Confirming that a shape cannot be registered as a trade mark if all of its essential characteristics merely perform a technical function, the European Court of Justice (ECJ) in Lego Juris A/S v The Office of Harmonization for the Internal Market (OHIM) C-48/09 P 14 September 2010 (unreported), held that Lego’s iconic three-dimensional trade mark for a red Lego brick was invalid under Article 7(1)(e)(ii) of Community Trade Mark (CTM) Regulation 40/94 EEC (now 207/2009/EC) because its shape is necessary to obtain a technical result.
Lego applied to register a red version of its four-by-two toy brick as a three-dimensional CTM in respect of “games and playthings”, in Class 28
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On the basis that it had acquired distinctive character, the mark was accepted for registration on 19 October 1999. Mega Brands applied for a declaration of invalidity, arguing that the registration was invalid, inter alia, because it was a sign that consisted exclusively of a shape that was necessary to obtain a technical result, contrary to Article 7(1)(e)(ii) of the CTM Regulation. In 2004, the Cancellation Division of 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 OHIM’s Cancellation Board, the Grand Board of Appeal and the EU General Court, the ECJ emphasised that the purpose of Section 7(1)(e)(ii) of the CTM Regulation was to prevent granting to an undertaking a perpetual monopoly that would impair permanently the opportunity for competitors to market goods in a shape that incorporated the same technical solution. The ECJ held that a shape could not be registered as a trade mark if all its essential characteristics performed a technical function. While recognising that all shapes of goods were, to a certain extent functional, the ECJ found that the bar to registration only applied to signs that consisted “exclusively” of the shape of goods that 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, the essential characteristics of which 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 that 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 in title, 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 colour were functional. This assessment could not be reviewed by the Courts as Lego had not challenged the evidence.
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 trade mark 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. The basis of the decision lies, essentially, in the premise that if the mark were allowed to remain on the register, Lego would have succeeded in retaining a monopoly over the functionality of attaching one toy brick to another via the two rows of round studs on the upper surface of the brick which click into and interlock with the indentations on the underside of the brick above. Although Lego has reached the end of the road as far as trade mark law is concerned, the ECJ did leave Lego with some hope suggesting that the protection of Lego’s brick lay not in trade mark law, but in national laws of unfair competition where applicable.