Suggesting to an Englishman that it might be time to “have a break” will most likely elicit the retort, “Have a Kit Kat”–so closely has the phrase become associated with the chocolate bar in Britain.

“'Have a break. . . . Have a Kit Kat' is an advertising slogan that has taken on a life of its own,” says Ian Craig, a partner at the London office of Dorsey & Whitney.

The association is so strong that Nestle, which manufactures the bars, decided that “Have a break”–on its own–had acquired a distinctive association with Kit Kat and applied to register the phrase as a trademark in 1995. Decades earlier, the company had registered both the entire slogan–”Have a break – Have a Kit Kat”–and the name “Kit Kat” in the British Trade Marks Registry.

But the 1995 application offended Nestle's rival Mars UK Ltd., which had plans to launch a competing candy bar called “Have a Break.” Mars objected to the registration on the grounds that an expression not used on its own couldn't acquire the distinctiveness necessary for a separate trademark.

The 10-year battle that ensued culminated in apparent victory for Nestle when the European Court of Justice (ECJ) ruled July 7 that a mark could acquire distinctiveness “in consequence of the use of that mark as part of or in conjunction with a registered trademark.”

But the battle isn't over: The ECJ made no finding as to whether “Have a break” had in fact acquired the necessary distinctiveness–only that it could. The court referred that issue back to the U.K. Court of Appeal.

“The way in which the Court of Appeal applies the ECJ ruling to the facts of this case will determine just how groundbreaking the ruling will turn out to be,” says Sally Field, a partner at the London office of Bristows, an IP boutique.

Breaking New Ground

Nestl?? 1/2 registered the slogan in its entirety, as well as the name “Kit Kat,” under the U.K.'s Trade Marks Act soon after the company began using the slogan in 1957.

However, the EU issued a directive in 1988 that harmonized trademark law across Europe. Britain adopted the directive as part of the Trade Marks Act of 1994 (see sidebar).

“The old law only permitted registration of words and logos,” explains Jane Mutimear, an IP partner at the London office of Bird & Bird, which represents Nestl?? 1/2 in the litigation. “But the amendments gave rise to the possibility of registering anything that could be represented graphically–including shapes, colors and smells that could be so represented and had achieved distinctiveness.”

Distinctiveness is at the heart of trademark law because the main function of a mark is to distinguish goods or services belonging to the trademark owner from goods or services of a different origin. Therefore, a company cannot register a trademark if the mark isn't distinctive.

But few goods or services don't have a name, and advertising and sales campaigns tend to use the entirety of the name and the slogan associated with it. The difficulty with marks beyond the traditional ambit of words and logos are that they tend to be only a part of a trademark, making their inherent distinctiveness difficult to prove.

“That's partly because the public is not used to considering a part of a mark as distinctive on its own,” Mutimear says. “So the trademark holder has to show that the subsidiary mark has an acquired distinctiveness by the way in which the holder used it.”

Which is exactly what Nestl?? 1/2 tried to do, though it had little success in the English courts.

A Distinct Ruling

Nestl?? 1/2 applied to register “Have a Break” in March 1995. The Trade Marks Registry hearing officer didn't rule on the application until February 2002, when he concluded that “Have a break” was “devoid of any distinctive character.”

Mars conducted a survey, the officer noted, which showed that consumers ate a variety of snacks during breaks. This demonstrated that “Have a break” lacked inherent distinctiveness in relation to snacks.

He also rejected Nestl?? 1/2 's argument that the mark had acquired a distinctive character as a result of Nestl?? 1/2 's use. Indeed, he reasoned, the company's failure to use “Have a break” as an independent mark was fatal to its argument that the mark had acquired distinctiveness through use.

Ten months later, the U.K. High Court rejected Nestl?? 1/2 's appeal of the decision. Nestl?? 1/2 then appealed to the Court of Appeal in early 2003. In July 2003, the Court of Appeal referred the case to the ECJ.

The ECJ ruled that part of a mark could acquire the distinctive character of a trademark, noting that the EU directive contained no restriction in that regard and referred solely to how consumers had used the mark.

“The expression 'use of the mark as a trademark' must therefore be understood as referring solely to the use of the mark for the purposes of the identification by the relevant class of persons [i.e. consumers] of the product or service as originating from a given undertaking,” the court wrote.”Yet such identification, and thus acquisition of distinctive character, may be as a result both of the use, as part of a registered trademark, or a component thereof and of the use of a separate mark in conjunction with a registered trademark.”

Trademark owners hailed the decision.

“The door is open for registering unconventional marks like slogans, shapes and colors that have always been used with another distinctive mark,” says Jean Pierre Maeder, group head of trademarks at Nestl?? 1/2 's world headquarters in Switzerland.

By way of example, Maeder points to the Toblerone bar, a candy bar with a unique triangular shape and distinctive packaging.

