A European Union court has dismissed Nestle's attempt to register the Kit Kat shape as a trade mark for its chocolate biscuit bar.
The court questioned whether consumers in all EU states would recognise the snack's "distinctive character".
Rival Cadbury Schweppes - now owned by Mondelez International - asked the EU to declare the Kit Kat trade mark invalid in 2007.
The court annulled the initial trade mark registration today, meaning that the Kit Kat shape can for now be used freely.
The European Union Intellectual Property Office (EUIPO) will have to re-examine whether the Kit Kat four fingers bar has acquired distinctive character through its use within all EU member states, not just across the EU generally, the General Court of the EU said.
The General Court, based in Luxembourg, is the second-highest in the EU.
Today it annulled EUIPO's decision in 2006 to register the Kit Kat as a trade mark in sweets, bakery products, biscuits, cakes and waffles.
If a trade mark is registered for a category of goods which also has sub-categories, then it applies only to goods where it has been put to use, the court said.
"The Court holds that none of the evidence taken into consideration by EUIPO establishes use of the mark in respect of bakery products, pastries, cakes and waffles," it said.
In addition, Nestle would have to prove that when it applied in 2002, its Kit Kat had already gained distinctive character through use in all 15 of the states that had joined the bloc by then.
It was not enough for Nestle "to show that a significant proportion of the relevant public throughout the EU, merging all the member states and regions, perceives a mark as an indication of the commercial origin of the goods designated by the mark,"the Court said.
The Court said EUIPO had found that Kit Kat had acquired distinctive character in 10 countries - Denmark, Germany, Spain, France, Italy, the Netherlands, Austria, Finland, Sweden and the UK - but not in countries including Belgium, Ireland, Greece and Portugal.
Nestle has the option of appealing against the decision before the EU's highest court within two months.