Nestle Schweiz AG v. Masterfoods AG (Maltesers, FIG./.Kit Kat Pop Choc.) Swiss Federal Supreme Court, No. 4, p. 222/2006, Decision of December 21, 2006

Abstract

This translation to English is the second translation in the the translation series in the Cardozo Arts & Entertainment Law Journal (CAELJ Translation Series #002). The translators welcome comments.

This is a translation of a Swiss Federal Supreme Court decision from December 21, 2006, regarding the issue of trade dress in the context of candies. The parties are two Swiss companies: Nestlé Schweiz AG (“Nestlé”) and Masterfoods AG (“Masterfoods”). Masterfoods sought an injunction against Nestlé’s launch of its new candy, Kit Kat Pop Chocs, which were round, bite-size versions of Nestlé’s Kit Kat candy bar. Masterfoods claimed that the trade dress used by Nestlé on its Kit Kat Pop Choc packaging infringed its trade dress for its Malteser candy, which are malted milk balls.

The Swiss Supreme Court upheld the lower court’s injunction against Nestlé. The court used many traditional trademark concepts in its analysis. The court noted that Masterfoods had shown that the trade dress for its Maltesers candy had gained secondary meaning. The court then held that Nestlé’s trade dress for its Kit Kat Pop Chocs would cause an indirect likelihood of confusion with Masterfoods’ Maltesers trade dress, despite the two trade dresses clearly having different logos. The reason for this was that Nestlé’s packaging, taken in its entirety, was so similar to Masterfoods’ Malteser packaging that Nestlé would be taking advantage of the good will acquired by Masterfoods. It was irrelevant that elements of the packaging, i.e., red background, depiction of chocolate balls, etc., were, as isolated elements, in the public domain. In addition, the court made note of the important fact that these are relatively inexpensive goods that are impulse buys by inattentive consumers. Therefore, the fact that the two candies had prominently displayed logos that were clearly different did not have much significance. Such consumers will likely assume, based on the similarity of the trade dress as a whole (which included the logos), that Nestlé’s Kit Kat Pop Chocs are a similar candy to Masterfoods’ Maltesers or that the Kit Kat Pop Chocs are made by Masterfoods or a company affiliated with Masterfoods.

This is an ongoing battle between Nestlé and Masterfoods. Masterfoods also sought an injunction against Nestlé in Belgium. The Antwerp Court of Appeals held for Nestlé, using completely different reasoning than the Swiss court. The Belgium court held that Masterfoods’ trade dress for its Malteser candy lacked any distinctiveness. The Belgium court seems to have reasoned that the Malteser trade dress consisted of common, non-distinctive elements that were common in the relevant market and that, even when taken as a whole, such elements cannot be combined to create a distinctive, protectable trade dress. The court held that if any likelihood of confusion did exist between the two products, the distinctively different logos on the packaging would dispel any such confusion.

Keywords: Swiss Trademark Law