Lego Juris A/S's appeal to the Court of First Instance (CFI) against the cancellation of its construction toy block shape community trade mark (CTM) was unsuccessful (T-270/06).
The applicant (Lego) obtained a CTM shape mark registration for a three-dimensional red construction toy block, for goods within Classes 9 and 28 on 19 October 1999. Following an application made three days later (on 21 October 1999) by the predecessor of Mega Brands, Inc., the registration was declared invalid by the Cancellation Division of the Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM) with respect to 'construction toys' in Class 28 on the grounds that the mark consisted exclusively of the shape of goods which was necessary to obtain a technical result (under Article 7(1)(e)(ii) of Council Regulation 40/94).
Lego tried unsuccessfully to appeal this decision before the Grand Board of Appeal at OHIM and then before the Court of First Instance. In respect of the latter, Lego's appeal had two aspects: that the Grand Board of Appeal had (i) incorrectly interpreted Article 7(1)(e)(ii); and (ii) incorrectly assessed the subject-matter of the mark at issue. The relevant section of Article 7(1)(e)(ii) reads: 'The following shall not be registered: [...] signs which consist exclusively of: […] the shape of the goods which is necessary to obtain a technical result...'.
The equivalent provision in the Trade Marks Directive (Article 3(1)(e)) had already been considered by the European Court of Justice (ECJ) in the Philips case (C-299/99). In that case, the ECJ's findings included the following:
- The Article must be interpreted in light of the public interest behind it: a trade mark registration should not afford a monopoly right in a technical solution or functional characteristic, thereby preventing a competitor from offering goods incorporating these aspects in competing products; and
- 'Where the essential functional characteristics of the shape of a product are attributable solely to the technical result, Article 3(1)(e), second indent, precludes registration of a sign consisting of that shape, even if that technical result can be achieved by other shapes' (para 83).
The CFI dismissed both aspects of Lego's appeal. The CFI summarised Lego's grounds of appeal as dependent on the Grand Board's interpretation of the terms 'exclusively' and 'necessary' within Article 7(1)(e)(ii). In Lego's view the Grand Board wrongly regarded as irrelevant the existence of all other different shapes that could achieve the same functionality.
Lego argued that the United States trade mark law "functionality doctrine" was consistent with the ECJ's guidance in Philips and should be applied when considering whether a shape mark fell within the Article 7(1)(e)(ii) exclusion. It asserted that the terms 'technical solution' and 'technical result' used by the ECJ had different meanings. Lego noted that a particular technical result can usually be achieved by various different technical solutions. If other shapes were available which implemented the same technical solution (to achieving the desired technical result) then the shape may be registrable and the exclusion should not apply. The availability of such other suitable shapes was relevant as it meant "there are no monopolistic risks".
Although the ECJ had stated, in Philips, that "if it is established that the essential features of a shape are attributable only to the 'technical result', the fact that that same result can also be achieved by other shapes using different 'technical solutions' does not mean that the shape becomes registrable", Lego noted this only referred to alternative shapes which implemented different technical solutions.
The CFI was unimpressed with Lego's fine distinctions. In its view the ECJ, in Philips, "dismissed the relevance of the existence of other shapes which could achieve the same technical result, without distinguishing shapes using another 'technical solution' from those using the same 'technical solution".
"Necessary" - The CFI found that this term should not be interpreted as meaning that the shape must be the only shape with which one could achieve the technical result in question: instead the essential characteristics of the shape need only be 'technically causal of, and sufficient to obtain, the intended technical result'.
"Exclusively" -The court relied on the ECJ's use in Philips of the phrase 'essential characteristics which perform a technical function' as an aid to the proper interpretation of the word 'exclusively': only the essential characteristics of the shape should be considered and the addition of non-essential characteristics with no technical function will not save a mark if all the essential characteristics of that shape do perform such a function.
In dismissing Lego's submissions, the CFI also held that for the purposes of assessing what the 'essential characteristics which perform a technical function' were under Article 7(1)(e)(ii), an objective assessment should be made, which should not be carried out by reference to the perception of the average consumer.
The public policy reasoning behind the Article 7(1)(e)(ii) is to prevent the monopolisation of shapes that perform a technical function so that any person may use them. This judgment indicates that the availability of other shapes which perform an equivalent function (whether they do so in a different or the same way as the shape mark in issue) does not serve to protect this public interest. If it did then the purpose of this exclusion could be frustrated by making multiple applications for the various different shapes that would achieve the technical function.