Court of Appeal judges in the United Kingdom rejected the application by the confectionery giant, saying its four-fingered bar was not "distinctive" enough to warrant trademark protection.
But Mr Justice Arnold ruled that it had not "acquired a distinctive character" enough to satisfy requirements for a trademark.
Three appeal judges analysed the case early this year and dismissed Nestle's challenge on Wednesday.
Today's decision upholds that ruling.
"Nestlé feels strongly about the matter and, depending on whether there are sufficient legal grounds, they could apply for leave to file an appeal to the Supreme Court".
Nestle has yet to decide whether or not it will appeal the Court of Appeal's decision, the BBC said. 'This judgment does not mean that our four finger-shape is now free for use in the United Kingdom or elsewhere.
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In Europe, Nestle's bid to protect the bar's shape was dealt a blow in December when an European Union court declared invalid a ruling from 2007 that Kit Kat had acquired distinctive character through its use.
Sally Britton, an intellectual property lawyer at Mishcon de Reya, said today's decision "sets a high bar for the registration of shape marks".
The Court of Appeal said the KitKat shape alone - without branding - had failed to gain distinctiveness to be registered as a shape mark.
Mondelez said in a separate statement that it was "pleased" with Wednesday's ruling.
She said: "Businesses seeking to protect non-traditional trade marks such as shapes or packaging will need to provide evidence that consumers are relying on that trade mark to identify the origin of the product".
It said KitKat's shape has been granted trademark protection in countries including Germany, France, Australia, South Africa and Canada.