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Latest Issue: Nov/Dec 2018

The ‘Chocolate War’: unwrapping the intellectual property Lessons

Thing have been less than sweet recently in the chocolate world after boutique chocolatier Hotel Chocolat accused supermarket chain Waitrose of imitating one of its flagship products. ‘Slabgate’ as it’s come to be known, centred on alleged similarities between a newly launched Waitrose product and Hotel Chocolat’s own chocolate slab.

The row erupted when Angus Thirlwell, co-founder of Hotel Chocolat, tweeted Waitrose with comparative photographs of the two products. In his tweet, Thirlwell also made clear that the Hotel Chocolat product was protected with a registered design. Waitrose has since stopped production of the product in question so whether or not the Waitrose product did constitute an infringement will never be tested in the courts.

What is clear however, is that Hotel Chocolat’s foresight in registering the design of its product, seems on this occasion to have discouraged a rival from producing a similar product. What does this case tell us then about the importance of protecting intellectual property and what lessons there are to be learnt?

Registered and unregistered designs

In the UK the design of a product – its shape and appearance – can be protected either via a registered design or by relying upon unregistered design rights. While this case was resolved privately, if it had gone to court, the fact that Hotel Chocolat had a registered design would likely have made it easier and cheaper to enforce its rights in the courts.

For those who opt against registering designs, some protection is afforded by unregistered design rights. There are disadvantages to this approach however, which businesses and entrepreneurs should consider. The length of time unregistered designs can be protected for is less than the length of protection for registered designs. There is therefore a chance that any unregistered design right in the Hotel Chocolat ’s product might have expired in this case.

Another approach in the absence of having a registered design right would have been for Hotel Chocolat to claim ‘passing off’. This is where a trader has goodwill in a particular get-up (for instance brand name, packaging design, or, less commonly, distinguishing features of the product itself, such as the shape of the Hotel Chocolat slab) and a third party adopts a similar get-up, thereby misrepresenting to the public that his goods/services are the goods/services of the trader. In this case, Hotel Chocolat would have had to claim that by choosing a similar product shape, Waitrose was leading consumers to believe that their product was actually a Hotel Chocolat product or was otherwise associated with or endorsed by Hotel Chocolat. This would likely have been difficult given that the brand names were clearly different and so consumers were unlikely to be deceived.

Needless to say then, it is easier and cheaper to enforce a registered design than an unregistered right, since the existence and scope of unregistered rights must be proved by substantial evidence. Businesses should balance the cost of registering a design against the value they place on their product – and the time and energy that has gone into the development of that product. Given the relatively low cost and speed of registration, the surest way to protect a design is undoubtedly to register it.

Designs v trade marks?

In a number of other recent high profile cases, other major confectionary businesses have attempted to protect the shape and appearance of their products by registering them as trade marks. This is a complicated area of law and ever evolving, and as such results are not always guaranteed. Nestle’s attempts to register the shape of its four-finger KitKat bar for example have been frustrated on several occasions.

The stumbling block in such cases has been the question of registering “non-traditional” marks – in this instance the shape of a product – as opposed to registering “traditional” trade marks like brand names and logos. If Hotel Chocolat wished to register the shape of its chocolate slab, it would be necessary to prove that consumers will recognise that shape as a badge of origin rather than simply as the shape of the product.

Safeguards have been imposed upon the trade marking of shapes with the intention of preventing the monopolisation of a shape which should really be protected by means of a time-limited intellectual property right (such as a design) rather than a trade mark which, if renewed and used, can last indefinitely). As such, to register a shape as a trade mark, “technical” objections must be overcome to show why the shape should be registered as a trade mark rather than as a design (which protects the shape and appearance of a product) or patent (which protects the way an invention works).

Despite the hurdles this can be done – shoe designer Louboutin’s recent success at the European Court of Justice shows that attitudes to “non-traditional” marks may be changing – but designs remain the easiest way to protect the shape of a product.

Choosing the right intellectual property and intellectual property strategy

What this case shows us then is that, in this instance, Hotel Chocolat’s decision to protect its intellectual property, and its choice of how to protect it, were effective in deterring a rival product.

The World Intellectual Property Organisation (WIPO) estimates that, in 2014, the value of “intangible capital” in manufactured goods, such as branding, design and technology, was worth around $5.9 trillion – equivalent to roughly a third of the value of all manufactured products. Protecting this value is therefore crucial, and key to that is choosing the right type or types of intellectual property – whether designs, trade marks, patents, copyright or database rights – and the right markets in which to seek protection.

Approaches to these questions will differ from business to business and will require the development of an intellectual property strategy that is closely aligned with wider business strategy.

For instance, in considering the territories covered by its intellectual property portfolio, a business should consider where its products are manufactured and sold – and which markets it might want to expand into in the future. Alternatively, if a business is not planning on entering a given market directly, it may still be worth obtaining intellectual property rights in that territory in order to develop licensing or franchising arrangements with third parties in that market. These questions and more are where business strategy and intellectual property strategy meet.

By considering these decisions early on, and viewing IP protection as an investment, innovators can build a solid foundation upon which to base further growth. Crucially however, a considered intellectual property strategy can ensure that your innovation and effort is rewarded, rather than a competitor’s imitation.

by Gina Lodge, Managing Associate, Marks & Clerk