Big surprise in Lego trade mark dispute: AG refers to logical business expectations

This morning Advocate General Mengozzi delivered his Opinion to the Court of Justice of the European Union in a case eagerly followed by all parents of small children who enjoy playing constructively with their toys -- Case C‑48/09 P Lego Juris A/S v Office for Harmonisation in the Internal Market and MEGA Brands, Inc. The background to the dispute is summarised by the Advocate General in his Introduction:

"‘2. This is an appeal by Lego Juris A/S (‘Lego Juris’) against the judgment of the Court of First Instance of 12 November 2008 in Case T‑270/06 Lego Juris v OHIM. It does not involve assessing the merits of Lego, whose instructional value and value in fostering logic and creativity are undoubted, but rather ascertaining whether the Court of First Instance’s interpretation of the Community trade mark legislation and of the only precedent of the Court of Justice are vitiated by the errors alleged by Lego Juris.

3. The Lego company and its main competitor, MEGA Brands, dispute whether it is possible to register as a trade mark a photographic representation of a typical Lego brick or whether its design contains essential characteristics of the shape of the brick which, because of their functionality, must remain available to any toy manufacturer and are therefore prohibited from registration".

After Lego secured registration of the illustration of the toy brick shown here, Mega Brands successfully sought cancellation of the registration. The decision of the Cancellation Division was upheld by the Board of Appeal, whose decision was in turn upheld by the Court of First Instance. In this, the final appeal, Lego Juris based its claim on three grounds:

"... the judgment under appeal provided an incorrect interpretation of Article 7(1)(e)(ii) of Regulation No 40/94 that bars from trademark protection all shapes which perform a function, independently of whether the criteria of that provision are fulfilled or not. It submits that the Court of First Instance departed from the judgment in Philips, in which the Court of Justice distinguished between ‘technical solutions’ and ‘technical results’, associating the requirement to maintain availability with technical solutions so that competitors are not obliged to seek different solutions leading to the same result, but calling on them to find different shapes using the same solution. That misinterpretation on the part of the Court of First Instance led it to hold that the functional shape itself must be available to all, whereas it is apparent from the judgment in Philips that only the functional characteristics of the shape itself must be available to all.

46. Second, ... the judgment under appeal used incorrect criteria in order to ascertain the essential characteristics of three-dimensional signs. Where a trade mark right is used effectively, the concept of ‘essential characteristics’ is synonymous with that of ‘dominant and distinctive elements’, which must be assessed from the perspective of the average consumer who is reasonably well informed and reasonably observant and circumspect. However, ... the Court of First Instance disregarded the rule that the perception of the consumer must be taken into account, following the circular approach of determining the essential characteristics precisely from the task performed by various parts of the shape.

47. Third, ... the judgment under appeal [uses] incorrect functionality criteria. It submits that the best way to assess whether a specific characteristic of the shape of an object fulfils a function is to alter that characteristic. If altering it has no impact on the function, then that characteristic is not functional. In that context, alternative shapes must be taken into account, since they would show that the grant of a trade mark in respect of a specific shape will not lead to a monopoly, and thus the shape is not caught by the absolute prohibition on registration contained in Article 7(1)(e)(ii) of Regulation No 40/94".

At this point, the IPKat respectfully reminds his readers that we are talking about a picture of a plastic interlocking toy brick and that there would appear to be a degree of over-intellectualisation of the issue which sometimes makes one think that, if you haven't got a clearer argument than these ones, you're probably going to lose. Anyway, not to be outdone, the Advocate General thought he'd do a bit of intellectualising of his own, laying down the methodology by which Lego's appeal would be measured:

"49. It is necessary in the present appeal to explain to economic operators the relevant criteria for registering as a trade mark the shapes of goods which are adapted to the technical functions which they must perform.

50. Undoubtedly the judgment in Philips set out the principles for interpreting the provision at issue, albeit by reference to the directive. However, the facts of that case resulted in a somewhat emphatic judgment as regards the registrability of signs composed of functional shapes. It is apparent from the judgment that there was a certain consensus that the graphic representation of the head of the electric shaver marketed by Philips was purely functional.

51. By focusing so narrowly on the facts of the case, the reply from the Court of Justice to the Court of Appeal (England and Wales) emphasised the grounds on which it was appropriate to refuse registration of a mark having those characteristics, but it scarcely set out for undertakings the guidelines for registering functional signs as trade marks. The judgment, faithful to the spirit of the legislation, 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.

52. ... the appeal must consider both substantive aspects, that is to say the possible errors of interpretation, and methodological aspects, namely the modus operandi for assessing the characteristics of objects and defining their functionality.

53. I believe that there has been only one precedent, and that this appeal is the second opportunity in 10 years for the Court to explore the intricacies of the provision at issue, which justifies the attempt to provide a reply which goes beyond the limits imposed by the grounds of appeal put forward by the appellant, before then examining those grounds. Furthermore, I hope thereby to meet the logical expectations of the business community as to the requirements for registering functional signs, which is anxious to receive clarification on this complex issue".

Applying his methodology, the Advocate General recommends rejecting all three grounds of appeal and affirming the decision of the Court of First Instance.

The "logical expectations of the business community" -- the IPKat welcomes the Advocate General's recognition of the importance of this concept, but wonders (i) why it has taken so long for the ECJ to be introduced to this very practical notion, (ii) who is the custodian of the interests of the business community before the ECJ and (iii) how many of the members of the court will be responsive to it? [Merpel bets the words "logical expectations of the business community" -- which have never appeared online until this very day -- will not appear in the Court's final judgment].

Business logic here
Cat logic here
Legal logic here