The Court of Justice of the European Union (CJEU) has held that Lego's long-contested Community Trade Mark (CTM) based on a red Lego brick is invalid under Article 7(1)(e)(ii) of the Trade Marks Regulation.

Article 7(1)(e)(ii) precludes registration of signs consisting exclusively of the shape of goods necessary to obtain a technical result. The CJEU confirmed that "necessary" does not require that the shape must be the only one capable of obtaining the result. The existence of alternative, functionally equivalent shapes is irrelevant.

"Exclusively" requires that "all the essential characteristics of a shape perform a technical function". "Essential characteristics" means "the most important elements of the sign". They can be identified on the basis of a simple visual analysis or a detailed examination of relevant criteria including surveys and expert opinion. There is no obligation to consider the perspective of the average consumer as this is not decisive, although it may be a relevant criterion.


In 1996, Kirkbi A/S (Lego A/S's predecessor in title) applied for a CTM based on a red 2x4 Lego brick. The Office of Harmonization for the Internal Market (OHIM) indicated, inter alia, that the sign should not be registered under Article 7(1)(e)(ii) of the Trade Mark Regulation. Nevertheless, in 1999, Kirkbi persuaded OHIM to register the mark.

Within days of the mark's registration it was attacked by Ritvik Holdings Inc., (the predecessor of Mega Brands Inc). In 2004, the Cancellation Division declared the mark invalid under Article 7(1)(e)(ii) in respect of 'construction toys' in class 28. Lego appealed unsuccessfully to the Grand Board of Appeal and the General Court and then appealed to the CJEU.

Earlier this year, Advocate General Mengozzi gave his opinion that the mark was invalid because "not only its essential characteristics, but also the brick as a whole, were dictated exclusively by their functional requirements".

The appeal before the CJEU

Alternative shapes

Lego argued that Article 7(1)(e)(ii) should not exclude registration of every shape performing a technical function, but only those creating a monopoly on technical solutions. Where several shapes exist which embody a particular solution to achieve a particular technical result, registration of one of those shapes does not create a monopoly over that solution.

The court rejected this. In the EU's system of intellectual property rights, "technical solutions are capable of protection for a limited period, so that subsequently they may be freely used by all economic operators". Article 7(1)(e)(ii) ensures that trade mark law cannot be used "to perpetuate, indefinitely, exclusive rights relating to technical solutions." The provision was laid down with "particular strictness" with no saving for shapes that had become distinctive through use.

The provision excludes registration of signs consisting exclusively of the shape of goods necessary to obtain a technical result.

"Necessary" does not mean that the shape must be the only one capable of obtaining the result. Registration of a functional shape will affect the availability of the technical solution to the proprietor's competitors, even where there are several other functionally equivalent shapes.

First, registration would prevent the use of merely similar shapes, potentially excluding access to a significant number of alternative shapes. Second, if a number of functionally equivalent shapes were registered at the same time, a technical solution might be made completely unavailable to third parties. Moreover, where a shape is the technically preferable solution, registration as a trade mark would make it difficult for competitors to market goods constituting a real alternative attractive to consumers.

"Exclusively" ensures that a sign cannot be refused registration where it incorporates a major non-functional element such as "a decorative or imaginative element which plays an important role in the shape". All shapes of goods are to some extent functional and it is inappropriate to bar registration solely because a mark has functional characteristics.

The condition of "exclusivity" is met where "all the essential characteristics of a shape perform a technical function, the presence of non-essential characteristics with no technical function being irrelevant in this context."

Identification of the essential characteristics

Lego argued that the "essential characteristics" must be identified from the perspective of the average consumer - i.e. they are the distinctive elements of the shape.

The court rejected this. There is no obligation under Article 7(1)(e)(ii) to take into account the perception of the sign by the average consumer. The average consumer's perception is not decisive. However, it "may be a relevant criterion of assessment for the competent authority when it identifies the essential characteristics".

"Essential characteristics" must be understood as referring to "the most important elements of the sign". These must be identified on a case-by-case basis. There is no hierarchy that applies systematically between the various types of elements. The competent authority may move straight to an "overall impression" assessment or examine each element in turn. The authority may use a simple visual analysis or carry out a detailed analysis of relevant evidence, such as surveys, expert opinions or "data relating to intellectual property rights conferred previously in respect of the goods concerned" (which in the present case included the proprietor's patents).


The court's judgment revolves around two key words within Article 7(1)(e)(ii): "exclusively" and "necessary". The court's approach to "necessary" is clear and logical. It should increase legal certainty by ending debate over functionally-equivalent shapes.

The court's approach to "exclusively" is less satisfactory. The court has overlaid "exclusively" with seemingly different tests: "essential characteristics" and "the most important elements". Having adopted these tests, it has given little guidance on how to apply them. It is up to the competent authority how to make such assessments and these "must be carried out on a case-by-case basis".

Moreover, the court's specific guidance is inconsistent. The court has clearly stated that the average consumer's perception is not decisive; indeed, there is no obligation even to consider it. However, the court also said:

"Article 7(1)(e)(ii) of Regulation No 40/94 cannot be applicable where the application for registration as a trade mark relates to a shape of goods in which a non-functional element, such as a decorative or imaginative element, plays an important role. In that case, competitor undertakings easily have access to alternative shapes with equivalent functionality, so that there is no risk that the availability of the technical solution will be impaired. That solution may, in that case, be incorporated without difficulty by the competitors of the mark's proprietor in shapes which do not have the same non-functional element as that contained in the proprietor's shape and which are therefore neither identical nor similar to that shape."

This suggests that a shape including a non-functional element which has an "important role" can be safely registered without creating a monopoly over a technical result - because the court assumes a product lacking the non-functional element will be dissimilar to the registered mark. The assessment of similarity in trade mark law is made on the basis of consumer perception including what the average consumer would perceive to be the distinctive elements of the registered mark and the extent to which these are duplicated in the later sign. However, the court has said that consumer perception need not be considered for Article 7(1)(e)(ii). This leaves a lacuna - on what basis is an element to be considered to have an "important role", and will that basis achieve the effect the CJEU presupposes?

Mengozzi described the case as "the second opportunity in 10 years for the court to explore the intricacies of the provision at issue." He encouraged the court to resolve the approach on "hybrid" marks which have both functional and non-functional essential features (he proposed a multi-step approach which we set out in our earlier analysis). Sadly, (and as we predicted) the court did not comprehensively address the question of hybrid marks or Mengozzi's multi-step approach because Lego's CTM was not a hybrid mark. Hopefully a further case, this time involving a hybrid mark, will flush out the detail needed to resolve these issues.

In the meantime, it is worth considering the real commercial impact of this decision. Article 7(1)(e)(ii) will bite where a sign's essential characteristics perform the function "of the product concerned". Lego's CTM is invalid in respect of "construction toys". Lego has enjoyed patent protection for its technical innovation and such protection has now expired. It cannot use trade mark law to extend its technical monopoly, but it retains a widely recognized brand and its portfolio of registered CTMs still includes 3D lego brick shape marks which, although they no longer apply to construction toys, cover an extremely wide range of goods and services (from plush toys to legal services).