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ECJ Upholds Cancellation of Community Trademark for Design of LEGO-brand Building Blocks

By Matthew D. Asbell

The European Court of Justice (ECJ), Europe’s highest court, has upheld the decisions of the Grand Board of Appeal of the Office for Harmonization of the Internal Market (OHIM) and the European Union General Court canceling the Community Trademark for the design of LEGO building blocks.

In April of 1996, Kirkbi A/S (Lego) filed an application for a three-dimensional rectangular red block, with two rows of four cylindrical studs on top. OHIM—the agency that registers trademarks in the European Union—found the mark had acquired a distinctive character, and registered it in October of 1999. Ritvik Holdings Inc. (Mega) contested the registration. In July 2004, the Cancellation Division found that the registration for the mark should be invalidated because it was an object designed to obtain a technical result.

Lego’s subsequent appeal to the ECJ was dismissed, based on the allegedly inherent functionality of the subject of the application. In the appeal, Lego argued that the registration of a shape should be prohibited as functional only if it would result in a monopoly of a “technical solution,” not where various “technical solutions” could arrive at the same result. Upholding the trademark would allow other manufacturers to create building blocks using different shapes. Mega asserted that if the trademark was allowed to remain registered, Lego would have a monopoly over the “best, most functional shape.” In addition, Mega contested that the existence of a patent for the same design reinforced the functional nature of the design, even though a patent does not necessarily preclude trade dress registration.

The ECJ decision reminded that trademarks are meant to “attract and retain” clients via use of a protected image that distinguishes one’s goods from those of another. The Court further confirmed that Lego’s brick has become distinctive and can be distinguished from other manufacturers by consumers. Yet, Lego’s brick was nevertheless “unsuitable for registration” as a trademark because the shape was deemed part and parcel of its function. When the shape of a product merely incorporates the technical solution developed and patented by the manufacturer, trademark protection of such a shape once the patent has expired would significantly reduce others’ opportunities to compete.

Article 7(1)(e)(ii) of Council Regulation No 40/94 states that “signs which consist exclusively of . . . the shape of goods . . . necessary to obtain a technical result” should be refused. Importantly, the addition of a non-essential element, such as a decoration or color, does not necessarily allow the mark to escape the net of functionality. In this case, the only non-essential, nonfunctional factor was the red color of the block, which could have been blue, yellow or green, for example, without changing its purpose. The ECJ also determined that the functionality, or necessity of attributes of a design in a trade dress application is not determined by consumers’ perceptions, because the target audience may not have the necessary knowledge to make such determinations.

There are different options for intellectual property protection in Europe. A registered community design, which protects the outward appearance of a product, has a life of up to twenty-five years, in five-year increments, from filing. However, a community trademark (CTM) is valid for ten years and can be renewed indefinitely for ten-year periods. Accordingly, protection for a design in the European Community is more enduring under Trademark Law. On the other hand, registration of a novel Community Design is easier to achieve, since protection is generally only withheld if the features of a product are dictated by its function and no alternate shapes are available.

The ECJ’s judgment in this case appears congruent with how this issue might have been decided in the United States. U.S. copyright and trademark laws provide little protection if any for useful or functional articles, and problems arise when considering form versus function. Instead, novel and non-obvious functional articles may be protectable under patent law. To determine what defines functionality in a trademark application, a U.S. adjudicator may take into account the existence of a utility patent, to support arguments that the design is functional, even if there are alternate designs. See In re Morton-Norwich Products, Inc., 671 F.2d 1332, 1340-1341 (C.C.P.A. 1982); The Antioch Company v. Western Trimming Corporation, 347 F.3d 150 (6th Cir. 2003).

Unfortunately, in the United States, functionality cannot be overcome by acquired distinctiveness, as seen in TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23, 121 S. Ct. 1255 (2001). In that case, an expired utility patent for the spring mechanisms of certain street signs—which kept them upright in windy weather—was strong evidence of functionality and as a result, trade dress protection was not available. Even though the product differed from others in the market, and consumers could identify its source based on its appearance alone, public policy prohibited trademark protection.

However, a patent does not necessarily preclude trademark protection altogether in the United States. A U.S. design patent protects “ornamental and nonfunctional features,” and may be used to support arguments that a design that is the subject of a trade dress application is not functional. Although a U.S. design patent is not dispositive on the issue, it could serve as evidence against functionality. See In re R.M. Smith, Inc., et al., 734 F.2d 1482 (1984) and In re Honeywell, Inc., 532 F.2d 180 (1976). Accordingly, it may generally be advisable to seek a U.S. design patent, where available, and concurrently or subsequently file a U.S. trade dress application. Similarly, in the European Community, one should consider the potential benefit of a registered community design initially, and possibly a concurrent or subsequent trade dress application.

[1] Matthew D. Asbell is an associate in the New York office of the firm of Ladas & Parry LLP. Mr. Asbell gratefully acknowledges the assistance of Rachelle Fernandes, a law student of the Benjamin N. Cardozo School of Law in New York, in the preparation of this article.

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