“These elements may now be registerable if they have acquired the necessary distinctiveness through usage,” he says.

The Court of Appeal will determine whether “Have a break” has acquired such distinctiveness. Nestl?? 1/2 bears the burden of proving that the partial slogan has a distinctive character by which consumers can easily relate to the Kit Kat bar.

Craig says the ECJ went too far in sending the case back to the Court of Appeal. “It's crazy to conclude that 'Have a break' could be an independent trademark,” he says. “The phrase is a generic term for having a rest, and the ECJ should have ruled that a mark, which is only a part of a trademark, can never obtain distinctiveness as a matter of law.”

Monopolizing Slogans

As Craig sees it, the ECJ decision moves European trademark law too close to the American model.

“In the U.S., trademarks are no longer signposts to quality and origin, but have become a commodity in their own right, irrespective of the particular goods to which they are attached,” he says. “That is evident from the growing power of the big brands and the big brand holders.”

Craig believes that if the English Court of Appeal allows Nestl?? 1/2 to register “Have a break,” it will obviate the purpose of a trademark as a badge of origin. Besides, he argues, it's important to remember that a trademark creates

a monopoly.

“In other words, by registering 'Have a break,' Nestl?? 1/2 would be obtaining three monopolies out of a single product,” he says.

Mutimear doesn't see it that way.

“There is reputation and goodwill in the phrase,” she says. “Nestl?? 1/2 created that reputation and goodwill and should be entitled to its exclusive use.”

———————

[SIDEBAR]

Trademark Harmony

The legal framework for Nestl?? 1/2 's application for registration of the “Have a break” portion of its ubiquitous “Have a break ?? 1/2 Have a Kit Kat” slogan lies in the 1988 EU directive on the community trademark, adopted into English law by the Trade Marks Act of 1994.

The key provisions of the directive are Articles 2 and 3.

Article 2 defines a trademark as “any sign capable of being represented graphically” provided that the sign is “capable of distinguishing the goods or services of one undertaking from those of other undertakings.”

Significantly, Article 2 doesn't distinguish between a sign that is a component of an existing trademark and a sign for which registration is sought in its entirety.

Grounds for refusing registration of the trademark can be found in Article 3. They include trademarks “devoid of any distinctive character.” However, the ruling body may not refuse registration of a mark that is not inherently distinctive if the use of the trademark has, before the date of the application for registration, endowed it with a “distinctive character.” This concept is known as “acquired distinctiveness.”

Suggesting to an Englishman that it might be time to “have a break” will most likely elicit the retort, “Have a Kit Kat”–so closely has the phrase become associated with the chocolate bar in Britain.

“'Have a break. . . . Have a Kit Kat' is an advertising slogan that has taken on a life of its own,” says Ian Craig, a partner at the London office of Dorsey & Whitney.

The association is so strong that Nestle, which manufactures the bars, decided that “Have a break”–on its own–had acquired a distinctive association with Kit Kat and applied to register the phrase as a trademark in 1995. Decades earlier, the company had registered both the entire slogan–”Have a break – Have a Kit Kat”–and the name “Kit Kat” in the British Trade Marks Registry.

But the 1995 application offended Nestle's rival Mars UK Ltd., which had plans to launch a competing candy bar called “Have a Break.” Mars objected to the registration on the grounds that an expression not used on its own couldn't acquire the distinctiveness necessary for a separate trademark.

The 10-year battle that ensued culminated in apparent victory for Nestle when the European Court of Justice (ECJ) ruled July 7 that a mark could acquire distinctiveness “in consequence of the use of that mark as part of or in conjunction with a registered trademark.”

But the battle isn't over: The ECJ made no finding as to whether “Have a break” had in fact acquired the necessary distinctiveness–only that it could. The court referred that issue back to the U.K. Court of Appeal.

“The way in which the Court of Appeal applies the ECJ ruling to the facts of this case will determine just how groundbreaking the ruling will turn out to be,” says Sally Field, a partner at the London office of Bristows, an IP boutique.

Breaking New Ground

Nestl?? 1/2 registered the slogan in its entirety, as well as the name “Kit Kat,” under the U.K.'s Trade Marks Act soon after the company began using the slogan in 1957.

However, the EU issued a directive in 1988 that harmonized trademark law across Europe. Britain adopted the directive as part of the Trade Marks Act of 1994 (see sidebar).

“The old law only permitted registration of words and logos,” explains Jane Mutimear, an IP partner at the London office of Bird & Bird, which represents Nestl?? 1/2 in the litigation. “But the amendments gave rise to the possibility of registering anything that could be represented graphically–including shapes, colors and smells that could be so represented and had achieved distinctiveness.”

Distinctiveness is at the heart of trademark law because the main function of a mark is to distinguish goods or services belonging to the trademark owner from goods or services of a different origin. Therefore, a company cannot register a trademark if the mark isn't distinctive.

