Nestlé registered "Have a break... Have a Kit Kat," "Kit Kat" and "Have a Kit Kat" as trademarks in the UK. But issues arose when the company sought to register only the words "Have a break" as an independent phrase for chocolate products in March 1995.
Rival Mars opposed, claiming that "Have a break" could not be registered as it had no distinctive character (unlike the "Have a break... Have a Kit Kat" strapline), and therefore did not comply with rules for trademark registration.
A trademark's essential function is to distinguish goods or services of one company from another. A trademark must therefore be of distinctive character and cannot merely be descriptive of the goods or services sold.
A mark can be inherently distinctive, or it may, through use, acquire a distinctive character, initially lacking, and thus be registered as a trademark.
Nestlé's hearing officer established that the relevant consumers construe "Have a break" as an invitation that is neutral in regard to origin and therefore devoid of inherent distinctiveness. Further the mark had not acquired distinctive character through use because, although there was extensive use of "Have a break... Have a Kit Kat," hardly any use was made of the line "Have a break" on its own. The hearing officer felt that use of the first three words on their own was essential. Therefore Nestlé`s application was blocked in December 2002.
Nestlé appealed, pointing to a consumer survey showing that a high proportion of the public associated the phrase "Have a break" with the trademark. The Court of Appeal had to consider whether the phrase "Have a break" as a result of use of the principal strapline "Have a break... Have a Kit-Kat" had acquired its own independent distinctive character.
For technical reasons to do with interpreting the UK Trade Mark Act in accordance with Community Law, the Court decided that this question had to be referred to the European Court for clarification.
On 27 January 2005, Juliane Kokott, an advocate general at the European Court in Luxenbourg, released her opinion on the matter.
Kokott stated that the use of a word sequence as part of a word mark can, as a matter of principle, lead to that word sequence acquiring the requisite distinctive character in order to be registrable as a trademark.
Kokott said that it may be presumed that the slogan "Have a break" used on its own, causes many relevant consumers to react automatically and to complete that slogan with "Have a Kit Kat." However, on its own that reflex reaction is not sufficient to prove distinctive character.
Instead it must be demonstrated that a product or service designated by the mark "Have a break" will in fact be attributed by the relevant consumers directly and unmistakably to the manufacturers of Kit Kat: Nestlé. It is therefore not sufficient for those consumers to wonder whether the product or service originates from that manufacturer. That would only give rise to the likelihood of confusion.
A brand owner wishing to register a non-distinctive element of a composite trademark is advised to make some individual use of the mark applied for on its own before application. Where the composite trademark is highly distinctive, as in Kit Kat's case, today's consumers should, with the help of advertising, quickly learn to treat the target mark as a trademark. This should then lead to a fast and successful registration of the mark.
An advocate general's opinion is followed in about 85 percent of cases by the full court; in this case the full court's ruling is due later this year. Once the full court rules on what criteria are needed, the UK court must make a final judgment if Nestlé and its "Have a break" slogan meet those terms.
But how important is the slogan "Have a break... Have a Kit Kat" to Nestlé anyway?
Research found that while 90 percent of the population could recite the slogan, it did not actually make them purchase a Kit Kat any more. So Nestlé dropped "Have a break... Have a Kit Kat" last year and replaced it with the slogan "Make the most of your break." With this move, Nestlé aims at increasing the market for workplace confectionery and snacks, currently worth € 140 billion in western Europe alone (US$ 171bn).
But according to a report in the Financial Times, the company is not giving up entirely on the old slogan. The FT speculated that it could be reinstated in three or four years when Nestlé has "re-established the relevance of the brand."