Canada’s Intellectual Property Law Firm

LEGO Loses Trademark Battle in Canada

In a unanimous decision, the Supreme Court of Canada ruled yesterday in Kirkbi AG v. Ritvik Holdings Inc. that trademark law cannot be applied to prevent Kirkbi’s competitors from selling toy building blocks that look like the basic LEGO blocks. The action was brought by Kirkbi AG, the Danish manufacturer of the LEGO toys, and Lego Canada Inc., the Canadian distributor against a Canadian company, Ritvik Holdings Inc., now Mega Bloks Inc. The rejection of the action by the Federal Court Trial Division and the Federal Court of Appeal was confirmed by the Supreme Court.

The well-known LEGO blocks have been manufactured and sold throughout the world for over 50 years. The basic LEGO block is a rectangular block with a characteristic array of cylindrical studs on its top surface. The studs interact with cooperating recesses and tubes on the bottom of the block to produce a locking effect.

As part of the surrounding circumstances which appear to have influenced the Court, Kirkbi owned a number of (now expired) patents in Canada and elsewhere for its LEGO blocks. The patents protected the pattern of studs on top of the LEGO blocks. In Canada, the last of Kirkbi's patents expired in 1988. After that date, Mega Bloks began to market a line of competing building blocks, virtually identical in size and shape to the LEGO blocks. They work with LEGO blocks and can be used interchangeably with them. Within the past decade, Mega Bloks has become a major competitor to Kirkbi both in Canada and in many other regions around the world.

Kirkbi has tried unsuccessfully to obtain a trademark registration in Canada for the shape or design of its LEGO blocks. Accordingly, Kirkbi sued Mega Bloks for passing off under Section 7(b) of the Canadian Trademarks Act, a provision that can be used to protect unregistered trademarks.

There was evidence of actual confusion, where consumers believed that the Mega Bloks products originated from Kirkbi. Accordingly, if the LEGO blocks were subject to trademark protection, it appeared that Kirkbi would be likely to succeed on the basis of passing off. However, the major hurdle was that the Kirkbi design was apparently acknowledged by both parties to be “primarily functional.”

The Court had to decide if a purely functional design could be the subject of trademark protection. (The Federal Court of Appeal used the term “primarily functional” whereas the Supreme Court used the term “purely functional.”) It was held that Kirkbi’s design was purely functional and "a purely functional design may not be the basis of a trademark, registered or unregistered".

The Court was concerned that the "mark" in this case was not a symbol applied to a product, but was rather the product itself. The Court stated that trademark law is "not intended to prevent the competitive use of utilitarian features of products…" To help clarify this concept, the Court explained that "a combination of elements primarily designed to perform a function may not be the subject matter of a trademark". Moreover, the Court emphasized that it is necessary for the public to be able to distinguish the mark from the product itself.

It appears to have been particularly damaging to Kirkbi that it had previously obtained patent protection relating to its blocks. The Court suggested that there is a presumption that the features claimed in a patent are purely functional. The Court reasoned that it would be inappropriate to extend trademark protection to those features as it would result in "overextending monopoly rights on the products themselves and impeding competition, in respect of wares sharing the same technical characteristics".

The result in this case is consistent with a case decided by the Canadian Federal Court of Appeal in 1995 involving Remington Rand Corp. vs. Philips Electronics N.V. In that case, the validity of Philips' trademark registrations was challenged. The registrations depicted three circular heads on an elec-tric shaver oriented to form an equilateral triangle. The Federal Court of Appeal held that Philips’ trademark registrations were invalid because they related to features which were primarily functional.

As another issue in the Lego case, Mega Bloks challenged the constitutional validity of Section 7(b) of the Canadian Trademarks Act. The Court upheld its validity.

The Supreme Court in this case has solidified the prevailing view that features which are purely or primarily functional will not be protected as trademarks. As well, where certain features previously benefited from patent protection, the Court is likely to presume that the features are primarily or purely functional, and therefore are not subject to trademark protection.

 

 

Smart & Biggar/Fetherstonhaugh has prepared a PDF version of this article.  To view the PDF, please click on the following link:  /Assets/IP_Update_Nov05.pdf