Nestle relied on the decision of the Intellectual Property Office of New Zealand in Societe des Produits Nestle S.A. v Horizon Biscuit Company Limited and Cadbury Confectionery Limited to argue that the four-bar shape did have capacity to distinguish the goods, and qualified as a trade mark. In that decision, although the Kit Kat shape was found to have some functional elements, it was not entirely functional and it was the other non- functional elements that could give the shape the capacity to distinguish. So the shape was held to meet the requirements of a trade mark.

In assessing whether the mark was capable of distinguishing, Mr Williams had regard to firstly, whether the trade mark was inherently adapted to distinguish chocolate confectionery, Mr Williams found Aldi’s evidence that various other chocolate products could be divided up into squares or small portions, showed the commercial desirability of being able to break portions into smaller portions. Moreover, whatever the reasons behind Nestle’s adoption of the shape in 1935 or 1948, Mr Williams said it must now be seen as a functional shape, and that consumers were aware of the convenient breakability of the mark. So the very feature that Kit Kat’s HAVE A BREAK advertising campaigns play on that is, the shape of the four ‘snapable’ finger like portions, was found not to be inherently capable of distinguishing chocolate confectionery pursuant to s.41(3) of the Trade Marks Act 1995 (Cwth).

In the alternative, Nestle argued the extensive use of the shape meant that it had acquired distinctiveness and should be accepted for registration pursuant to s.41(6) of the Trade Marks Act 1995 (Cwth). As well as relying on its sales and advertising of the product, Nestle relied on survey evidence to establish factual distinctiveness. Of the 300 people Nestle had, had professionally surveyed, 86% upon seeing a wax bar in a chocolate colour identical in size and shape to the Kit-Kat four-bar product (without the Kit Kat trade mark) recalled seeing a similar shaped product previously. 89% of those people also associated it specifically with Nestle’s Kit Kat. This equated to roughly 77% of the population associating the four-bar shape with Nestle.

However, whilst noting 77% this was an impressive number, Mr Williams found the responses of those who did not make the connection with Nestle but associated the shape with chocolate confectionery generally, or confused it with other brands of chocolate more compelling. He said it indicated that the shape was “generic or something very like it”, and was not prepared to find that the mark was factually distinctive on the basis of this evidence.

In any event, Aldi argued that the recognition of the trade mark was not important if the shape mark was not actually used as a trade mark. Nestle relied on its advertising and point of sale materials to show that the mark was used as a trade mark. However, whilst Mr Williams found use of a shape in advertising could amount to use as a trade mark, it did not in this case. In particular, Nestle’s evidence of its advertising campaigns, including the popular HAVE A BREAK campaign, emphasised the breakability of the chocolate bar and tended to show the four-bar or two-bar form of the Kit Kat broken into two pieces or a single piece. Mr Williams considered that this meant the public was not being educated to see the 4-bar shape as a trade mark, but rather that it was functional i.e. it could be snapped into single or 2-bar portions.

The shape mark was therefore found not capable of distinguishing chocolate confectionery and its registration refused.

Interestingly, Nestle’s application to register the two bar Kit Kat as a shape trade mark was abandoned after it was opposed.

Under the ground of novelty, the Opponent relied, inter alia, on two documents identified as DA3 and DA8, which were technical application sheets produced by the manufacture of the sugar derivative Isomalt used to produce the coating syrup. In assessing whether these documents anticipated the claims of the application, the Delegate noted that:

Both documents have very specific directions about how to make a suspension of Isomalt ST in an Isomalt GS solution. However, there is little detail of how this suspension is then used in a coating process in either document apart from a table outlining general process parameters … Without such detail, it is not clear that either DA3 and DA8 contains sufficient information to meet the Hill v Evans [supra] test of being the same as the claimed invention for the purposes of “practical utility”.

 
The Delegate considered whether, assuming the skilled worker could supply the missing detail, the documents otherwise anticipate the claims. It was noted that while each of the documents were individual recipes, they formed part of a larger technical document supplied by the manufacture to its customers. In the Delegates view:

Being part of a larger collection of recipes, DA3 and DA8 have to be read in the context of all the other technical application sheets because considering them in isolation might be seen as rummaging through the prior art’s “flag locker” to pull out the relevant “flag” (against the teaching of ICI Chemicals v Lubrizol Corp [supra]).

 

In this regard, while DA3 and DA8 both outline the suspension method, another Palatinit technical application sheet (Technical Application sheet 3.5.2b) describes an alternative method (the solution method).

 
The Delegate considered that having regard to the entire collection of technical application sheets, at the relevant date “the manufacturer was not necessarily recommending the suspension method to their clients”, concluding that:
 

Against this background unless there was a clear direction in the citation (or from the common general knowledge) to explain why a method was particularly advantageous, I am not convinced that there are clear and unmistakeable directions for the skilled worker to use the exact method outlined in DA3 or DA8.