Confirming that a shape cannot be registered as a trademark if all of its essential characteristics merely perform a technical function, the European Court of Justice held that Lego’s iconic three-dimensional trademark for a Lego brick was invalid under Article 7(1)(e)(ii) of CTM Regulation 40/94 EEC (now replaced by 2009/207/EC) because its shape is necessary to obtain a technical result. Lego Juris A/S v OHIM and MEGA Brands, Inc.,Case No. C-48/09 P (ECJ, Sept. 14, 2010).
Mega Brands applied for a declaration of invalidity against Lego’s three-dimensional trademark for a red Lego brick arguing that the registration was invalid, inter alia, because it was a sign that consisted exclusively of a shape which was necessary to obtain a technical result contrary to Article 7(1)(e)(ii) of the CTM Regulation. In 2004, the Cancellation Division of the Office for Harmonisation in the Internal Market (OHIM) declared the mark invalid. OHIM’s Grand Board of Appeal and the EU General Court dismissed Lego’s appeals. Lego took the case to the ECJ.
Upholding the decisions of the three lower tribunals, the ECJ emphasized that the purpose of s.7(1)(e)(ii) of the CTM Regulation was to prevent granting a perpetual monopoly which would permanently impair the opportunity for competitors to market goods whose shapes incorporated the same technical solution. The ECJ held that a shape could not be registered as a trademark if all its essential characteristics performed a technical function. While recognizing that all shapes of goods were to a certain extent functional, the ECJ found that the bar to registration only applied to signs which consisted "exclusively" of the shape of goods which were "necessary" to obtain a technical result. Therefore, the shape of goods would not be denied registration solely on the ground that it had functional characteristics. However, the mere presence of minor arbitrary elements in a three-dimensional design whose essential characteristics were dictated by the technical solution to which the sign gave effect did not prevent a shape from being refused registration.
The existence of alternative shapes which could achieve the same technical result was not relevant in determining a shape’s functionality. Once the essential characteristics of the goods were identified, it was only necessary to assess whether those characteristics performed a technical function. This could be assessed by taking into account documents relating to prior patents describing the functional elements of the shape concerned. OHIM’s Grand Board of Appeal considered prior patents owned by Lego’s predecessor, finding that the most important element of the Lego brick consisted of two rows of studs on the upper surface of the brick and that all other elements apart from its color were functional.
Practice Note: The ECJ provided no guidance on the meaning of "essential" and "non-essential" characteristics or "minor arbitrary elements," which will make it difficult to assess whether a particular product shape will be granted trademark protection. In practice, obtaining registration for a shape will remain difficult leaving companies to explore possible alternative protection for a limited period through patents or designs. For enterprises in a similar situation as Lego, when attempting to block rivals from selling "slavish copies" in the EU, consideration should be given to EU unfair competition law (as opposed to purely trademark law). In this case, the judges noted that unfair competition was not raised as an aspect of the dispute.