The Swiss firm is attempting to protect the four-finger bar's shape, but its competitor says that would give them an unfair advantage in the UK's £3.5bn chocolate market.
On Wednesday, the High Court of England and Wales upheld a previous European decision against Nestlé, agreeing with Cadbury that the company can't trademark a shape on its own.
QUIZ! Can You Guess The Chocolate Bar On Shape Alone?
Nestlé confirmed its plan to appeal on Wednesday. It said in a statement: "KitKat is much loved and the iconic shape of the four-finger bar, which has been used in the UK for more than 80 years, is well known by consumers.
"We believe that the shape deserves to be protected as a trade mark in the UK and are disappointed that the court did not agree on this occasion."
Meanwhile Sharon Daboul, trademark attorney at EIP, said: “The question is whether a consumer would look at the four-finger chocolate bar and straight away know it was a KitKat, without the logo or wrapper.
"Consumers will tend to be influenced by a brand name and the outer packaging of a product rather than its shape alone, so the threshold for registering shapes as trademarks is high."