13.08.2020

The German Federal Court of Justice has ruled on the dispute between the chocolate manufacturers Ritter Sport and Milka: Ritter Sport continues to be the only square chocolate

Authors: Laura Kues und Ann Cathrin Müller

Background

(BGH, Decisions of 23.07.2020, case nos. I ZB 42/19 and I ZB 43/19)

The legal dispute between Ritter Sport and Milka, which spanned a period of ten years, has now been decided by the German Federal Court of Justice (Bundesgerichtshof – BGH): Ritter Sport is and will remain the only square chocolate bar on German supermarket shelves. This means that also in future, there will be no square-shaped lilac chocolate bars.

The German company Alfred Ritter GmbH & Co. KG has been the owner of two three-dimensional trademarks protecting the neutralised square packaging of its “Ritter Sport” and “Ritter Sport Mini” chocolate bars under trademark law since 1996 and 2001. More specifically, the packaging in question is a blank, square-shaped wrapping with a lengthwise seam on the back that allows the bar to be snapped open and two serrated, sealed side flaps.

The US Milka chocolate producer, Mondelez, has tried for ten years now to dispute the family company’s monopoly on producing square chocolate bars. The signs in dispute are so-called three-dimensional shape marks, which means three-dimensional shapes and designs, of whatever kind, that can differ from or coincide with the shape or packaging of the goods concerned. There are currently about 4,900 such trademarks, including the Kit Kat bar and the Nutella jar. As shape marks involve a risk of unjustified monopolisation, their registration is linked to strict protection requirements. Where the shape results from the nature of the goods themselves, no trademark protection is granted.

The Milka chocolate producer took the view that this was the case with Ritter Sport. It claimed that the square packaging resulted from the shape of the chocolate bar and, therefore, was not eligible for protection as a trademark pursuant to Section 3(2) no. 1 German Trademark Act (Markengesetz). Mondelez applied to the German Patent and Trademark Office (Deutsches Patent- und Markenamt) for cancellation on said grounds, but was unsuccessful: the German Patent and Trademark Office rejected the applications.

The judicial proceedings

Mondelez then appealed to the German Federal Patent Court (Bundespatentgericht) in Munich against the decision of the German Patent and Trademark Office. Contrary to the German Patent and Trademark Office’s decision, the judges at the Federal Patent Court confirmed the view of the Milka chocolate producer that the signs were not eligible for registration pursuant to Section 3(2) no. 1 German Trademark Act.

The trademark owner responded to this by filing an appeal on points of law with the Federal Court of Justice, who threw out the decision of the Federal Patent Court in 2017 and referred the matter back to the Munich Patent Court. The judges at the Federal Court of Justice took the view that the square shape of the chocolate bar was not a shape resulting from the chocolate as such and that the ground for refusal of protection set out in Section 3(2) no. 1 German Trademark Act therefore did not exist. In their opinion, the Federal Patent Court had, however, failed to sufficiently examine the question of whether the ground for refusal of registration set out in Section 3 (2) no. 3 German Trademark Act might exist. According to said provision, signs whose shape gives substantial value to the goods are not eligible for registration.

The judges at the Federal Patent Court then confirmed in their decision from the year 2018 the view taken by the Federal Court of Justice as regards the ground for refusal of protection set out in Section 3(2) no. 1 German Trademark Act and, in addition, held that the ground for refusal of protection set out in Section 3(2) no. 3 German Trademark Act did not exist as the square shape did not give any substantial value to the goods.

The Milka chocolate producer proceeded against these decisions by once more filing appeals on points of law with the Federal Court of Justice, arguing that, in its opinion, the square shape gave “substantial value” to the goods precisely because of its simplicity, and claimed that also other competitors should be able to make use of those aesthetics and that functionality.

The decision

On 23 July 2020, the Federal Court of Justice then decided in the final-instance proceedings that Ritter Sport is and will remain the only square chocolate bar on German supermarket shelves (BGH, Decisions of 23 July 2020, case nos. I ZB 42/19 and I ZB 43/19).

The judges at the Federal Court of Justice rejected the Milka chocolate producer’s appeals on points of law and confirmed that the applications for cancellation were unfounded, as the registered trademarks did not consist exclusively of a shape that gave substantial value to the goods. The Federal Court of Justice used this as an opportunity to clarify the meaning of the characteristic of “substantial value”: the material criteria for this characteristic include, amongst other things, the nature of the relevant category of goods, the artistic value of the shape, the shape’s difference to other shapes commonly used in the relevant market, a significant difference in pricing compared to similar products, or the development of a marketing strategy that emphasises above all the aesthetic features of the relevant goods. Taking the above criteria into account, grounds for refusal of protection exist, according to the Federal Court of Justice, if there are objective and reliable indications that the consumers’ decision to buy the relevant goods is largely influenced by this characteristic.

In the opinion of the Federal Court of Justice, the square shape is the only significant characteristic of the wrappings in dispute. This square shape does not, however, give any substantial value to the wrappings. According to the Federal Court of Justice, the square shape does not have any artistic value or lead to a difference in pricing. While conceding that the fact that the trademark owner advertises the chocolate using the slogan “Quadratisch. Praktisch. Gut.” (or “Quality. Chocolate. Squared.”, to use the company’s own translation) might result in consumers considering the shape to be an indication of a particular (company) origin and quality of the chocolate, the Federal Court of Justice also held that this was irrelevant. This is because the shape of goods or the shape of packaging is only excluded from protection as a trademark pursuant to Section 3(2) no. 3 German Trademark Act if such shape gives substantial value to the goods. Indications to this effect do not exist, however, in the opinion of the Federal Court of Justice.

Our comments

For some time now, the German chocolate market has been all about finding ways to shrink competitors’ market shares by developing new formats and ideas for products. Market participants try to use extraordinary forms to set themselves apart from competitors and to attract the interest of consumers through their singularity. The Ritter Sport producer has successfully done so with its unique square-shaped chocolate bar.

In their decision, the judges at the Federal Court of Justice have once more clarified the characteristics that are relevant for a three-dimensional trademark. It remains to be seen whether the number of registered shape marks will rise in future based on the rulings of the Federal Court of Justice.

Author
Laura Katharina Kues

Laura Katharina Kues
Senior Associate
Cologne
laura.kues@luther-lawfirm.com
+49 221 9937 25711