Only a Phyrrhic victory for Ritter Sport?

On 23 July 2020 the German Federal Court (Bundesgerichtshof, BGH) decided that two three-dimensional marks for the square packaging of “Ritter Sport” chocolate bars are protected as trademarks. The decision brings an end to a battle against the Ritter Sport square packaging shape marks that started back in 2010. Mondelēz could not convince the court that their competitor´s marks were ready for cancellation.

Does this mean that Ritter Sport´s square packaging marks are safe in the future? We fear, it does not.

The German Trademark Act is very generous when dealing with the question which signs were eligible for protection as trademarks: Names, designs, letters, numerals, sound marks, three-dimensional designs, colours, and colour-combinations may be protected as trademarks; in case the specific sign is descriptive or generic, it may still enjoy protection in case it has acquired a secondary meaning with the affected trade circles. The same is true under the Regulation on the European Union Trademark (see sec. 8, para 3 German Trademark Act, MarkenG; Article 7, para 3, Regulation EUTM).

However, the law is different when it comes to signs consisting exclusively of a shape. Such signs are not capable of being protected as a trademark when (i) the shape results from the nature of the goods themselves, or (ii) when the shape gives substantial value to the goods (see German Trademark Act, sec. 3, para 2, similarly Article 7, para 1 e Regulation EUTM). In contrast to the above mentioned barriers, lack of distinctive character, or descriptiveness, it is not possible to overcome these obstacles with the help of secondary meaning. Shape signs that result from the nature of the goods themselves, or shape signs where the shape gives substantial value to the goods cannot even be protected as a trademark in case 100 % of the affected trade circle attribute the shape to the holder of the trademark.

The case demonstrates brilliantly that trademark owners are between the devil and the deep blue sea when designing a shape mark for goods:

• In case the form is rather banal, the applicant has to fear rejection of an application, respectively holder has to fear cancellation of a registration because the shape “results from the nature of the goods themselves”, an absolute ground for ineligibility for protection under sec. 3, para 2 no. 1 German Trademark Act (corresponds to Article 7, para 1, lit. e (i) Regulation EUTM). Thus, for example, the shape of an “ordinary” bottle for mineral water cannot be protected because it “results from the nature of the goods themselves”.

• On the other hand, in case the shape consists of a very artistic, fanciful, creative form, the holder has to fear rejection of an application respectively cancellation of an existing registration because the shape “gives substantial value to the goods” – then, the shape mark is not eligible for protection pursuant to sec. 3, para 2, no. 3 Trademark Act (corresponds to Article 7, para 1 e (iii) Regulation EUTM).

When attacking the square packaging trademarks of “Ritter Sport” chocolate bars, Mondelēz has indeed, first claimed that a square packaging shape would result from the nature of the goods themselves and was, thus, not eligible for protection under sec. 3 para 2 no. 1 Trademark Act (corresponds to Article 7 para 1 e (i) Regulation EUTM). The Federal Court decided already 2017 (BGH, I ZB 105/16, I ZB 106/16, decisions of 18 October, 2017) that the shape of Ritter Sport´s square packaging marks do not result from the nature of the chocolate itself because the performance characteristics of a square chocolate bar are, for the ordinary consumer, not superior to the performance characteristics of a rectangular but not square chocolate bar. Thus, Mondelēz has first attempted to argue that Ritter Sport´s design is a rather banal shape resulting from the nature of chocolate.

However, after this argument – which presumes a rather banal design – has been rejected, the Federal Court had now to deal with the question whether the square packaging shape of the trademark would give “substantial value to the goods” – which would mean that the shape of the trademark was so fantastic that it attached substantial value to the chocolate bars.

When deciding this question, the Federal Court pointed out that the lower instance court (the Patent Court) responsible for the finding of the facts has not assessed that the square packaging shape had any artistic value or that the square packaging shape was responsible for higher margins of Ritter Sport compared to competing chocolate bars. The court points out that a sign is not eligible for protection because it consists exclusively of a shape that gives substantial value to the goods in case there were objective and reliable factors suggesting that the decision of consumers to purchase the relevant product, the chocolate bars will be determined to a large degree by the square packaging trademark. The Federal Court summarizes that the lower instance court has not found facts substantiating this factor.

It is not surprising that the instance court has not found such facts in this case – when considering that the cancellation motion has been based on banality of the form, and specific artistic skills at the same time.

The law suit dealing with the cancellation motion of Mondelēz has come to an end with the decision of the Federal Court. However, the decision of the Federal Court does not impede further competitors of Ritter Sport to file another cancellation motion with the German Patent and Trademark Office; cancellation motions may be lodged by any person under sec. 54 para 1 of the German Trademark Act.

Based on the case that has now been decided, and the grounds of the decision of the Federal Court, a second applicant will most likely not base a cancellation motion again on two rather contradictory grounds – but pick one of the grounds. It might well be possible, at least thinkable, to provide evidence that the decision of consumers to purchase the square Ritter chocolate bars is determined to a large degree by the square packaging trademark, for example by means of a survey among purchasers of chocolate bars. In case the results of a survey show that the decision of purchasers who decide for Ritter Sport´s square chocolate bars is to high degre, determined by the square packaging form, a different situation would be given. Prospects of a further attack could therefore be quite good in case an applicant demonstrates the importance of the square packaging trademark to (potential) purchasers.

In this sense, the decision does not grant Ritter Sport rights in a square packaging mark for chocolate bars for eternity. It rather contains guidance to further petitioners on the fact finding to be done before filing a cancellation motion and on how to submit these facts to the Office and to the Court.