LEGO Group, the Danish manufacturer of the beloved building toy, has been riding high lately. Where other toy companies seemed to be falling victim to age compression (the idea that children are not LEGO Litigationspending their time playing with toys as much as they used to), LEGO has remained not only profitable, but popular. Successful tie-ins to successful multimedia franchises like Harry Potter, Batman, Star Wars and Indiana Jones have proven to be excellent additions to LEGO’s in-house themed sets of secret agents, castles, Bionicle, and Mindstorms.

LEGO has also found success not only in tying into other franchises, but in expanding its own brand into video games, amusement parks and (of more dubious wisdom), fruit-flavored gelatin candies.

But no amount of colorful, neatly interlocking blocks will help LEGO scale its most recent obstacle: the European Court of First Instance. At stake was more than the billions spent worldwide on childrens’ toys – the decision also laid new ground on the future of copyright claims for three-dimensional shapes.

LEGO group attempted to seek a trademark for their common red brick, claiming that the three dimensional shape with its orderly rows of studs, is a symbol of their company. The studs, of course, are what permits one LEGO brick to connect to another brick. In an 8,400 word opinion, the Court refused to overrule a European trademark decision that held three dimensional shapes serving a functional purpose (like allowing interconnectivity) cannot be trademarked. The Court stated that the trademark board “was right to find that the shape at issue [to be] functional,” and under European law, there is a “distinction between shapes incorporating the same technical solution and those incorporating other technical solutions.” Because the studs on LEGO blocks serve the function of allowing interconnectivity with other LEGO blocks, their shape serves the same technical solution as other blocks with similar-looking studs. The court ruled this meant that the purpose of the shapes of LEGO blocks was functional, and functionality was sufficient grounds to deny trademark protection.

Building Success

LEGO toys, because of their worldwide popularity, have found admirers beyond those who are just interested in mere playthings. Nathan Sawaya, a former attorney, crafts large works of art out of the little plastic blocks, and a number of stop-motion movies use LEGO blocks as their medium. LEGO bricks are also used as a means of encouraging innovation and performance in the business community.

However, there has also been a great deal of attention that the company would much rather avoid. Noted modern artist Zbigniew Libera caused no small amount of stir by producing concentration camp sets out of the blocks, with authentic-looking packaging and skeleton figures to represent victims. (He has stated, “My intention was to reflect on rationalism and education.”) A number of pirate manufacturers have marketed LEGO sets with themes the company itself won’t touch, such as realistic 20th and 21st-century firearms.

Naturally, the LEGO Group was not amused, and has not shied away from heading to court if it feels its trademarks have been violated. It has sued the owner of the internet fan-site, the producers of risqué T-shirts modeled on LEGO figures, and the manufacturer of rival Best Lock Building System. A 1999 suit against Finish toymaker Biltema Suomi Oy, manufacturer of the Coko Blocks line, demonstrates just what LEGO is worried about. An examination of the two companies’ products shows parallels that provoked fears of consumer confusion – the dreaded bane of trademark holders, where a consumer mistakes one brand with another and thereby deprives the brand of a sale. LEGO was concerned that someone wanting to purchase a LEGO product might buy a Coko block product by mistake, and either a) become frustrated with LEGO when the new blocks failed to interconnect with actual LEGO blocks, or b) become perfectly happy with the new blocks, and thereby switch allegiance to the other manufacturer.

Building Character

In recent years, perhaps LEGO’s most formidable market and legal competitor has been Mega Brands, owner of the Mega Bloks [sic] line. Mega Bloks can not only interlock with LEGO bricks, but, like LEGO, also feature some savvy multimedia tie-ins such as Disney’s Pirates of the Caribbean.

LEGO unsuccessfully sued the Montreal-based Mega Brands in Canadian court over trademark infringement, hoping to forestall the possibility of consumer confusion. The Canadian Supreme Court opinion, issued in 2005, held that despite LEGO’s protestations, the upper surface of the LEGO brick was purely functional and therefore could not benefit from trademark protection. To benefit from trademark protection, the item in question could not be merely a functional tool to arrive at a technological solution.

That same year, however, LEGO prevailed in a trademark suit against Mega Brands/Mega Bloks in a Netherlands court. The court concluded that, due to the compatibility of the two companies’ bricks, there existed a potential for consumer confusion. In that case, the court noted that Mega Brands could have marketed a block of different dimensions but with the same ability to connect with other Mega Brands blocks, which would have nullified the risk of consumers confusing Mega Bloks sets for LEGO sets.

Hitting a Brick Wall

The successes LEGO saw in 2005 didn’t create continued success in 2006, when the Office of Harmonisation for the Internal Market (OHIM), the European Union agency responsible for registration of trademarks, ruled that a LEGO brick could not be considered a three-dimensional trademark under European law. LEGO appealed the decision to the Court of First Instance, with competitor Mega Brands intervening on behalf of the OHIM.

The basis for the suit was twofold: first, whether functional shapes are per se precluded from trademark registration, and second, whether the functional shape of a LEGO brick is sufficiently distinctive to benefit from trademark protection.

The crux of any claim for a three dimensional trademark, and the stumbling block for LEGO, is the examination of whether the shape in question serves a functional purpose. The Court expressed concern that allowing one company to trademark building-brick studs would effectively give that company a monopolistic right to a technological solution (a particular form of interconnectivity), which would go far beyond the normal role of trademarks of protecting the symbols of a company. The legal focus on function permits a company to market a particular brand of, say, screwdrivers, and protect the symbols of that brand, without preventing anyone else from marketing competing brands.

The Court upheld the OHIM’s ruling that the LEGO brick, with its all-important studs, was functional in nature, and was not primarily concerned with making the brick distinctive. Further, the Court held that the studded brick was not so distinctively connected with LEGO to meet the high standard necessary for trademark protection.

Breaking It Down

The consequences for a three dimensional copyright suit can be enormous. Honda, the Japanese automobile and motorbike manufacturer, recently won a case against a Malaysian competitor in Malaysian court. The court ruled that a three dimensional reproduction of a two dimensional drawing – in this case, a drawing of a Honda-designed bike – infringed the copyright. Similarly, in Winfield Collection, Ltd. v. Gemmy Industries, Corp., a federal court in Michigan ruled that the manufacturer of an arts-and-crafts design deserved copyright protection for the three dimensional figure the design produced.

Both of those cases involved issues very different than those involved in the LEGO litigation. LEGO sought to copyright a three-dimensional object itself, rather than a two-dimensional drawing that would produce a three dimensional object. However much goodwill LEGO has built up over seventy years of producing beloved toys, it’s probably for the best that they lost this particular case. Allowing one company to trademark a functional shape – thereby preventing others from marketing a product using the same shape – would open up the possibility that only one company in the world could produce spoons, or wheelbarrows, or automobile airbags, with harmful results for consumers.

Where does that leave LEGO? However much this loss may sting, the company can surely take solace in its loyal endlessly creative fans. After all, what other company inspires its customers to produce elaborate dioramas of a dragon-riding Shaquille O’Neal leading his undead hordes in a fearsome battle against a masked vigilante armed with man-eating sharks? None that I know.