CFI blocks Lego’s trademark bid

European Union

In Lego Juris A/S v Office for Harmonization in the Internal Market (OHIM) (Case T-270/06, November 12 2008), the Court of First Instance (CFI) has affirmed a decision of the Grand Board of Appeal of OHIM in which the latter had held that the shape of Lego Juris A/S's brick was functional and thus unregistrable under Article 7(1)(e)(ii) of the Community Trademark Regulation (40/94). 

On April 1 1996 Lego applied for the registration of the shape of its toy brick as a three-dimensional Community trademark. The mark was registered on the basis of acquired distinctiveness on October 19 1999. Mega Brands Inc subsequently applied for the cancellation of the mark. The Cancellation Division of OHIM declared that the registration was invalid with respect to "construction toys" in Class 28 of the Nice Classification under Article 7(1)(e)(ii) of the regulation. Article 7(1)(e)(ii) reads as follows:
"1. The following shall not be registered:
(e) signs which consist exclusively of:
(ii) the shape of goods which is necessary to obtain a technical result.
Lego appealed. The newly formed OHIM Grand Board of Appeal dismissed the appeal. Among other things, it held that the word ‘exclusively’ in Article 7(1)(e)(ii) means that the shape has no purpose other than that of achieving a technical result, and that the word ‘necessary ’ in the same provision means that the shape is required to achieve that technical result, but that it does not follow that other shapes cannot also perform the same task (for further details please see “Grand Board upholds cancellation of Lego shape mark”).
Lego appealed to the CFI, arguing that the Grand Board had:
  • incorrectly interpreted Article 7(1)(e)(ii) of the regulation; and 
  • incorrectly assessed the subject matter of the three-dimensional mark at issue.
With regard to the first claim, Lego alleged that the Grand Board had misinterpreted the scope of Article 7(1)(e)(ii) and, in particular, the scope of the terms ‘exclusively’ and ‘necessary’, by considering that the existence of functionally equivalent alternative shapes using the same technical solution was irrelevant for the purposes of the application of that provision. Relying on Philips (Case C-299/99), Lego argued that the decisive question was whether trademark protection would create a monopoly on technical solutions or the functional characteristics of the shape in question, or whether sufficient freedom remained for competitors to apply the same technical solution and use the same characteristics.
According to the CFI, 'exclusively' must be read in light of the expression "essential characteristics which perform a technical function". Therefore, the addition of non-essential characteristics having no technical function does not prevent a shape from being caught by that absolute ground of refusal if all the essential characteristics of that shape perform such a function. The CFI also stated that 'necessary' means that the shape is required to obtain a technical result, even if that result can be achieved by other shapes.
With regard to the second claim, Lego argued that the Grand Board had failed to identify the essential characteristics of the shape at issue, namely the design and proportion of the studs. In other words, the Grand Board should have focused on the outer surface, and not on the invisible features of the brick - in particular, the hollow skirt and the secondary projections on the underside. Lego insisted that the essential characteristics of the shape should be determined by consumer perception, not by expert testimony. However, with regard to consumer perception, the CFI stated as follows:
The perception of the target consumer is not relevant to the analysis of the functionality of the essential characteristics of a shape. The target consumer may not have the technical knowledge necessary to assess the essential characteristics of a shape and therefore certain characteristics may be essential from his point of view, even though they are not essential in the context of an analysis of functionality and vice versa. Accordingly, it must be held that the essential characteristics of a shape must be determined objectively for the purposes of applying Article 7(1)(e)(ii).
With regard to expert testimony, the CFI held that the Grand Board had not erred in referring to the testimony of Mega Brands' expert, and not to the testimony of Lego’s expert as regards functionality.
Finally, Lego argued that the Grand Board had been partial, as it had taken into account a decision of the Supreme Court of Canada, but had found that a corresponding Dutch decision was irrelevant. The CFI held that it is settled case law that OHIM is not bound by national decisions, but can mention these. Moreover, the Grand Board had stated why it felt that the Dutch decision was irrelevant.
In this decision, the CFI has taken a classic appellate approach - deferring to the Grand Board for findings of fact and concentrating on whether the board had erred in law. Lego still has the opportunity to appeal to the European Court of Justice; it would be interesting to see how the court would rule in this case, as the 'technical result' exclusion is rarely applied and even more rarely adjudicated. 
Peter Gustav Olson, MAQS Law Firm, Copenhagen

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