Lego is one of the best-known and loved toys around. The energy and creativity that the toy inspires in its users are matched in the company's endeavours to build strong IP protection for the product. But Lego has recently lost the latest round in its battle to protect its iconic brick shape as a Community trade mark. The case highlights the lengths that brand owners will go to secure shape trade mark protection and one particular pitfall that may catch shapes that perform a function.
Shape trade marks
As a matter of EU law, product shapes can in principle be protected as trade marks. Brand owners that successfully register a shape trade mark acquire monopoly rights over that particular shape and other shapes that consumers may confuse with the product shape mark. However, not every product shape can be protected under the EU trade mark regime. Special rules exist to protect certain freedoms of other manufacturers.
Lego's efforts to acquire trade mark protection
The value of a shape trade mark registration is underlined by Lego's efforts to trade mark its most celebrated toy, the four-by-two block. Aside from colour variations, the block has been an unchanged staple feature of Lego's construction products since 1958.
Lego filed a Community trade mark application for the block in 1996. It was registered in 1999. Two days later, one of Lego's rivals, Mega Brands (the makers of Mega Bloks), applied for the registration to be revoked on the basis that the block shape did not qualify as a trade mark.
This claim was upheld by the Cancellation Division of OHIM (the European office that governs Community trade marks). Lego appealed, first to OHIM's First Board of Appeal, and then to OHIM's Grand Board of Appeal. Both were unsuccessful. Having run out of avenues at OHIM, in 2006 Lego appealed the decision to the EU Court of First Instance. The appeal has failed.
Why did Lego fail?
Amongst the special rules it applies to product shape marks, EU trade mark law forbids the registration of trade marks that consist "exclusively" of the shape of goods which are "necessary" to obtain a technical result1. This provision is designed to prevent a brand owner acquiring a monopoly on the functional characteristics of a product. It was applied in the famous Philips three-head razor case2. The challenge that Lego faced was to show that the characteristics of its block are not merely functional.
Whilst the Court accepted that the shape of the block might contain some characteristics that are not functional (although it did not identify these characteristics), it could not be persuaded that the essential characteristics of the shape (i.e. the studs that form an interface between blocks) were not functional. The studs would work together to "achieve a technical result" when the toy is used as intended, in a play construction project.
The Court recognised that, were it to allow the registration, Lego's trade mark rights could create an obstacle that prevents its competitors from offering any product with similar functional features. That these features might in fact be recognised by consumers as an indicator of the origin of the product is irrelevant, as the rule against trade mark protection for purely functional shapes is absolute. It cannot be overcome by evidence of actual distinctiveness.
Lego tried to counter this by arguing that its competitors could reach the same "technical result" (i.e. blocks that are capable of being stacked on one another) by devising a different technical solution. The Court was not swayed by this. It held that where the essential characteristics of a product shape inevitably result in the desired technical result, the shape must be excluded from protection. The Court maintained that a shape whose essential characteristics are functional must be available to be freely used by all.
Is this decision important?
For Lego and its competitors, this is an important, although presumably not unexpected, decision. There are already other blocks on the market that apparently share the "essential functions" of the Lego block. Were the validity of the Lego registration ultimately upheld, it would be difficult to see what would stand in the way of a successful infringement action against them.
Competitors with a significant investment in the market for toys of this kind will therefore celebrate the outcome of this appeal. Lego has pledged to appeal the case to the European Court of Justice.