But few goods or services don't have a name, and advertising and sales campaigns tend to use the entirety of the name and the slogan associated with it. The difficulty with marks beyond the traditional ambit of words and logos are that they tend to be only a part of a trademark, making their inherent distinctiveness difficult to prove.

“That's partly because the public is not used to considering a part of a mark as distinctive on its own,” Mutimear says. “So the trademark holder has to show that the subsidiary mark has an acquired distinctiveness by the way in which the holder used it.”

Which is exactly what Nestl?? 1/2 tried to do, though it had little success in the English courts.

A Distinct Ruling

Nestl?? 1/2 applied to register “Have a Break” in March 1995. The Trade Marks Registry hearing officer didn't rule on the application until February 2002, when he concluded that “Have a break” was “devoid of any distinctive character.”

Mars conducted a survey, the officer noted, which showed that consumers ate a variety of snacks during breaks. This demonstrated that “Have a break” lacked inherent distinctiveness in relation to snacks.

He also rejected Nestl?? 1/2 's argument that the mark had acquired a distinctive character as a result of Nestl?? 1/2 's use. Indeed, he reasoned, the company's failure to use “Have a break” as an independent mark was fatal to its argument that the mark had acquired distinctiveness through use.

Ten months later, the U.K. High Court rejected Nestl?? 1/2 's appeal of the decision. Nestl?? 1/2 then appealed to the Court of Appeal in early 2003. In July 2003, the Court of Appeal referred the case to the ECJ.

The ECJ ruled that part of a mark could acquire the distinctive character of a trademark, noting that the EU directive contained no restriction in that regard and referred solely to how consumers had used the mark.

“The expression 'use of the mark as a trademark' must therefore be understood as referring solely to the use of the mark for the purposes of the identification by the relevant class of persons [i.e. consumers] of the product or service as originating from a given undertaking,” the court wrote.”Yet such identification, and thus acquisition of distinctive character, may be as a result both of the use, as part of a registered trademark, or a component thereof and of the use of a separate mark in conjunction with a registered trademark.”

Trademark owners hailed the decision.

“The door is open for registering unconventional marks like slogans, shapes and colors that have always been used with another distinctive mark,” says Jean Pierre Maeder, group head of trademarks at Nestl?? 1/2 's world headquarters in Switzerland.

By way of example, Maeder points to the Toblerone bar, a candy bar with a unique triangular shape and distinctive packaging.

“These elements may now be registerable if they have acquired the necessary distinctiveness through usage,” he says.

The Court of Appeal will determine whether “Have a break” has acquired such distinctiveness. Nestl?? 1/2 bears the burden of proving that the partial slogan has a distinctive character by which consumers can easily relate to the Kit Kat bar.

Craig says the ECJ went too far in sending the case back to the Court of Appeal. “It's crazy to conclude that 'Have a break' could be an independent trademark,” he says. “The phrase is a generic term for having a rest, and the ECJ should have ruled that a mark, which is only a part of a trademark, can never obtain distinctiveness as a matter of law.”

Monopolizing Slogans

As Craig sees it, the ECJ decision moves European trademark law too close to the American model.

“In the U.S., trademarks are no longer signposts to quality and origin, but have become a commodity in their own right, irrespective of the particular goods to which they are attached,” he says. “That is evident from the growing power of the big brands and the big brand holders.”

Craig believes that if the English Court of Appeal allows Nestl?? 1/2 to register “Have a break,” it will obviate the purpose of a trademark as a badge of origin. Besides, he argues, it's important to remember that a trademark creates

a monopoly.

“In other words, by registering 'Have a break,' Nestl?? 1/2 would be obtaining three monopolies out of a single product,” he says.

Mutimear doesn't see it that way.

“There is reputation and goodwill in the phrase,” she says. “Nestl?? 1/2 created that reputation and goodwill and should be entitled to its exclusive use.”

———————

[SIDEBAR]

Trademark Harmony

The legal framework for Nestl?? 1/2 's application for registration of the “Have a break” portion of its ubiquitous “Have a break ?? 1/2 Have a Kit Kat” slogan lies in the 1988 EU directive on the community trademark, adopted into English law by the Trade Marks Act of 1994.

The key provisions of the directive are Articles 2 and 3.

Article 2 defines a trademark as “any sign capable of being represented graphically” provided that the sign is “capable of distinguishing the goods or services of one undertaking from those of other undertakings.”

Significantly, Article 2 doesn't distinguish between a sign that is a component of an existing trademark and a sign for which registration is sought in its entirety.

Grounds for refusing registration of the trademark can be found in Article 3. They include trademarks “devoid of any distinctive character.” However, the ruling body may not refuse registration of a mark that is not inherently distinctive if the use of the trademark has, before the date of the application for registration, endowed it with a “distinctive character.” This concept is known as “acquired distinctiveness.”