Lego Loses EU Court Appeal Over Toy Trademark in Battle With Mega Brands

Lego A/S, Europe’s biggest toymaker, lost a court challenge seeking European Union-wide trademark rights for the shape of its toy bricks.

The ruling by the EU’s highest court in Luxembourg today puts an end to Lego’s chances to get a trademark to protect the shape of its building blocks in the region’s 27 nations. The dispute has its origins in 1999, when Billund, Denmark-based Lego won an EU trademark on the blocks’ shape which Mega Brands Inc., Lego’s biggest competitor in snap-together toys, then succeeded in overturning.

A shape such as Lego’s toy brick that “merely performs a technical function cannot be registered as a trademark,” the European Court of Justice ruled today. “Such a registration would unduly impair the opportunity for competitors to place on the market goods whose shapes incorporate the same technical solution.”

Lego had claimed the knobs on top of its toy bricks make them “highly distinctive” and eligible for a trademark. The EU trademark agency said the toy can’t be protected because its shape serves a technical purpose, a decision backed by a lower EU court in 2008.

“It is naturally a matter of concern to us that use of the brick by others can dilute the trademark,” Peter Kjaer, head of Lego’s intellectual property department, said in a statement on the company’s website. “The worst aspect is that consumers will be misled.”

Shoppers Don’t Know

“Analyses show that 40 percent to 60 percent of shoppers believe they are buying a Lego product when in fact they are purchasing a different product,” said Kjaer.

Mega Brands, based in Montreal, Canada, said in a statement that the ruling “has no impact on Mega Brands’ extensive footprint” in the EU, because it confirms previous decisions by a lower court and the region’s trademark agency.

Mega Brands rose as much as 6.3 percent in Toronto Stock Exchange composite trading and traded at 49 Canadian cents, up 1 cent, at 10:27 a.m. local time.

The EU court in 2002 clarified for the first time that shapes used for a so-called technical result can’t be protected under EU trademark law. The court rejected Royal Philips Electronics NV’s bid to block Spectrum Brands Inc.’s Remington Products from selling shavers with a triangle-shaped rotating head similar to those made by Philips.

Today’s case is C-48/09 P Lego v OHIM.

To contact the reporter on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net