Everything is awesome: Lego blocks “Lepin” trade mark registration

Back in December 2018 we shared LEGO's insights into building a long term brand protection strategy. Now John Shaw (Stone King) looks at how LEGO has recently implemented these strategies in the UK. 

Over to John:

In February 2019, LEGO successfully invalidated an application for a UK trade mark featuring the word "LEPIN". The mark was filed by Shantou Chenghai District Longjun Toys Factory Co., Ltd. The Toy Factory Co had filed a trade mark application for a square figurative mark that incorporated two Chinese characters and the word “LEPIN”. In the proceedings, LEGO demonstrated the practical steps it takes to ensure its brand value is not damaged or diluted by pretenders.

The application for the mark included a specification for: Toys; Building blocks [toys]; Doll’s houses; Dolls’ rooms; Toy vehicles; Radio controlled toy vehicles; Toy models; Jigsaw puzzles; Controllers for toys and Toy robots in class 28. The mark was registered on 1 September 2017.

On 6 February, LEGO Juris A/S (“Lego”) applied to have the mark declared invalid under section 47(2) of the Trade Marks Act 1994 (the “Act”)on the basis that it was registered contrary to sections 5(2)(b), 5(3) and 5(4)(a). The grounds under sections 5(2)(b) and 5(3) were based on the well-known EUTM. Under section 5(4)(a), Lego claimed that its reputation and goodwill entitled it to prevent the use of the LEPIN mark under the law of passing off.

LEGO: Building a world class brand protection strategy

The Toy Factory Co filed a defence and counterstatement in which it made a comparison of the words “LEGO” and “LEPIN” noting that “LEGO” appeared in the Oxford English Dictionary, whereas “LEPIN” did not. It was submitted that LEPIN was the transliteration of the two Chinese characters which appear above it in the mark: “LE” meaning happy; cheerful; laugh” and “PIN” which means “spell; piece; risk” (para 3). It was also submitted that because there were no fixed colour features in the LEPIN mark, it would be distinct in a visual way from the LEGO mark. It was also submitted that the aural similarity was low on the basis that the average parent (who would most likely be the individual purchasing the toys) would consider the word as a whole and would be unlikely to confuse “PIN” and “GO”.

Lego filed evidence from three people which included information regarding the money spent on advertising which incorporated the Lego mark, the money received on various royalties from the licensing of video games and films and the existence of the LEGOLAND Windsor theme park which used the Lego mark. Evidence was also filed showing a comparison of the products side by side and that the Oxford English Dictionary recorded “Lego” as a trade mark. Further to this, it was submitted on behalf of LEGO that the Consumer Service Department had received numerous complaints from the public about the proprietor’s LEPIN products (Para 17). The strong level of evidence is a good example for other businesses of what records should be kept in order to protect a brand.

Decision

Section 5(2)(b) (i.e. likelihood of confusion)

The UKIPO noted that the LEGO mark is dominated by the word “LEGO” and that although the Chinese characters are larger than the word LEPIN, the majority of the UK average consumers will not be able to read the Chinese characters and so focus on the word LEPIN.

On the point of distinctiveness, the UKIPO found that the LEGO mark was “about as distinctive as it is possible by virtue of its use” in relation to the construction of toys and due to the consistent use of the colours in the mark, the colours were a factor in establishing the distinctive character. This is a helpful reminder to brand owners of the importance that any trade mark features prominently in advertising material, on websites, on products and in retail stores so as to develop distinctiveness.

LEGO provided significant evidence particularly from its Consumer Service Department setting out the confusion that some consumers had. One comment from July 2016 stated: "It had your logo by where it should say Star Wars it say STAR WNRS ha!!” whereas the set referred to did not have the LEGO mark (Para 44). This made it easier for the UKIPO to find that confusion was likely.

On the basis that both marks were for identical goods, the “huge level of distinctiveness” of the LEGO mark and the “strong structural similarities between the marks in terms of colour” the UKIPO found that there is a likelihood of confusion between the two marks. The UKIPO went on to note that: "In this scenario, there would be indirect confusion i.e. the average consumer notices the Chinese characters so knows that the marks are not the same, but assumes that the later mark is a variation of the earlier mark, such as a Chinese sub-brand or a co-brand."

As a result the ground of invalidation succeeded under section 5(2)(b) of the Act.

Section 5(3) (i.e. unfair advantage)

It was noted by the UKIPO that when taking into account the strength of the reputation and distinctiveness associated with the earlier mark and the identical or almost identical use of colour, together with the (relatively) limited degree of similarity between the marks (considered as a whole) in relation to identical good, the earlier mark will be called to mind. As a result the necessary ‘link’ between the marks was established.

Although the claim to unfair advantage was successful, the two other types of damage were also considered: detriment to distinctive character; and detriment to reputation of the earlier mark.

Evidence provided by LEGO was also used to highlight the dilution issue. A customer had commented “I am a collector and seller of new Lego Parts and I know that when I purchase official Lego this is quality assured, but from what I see Lepin could undermine this and flood the market with cheap copy’s [sic]”. Evidence that fans of LEGO were becoming annoyed that LEGO was not seen to be doing enough to combat the undermining of the LEGO brand (Para 63) featured in the decision by the UKIPO.

The ground succeeded under section 5(3) of the Act.

Section 5(4)(a) (i.e. the law of passing off)

It was noted that LEGO’s use of the mark dates from 1973 and that LEGO clearly has substantial goodwill in relation to its earlier mark for construction toys. The actual use of the LEPIN mark was in the same colour scheme with the strong intention of benefiting from the level of goodwill that LEGO had. As a result, the UKIPO found that at the relevant date LEGO was entitled to have prevented the use of the LEPIN mark under the law of passing off because such use would have been damaging the applicant’s goodwill. It was also noted that damage could have arisen in a number of ways, such as through confusion of purchasers and the diversion of trade or the misbelief that the goods were supplied under licence.

It is worth noting that within the evidence submitted by LEGO, there was evidence that individuals had thought that LEPIN was LEGO “for another market” indicating a licensing activity (para 16).

The ground under section 5(4)(a) of the Act succeeded.

Comment

LEGO displayed its comprehensive approach to brand protection in these proceedings. It submitted evidence from three individuals and provided significant financial information, a variety of visual evidence and records from its customer service department.

This serves as a good lesson for any brand looking for practical steps to take to protect its brand. A thorough record keeping protocol can become a valuable tool for IP infringement, opposition or invalidity proceedings. LEGO was able to display goodwill, confusion and dilution all through evidence and test purchases were even made of Lepin products from a UK seller. It is notable that one of the comments from customers, which was used as a reference point for confusion, was from 2016. This shows a diligent level of record keeping by LEGO, retaining evidence for years before use.

Brands should consider what practical steps they could take so that they have strong evidence to hand in the event that proceedings are necessary. Financial information, customer service records and image evidence were the building blocks for strong submissions – LEGO has provided an excellent instruction manual.