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Tuesday, 14 September 2010

Lego brick hits a wall

The ECJ has today, in Case C‑48/09 P, ruled that the iconic Lego brick (depicted right is the image that was subject of the trade mark registration) cannot be registered as a trade mark because its shape is necessary to obtain a technical result. The ECJ upheld the decisions of OHIM's Cancellation Division, the Grand Board of Appeal, and by the Court of First Instance (now General Court) that came to the same conclusion (noted on IPKat here). The most pertinent paragraphs of the decision read as follows (bold by the IPKat, some omissions made):

45 First, the inclusion in Article 7(1) of Regulation No 40/94 of the prohibition on registration as a trade mark of any sign consisting of the shape of goods which is necessary to obtain a technical result ensures that undertakings may not use trade mark law in order to perpetuate, indefinitely, exclusive rights relating to technical solutions.

46 When the shape of a product merely incorporates the technical solution developed by the manufacturer of that product and patented by it, protection of that shape as a trade mark once the patent has expired would considerably and permanently reduce the opportunity for other undertakings to use that technical solution. In the system of intellectual property rights developed in the European Union, technical solutions are capable of protection only for a limited period, so that subsequently they may be freely used by all economic operators. [...]

47 Furthermore, the legislature has laid down with particular strictness that shapes necessary to obtain a technical result are unsuitable for registration as trade marks, since it has excluded the grounds for refusal listed in Article 7(1)(e) of Regulation No 40/94 from the scope of the exception under Article 7(3). If follows, therefore, from Article 7(3) of the regulation that, even if a shape of goods which is necessary to obtain a technical result has become distinctive in consequence of the use which has been made of it, it is prohibited from being registered as a trade mark [...].

[...]

51 As regards the fact that the ground for refusal covers any sign consisting ‘exclusively’ of the shape of goods which is necessary to obtain a technical result, the General Court stated, at paragraph 38 of the judgment under appeal, that that condition is fulfilled when all the essential characteristics of a shape perform a technical function, the presence of non-essential characteristics with no technical function being irrelevant in that context.

52 That interpretation is consistent with paragraph 79 of Philips. Moreover, it reflects the idea underlying that judgment, as set out by Advocate General Ruíz‑Jarabo Colomer at point 28 of his Opinion in that case and also at point 72 of his Opinion in Case C-363/99 Koninklijke KPN Nederland [2004] ECR I-1619, that is to say, that the presence of one or more minor arbitrary elements in a three-dimensional sign, all of whose essential characteristics are dictated by the technical solution to which that sign gives effect, does not alter the conclusion that the sign consists exclusively of the shape of goods which is necessary to obtain a technical result. In addition, since that interpretation implies that the ground for refusal under Article 7(1)(e)(ii) of Regulation No 40/94 is applicable only where all the essential characteristics of the sign are functional, it ensures that such a sign cannot be refused registration as a trade mark under that provision if the shape of the goods at issue incorporates a major non-functional element, such as a decorative or imaginative element which plays an important role in the shape.

53 As regards the condition that registration of a shape of goods as a trade mark may be refused under Article 7(1)(e)(ii) of Regulation No 40/94 only if the shape is ‘necessary’ to obtain the technical result intended, the General Court rightly found, at paragraph 39 of the judgment under appeal, that that condition does not mean that the shape at issue must be the only one capable of obtaining that result [later referring to paragraphs 81 and 83 of Philips for support of this statement.]
The outcome probably comes as a surprise to none. The ECJ seems to take a rather expansive view of what constitutes a "shape of goods which is necessary to obtain a technical result" - it is sufficient if the "essential characteristics" of the shape perform a technical function, the presence of non-essential characteristics with no technical function being irrelevant. The distinction between essential and non-essential characteristics of a shape will be difficult to draw in practice - the also relevant distinction between "minor arbitrary elements" and "major arbitrary elements" will likewise be fodder for lawyers. It is clear - already was after Phillips - that the mere existence of other possible shapes that perform the same technical function is insufficient to show that the shape is not necessary to obtain a technical result.

The ECJ left the door slightly open for Lego by noting that the matter "can, where appropriate, be examined in the light of rules on unfair competition" (para. 62) - over which the ECJ currently has no competence and Europe has no harmonisation.

Merpel gets a point for correctly predicting that the Advocate General's "logical expectations of the business community" are nowhere found in the judgment.

2 comments:

MTPT said...

Has to be the right result.

It'll be interesting to see if anyone else takes advantage fo the decision to try and enter the market with own-brand interoperable products (Both Lego and Mega Brands already appear to rely heavily on licensed characters - notably Harry Potter and Halo - to justify premium prices).

Isn't the unfair competition issue a red herring? Presumably such an argument might have succeeded back when MEGA BLOKS interoperable blocks originally came to market, but that was quite a few years ago. The marketing strategy from both Lego and Mega Brands is based on the sale of complete kits, rather than individual blocks, so you'd be left untangling the contribution (if any) interoperability has on the selection of a MEGA BLOKS kit over a LEGO one (consumer surveys ride again!).

Mark said...

Ah. I can't believe I didn't notice this one. I just stumbled upon this post by means of PriorSmart's portal only now.

Since we're on the topic of Lego.. I made an interesting patent information infographic. Just sharing it with you: http://www.ipexl.com/help/index.php/Example_Patent_Information_Usage_Lego_Infographic

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