In this part, I am going to deal with Question 2:
“(2) Where a shape consists of three essential features, one of which results from the nature of the goods themselves and two of which are necessary to obtain a technical result, is registration of that shape as a trade mark precluded by Article 3(1)(e)(i) and/or (ii) of Directive 2008/95 …?”
But first, a quick analysis of the “Essential Elements” process.
“1. The following shall not be registered or, if registered, shall be liable to be declared invalid:
(e) signs which consist exclusively of:
(i) the shape which results from the nature of the goods themselves;
(ii) the shape of goods which is necessary to obtain a technical result;
(iii) the shape which gives substantial value to the goods;
The “Essential Elements” Test
In order to check if a shape mark falls under the prohibitions of 3(1)(e), courts generally use a two stage analytical process, detailed below:
- Identify “essential elements”.
- Check if all the identified “essential elements” fall under the prohibitions of 3(1)(e).
Though this test is well known, little is known of the identification criteria.
The Lego case referred to “essential elements” as the “most important elements of the sign.”
Apart from such vague guidelines, we can form some understanding of the identification criteria by looking at Lego’s analysis of whether consumer perception is to be the basis of identifying “essential elements” (discussed already).
The court held that consumer perception could, at best, be a relevant factor, but could not be the basis of identification. It held that they had to be identified “objectively” based on written submissions and expert opinion or even upon an overall impression. Furthermore, it reasoned that consumers lacked the technical knowledge necessary to effectively determine the elements.
Though we know conclusively that consumer perception is not the basis, we still have no concrete understanding of what the basis itself is.
Given the lacunae, I have attempted to formulate a test.
How should “essential elements” be identified?
As discussed earlier in this series, if one of the “essential elements” is an arbitrary element, then the shape will not be considered to be falling under the prohibitions of 3(1)(e). The underlying rationale behind allowing for such marks is that competitors can make use the functional aspects of the shape by simply discarding the arbitrary element(which is useless by definition). As a result of competitors having the freedom to do so, the trade mark owner gains no unfair advantage.
We need to approach the identification criteria question from this angle.
Though I haven’t been as ambitious as to come up with an all-encompassing test, I believe two conditions are necessary for a shape’s element to be “essential”:
- Detachability: Element must be able to exist on its own.
- Absence must make the shape “substantially” dissimilar to the original shape.
Let us now look at the reasoning behind the two conditions.
The element has to be detachable from the other elements. Otherwise competitors will not be able to discard the arbitrary element and use the rest of the functional part of the shape. If competitors are not able to discard the arbitrary element, then the entire analysis of arbitrary element falls.
Hypothetically, if an arbitrary element were to be considered to be an “essential element” despite it being required for the existence of a different essential element that happens to be functional, then the shape would be allowed to be registered despite it being impossible for competitors to discard the arbitrary element without discarding the functional element as well. Such an identification provides the trade mark owner with an unfair advantage.
The reasoning for the second condition comes from the test of “substantial similarity”.
The arbitrary essential element should be such that when removed from the entirety of the shape, the resulting shape should be “substantially” distinct from the original shape.
Otherwise, competitors will not be able to use the functional elements of the trade marked shape, because even after they discard the arbitrary element, the shape would still be very similar to the registered shape. Therefore, on account of trade mark infringement, competitors will not be able to use the functional aspects of the shape as well.
One can see this clearly in the Lego case.
While attempting to register a red brick shape, Lego argued that the red colouration was an arbitrary element and since competitors could discard the arbitrary element, Lego should be allowed to register the mark.
The court disagreed and held that the red colouration of the brick was not an “essential feature” (same as “essential element“). Unfortunately though, it failed to provide a sound justification, despite holding aptly.
The justification should have been that even if competitors used another colour for their toy bricks, they would still be restricted on account of trade mark infringement, as merely changing the colour of the brick would not make the competitor’s bricks sufficiently distinct from that of the hypothetically trade marked Lego’s brick.
Now, let us get down to the question analyzed in the current case.
Question 2 Deconstruction
The court split the Kit Kat shape into three “essential elements”.
“i) The rectangular ‘slab’ shape of the mark as it appears on the form of application including the relative proportions of length, width and depth;
ii) The presence, position and depth of the breaking grooves arranged along the length of the bar, which effectively divide the bar into detachable ‘fingers’;
iii) The number of such grooves, which together with the width of the bar determine the number of ‘fingers’.”
Two fell under the prohibition of 3(1)(e)(i)[Nature of the goods];
and the other element fell under the prohibition of 3(1)(e)(ii)[Technical Result].
The question was if such marks were also to be precluded from registration.
The Court came up with a strange line of reasoning.
It held that the sub-clause of 3(1)(e) i.e. (i), (ii) and (iii) worked independently of each other.
If a shape was required to be precluded from registration on the grounds of 3(1)(e), then all the “essential elements.”, had to fall within the purview of any one of (i), (ii) or (iii).
No mixing and matching was allowed.
When this question came up in Hauck, the same reasoning was held.
Strangely enough, very little substantiation was given. Every entity that gave its opinion on the matter simply asserted that such a reading of the statute did not lead to any deleterious effects on the public policy rationale underlying the provision.
I find this decision incredibly problematic.
Allow me to illustrate.
Let us consider a shape which has two “essential elements”.
One is a result of the “nature of the goods themselves” and the other causes a “technical result”.
According to the court, such a mark would be registrable.
If such a mark were to be registrable, then the owner of the mark would own an eternal monopoly over products of certain type with a particular technical result.
Competitors won’t be able to do anything about the element which is a result of the nature of the good because that is just the manner in which the good intrinsically looks or generally looks. He will necessarily have to incorporate the feature that is a nature of the goods themselves.
Next, let us consider the second “essential element.”.
The competitor’s hands are anyway tied w.r.t. the first element, but now he cannot include the second element in his product because the second element, in combination with the first element, forms the mark. Therefore, the regime is effectively depriving competitors from using an element that causes a “technical result”.
This is blatantly against competition and provides the owner with an unfair advantage.
I can only wonder what the judges were thinking while coming up with such a decision.
At least, they should have substantiated the reasons behind why they felt there was no deleterious effect on competition when it very evidently seems so.
Question 3 Deconstruction.
U.K. Judgment(1)(2), Court of Justice Judgment, AG Opinion, IP Kat Post (1)(2).
Image from here.