Lego obtained a Community Trade Mark for the shape of its typical 2×4 construction toy brick on 19 October 1999. A few days later its main competitor, MEGA BRANDS (the makers of Megablocks) successfully had the mark declared invalid, primarily on the basis that the essential characteristics of the shape sought to be registered all performed a technical function. Lego unsuccessfully appealed this decision to the Grande Chamber of the Board of Appeal and then to the Court of First Instance (now called the General Court). Lego's further appeal is now pending before the European Court of Justice (ECJ).

Advocate General Mengozzi's opinion is that Lego's appeal should be unsuccessful. The primary issue was whether it is legitimate to register as a trade mark a photographic representation of a typical Lego brick or whether, because the essential characteristics of its shape are functional, it must remain available for use by any toy manufacturer.

The relevance of alternative shapes

Lego's main argument in the appeal was based on a "creative" interpretation of the ECJ's ruling in the Koninklijke Philips Electronics NV v Remington Consumer Products Ltd (C-299/99) case (Philips). This interpretation accepted that following Philips the existence of other possible designs could be irrelevant if the essential features of the shape mark served a technical function. Lego argued that this did not mean that alternative designs were always irrelevant. Alternative shapes which merely achieved the same "technical result" were irrelevant. However, the existence of alternative shapes that used the same "technical solution" as the mark to achieve that result were highly relevant. The existence or absence of such alternatives is, in Lego's view, the correct criteria for establishing whether or not the grant of a trade mark would give rise to a monopoly on technically functional features (which Article 7(1)(e)(ii) is designed to prevent). The public purpose behind Article 7(1)(e)(ii) is not frustrated when alternative shapes which achieve the same technical outcome using the same technical solution indicates that competitors will not be restrained.

The Advocate General did not agree that the ECJ made such a fine distinction. In his view the differences alleged by Lego "between 'technical solutions' and 'technical results' finds no support in Philips" or in the wording of Article 7(1)(e)(ii) itself. Furthermore, if the shape in question consisted entirely of functional characteristics then the "judgment in Philips was abundantly clear... that '[the existence] of other shapes which could achieve the same technical result can[not] overcome the ground for refusal or invalidity contained in [the provision at issue]'".

However the existence of alternative shapes may be relevant to registerability of hybrid shapes which have essential characteristics which are functional and others which are not – see below.

Determining whether part functional part non-functional shapes are registerable.

The Advocate General noted that the Philips judgment had set out what functional shapes were clearly covered by the Article 7(1)(e)(ii) ban. The ECJ in that case could have restricted the ban's scope only to cover signs which were composed entirely of functional characteristics. In the Philips case there was a consensus in the English courts that the Philips razor head shape mark was solely functional (in other words, all its characteristics were functional). However, instead the ECJ preferred "a more flexible approach" that meant that even if only the "essential characteristics" of the shape mark perform a technical function the mark will fall within the ban. In the Advocate General's opinion the ECJ by "adopting that approach ...introduced an element of vagueness, which is now exacting its price"

The Advocate General graphically noted "The [Philips] judgment...did not absolutely preclude marks composed of functional shapes from being registered, although it did not make this easy. To use a metaphor, the court did not close the door on registering functional signs, but rather left it ajar; and this appeal must determine the size of the gap left by that half-closed door... this appeal is the second opportunity in 10 years for the Court to explore the intricacies of the provision at issue"

Accordingly the Advocate General proposed a step by step analysis.

  1. Look at each and every feature/characteristic of the shape mark in turn. Are all the characteristics of the shape functional? If so, the shape should not be registered or, if registered, it should be declared invalid. If not proceed to step 2
  2. Identify the "essential features" of the shape. Are all these dictated by their functional requirements? If so, the shape should not be registered or, if registered, it should be declared invalid. If not proceed to step 3
  3. As the registration of such a hybrid functional / non-functional shape trade mark may still prevent competitors from using the essential functional characteristics, the Advocate General suggested two alternatives to ensure the public policy behind the ban was respected:
    1. The examiner should use his powers (which the Advocate General believed Article 37(2) of Regulation 207/2009 afforded him) to disclaim the functional characteristics from protection and should only grant the mark if what is not disclaimed has distinctive character. If not, the mark should not be registered or should be declared invalid.
    2. The examiner should analyse the market place to determine whether the registration of this shape would lead to "a significant non-reputation related disadvantage for competitors" (in the market analysis of the impact of such hybrid shapes, the existence of alternative shapes was a relevant factor). If it did, then the mark should not be registered or should be declared invalid.

It should be noted that as "not only its essential characteristics, but also the brick as a whole, were dictated exclusively by their functional requirements" the Lego mark was held invalid at stage 1 and there was therefore no need to proceed further in this case.


Essential characteristics

Core to the Advocate General's approach is the identification of the essential characteristics of the shape mark at stage 2. This begs the question "essential" in what respect?

The Advocate General did not agree with Lego's assertion that the essential characteristics of a mark were those essential to its distinctive character (i.e. the dominant and distinctive elements as perceived by the average consumer). This was because the Article 7(1)(e)(ii) ban was designed to be a "preliminary obstacle" and therefore whether the mark has any distinctive character is at this stage irrelevant.

He therefore made it clear that "essential" did not mean what Lego thought it did. He also attempted further clarification of what it did mean by the use of alternatives terms such as "the most important elements of the shape" and the shape mark's "principal characteristics" However, he still failed to clearly specify, "essential", "important" or "principal" in what sense? If, as the wording of his opinion may be read to suggest, the "essential" characteristics of a shape mark are those characteristics that are essential to the shape's functionality, then all shapes which are functional to any extent will always consist only of essential characteristics which are functional and will hence fall within the ban. This is circular, so how to identify what are and what are not a shape mark's essential characteristics remains an enigma.

The ECJ is likely to follow the Advocate General's opinion to a certain extent by confirming its own earlier reasoning that the existence of alternative shapes which serve the same function served by the shape mark, is irrelevant to assessing whether a shape mark consists exclusively of functional features and is therefore covered by Article 7 (1)(e)(ii). However, the ECJ is unlikely to shed light on how identify a shape mark's essential features. It does not need to in order to resolve this dispute. The Lego brick has already been held to consist solely of functional features and therefore there is no need for the ECJ to consider whether any feature should be regarded as essential or not essential.

Furthermore, the ECJ will not be required to address which of the Advocate General's suggested solutions to determining whether hybrid functional/non-functional shapes should be registered (see step 3 above).

Accordingly, the authoritative "guidelines" the Advocate General hoped to be provided "to economic operators [as to] the relevant criteria for registering, as a trade mark, the shapes of goods which are adapted to the technical functions which they must perform" will remain absent. Also, in view of the complexity and ambiguity of the criteria suggested by the Advocate General, the legal uncertainties left behind by the ECJ following the Philips case may have, in fact, been increased.