapes as trade marks in Singapore. Traders seeking to register or assert trade mark protection over the shape of their goods should take careful heed of the guiding principles laid down by the High Court summarised above.

 


DN - Dedar Singh GillContributed by

Dedar Singh Gill
Managing Director, Intellectual Property
Drew and Napier LLC


Dedar heads the Intellectual Property practice at Drew and Napier. He has 30 years of legal experience and has been recognised in industry publications as one of Singapore’s top IP practitioners.

Many of his local and foreign clients are household names.

Though Dedar is a leading practitioner for all aspects of IP work, he is particularly active in Intellectual Property litigation including patents, trade marks, copyright and design infringement, passing off and breach of confidential information.
DN - Gabriel OngOng Sheng Li, Gabriel
Senior Associate, Intellectual Property
Drew and Napier LLC


Gabriel handles intellectual property and general civil litigation, with a focus on trade mark infringement, copyright and design infringement, passing off, breach of confidential information, and contractual disputes arising out of IP agreements.

Apart from contentious work, he also undertakes general IP related advisory work, such as drafting and reviewing IP agreements, advising on advertising and promotional materials and product labelling requirements.