The recent decision by the General Court of EU helped Lego win its claim over their famous Lego Bricks. Lego won this case against Delta Sport which claimed that Lego cannot claim Trademark rights over their own creations such as the subject matter toy bricks. This brings us to the question: why would a company not own Intellectual Property rights to something they themselves invented? The answer lies in the 'Doctrine of Functionality'.
This doctrine mandates that certain product features cannot be protected by Trademark Law. These features are the ones that are functional/essential for a product to be useful and are known as functional features. This was defined by the US Supreme Court in the case of Inwood Laboratories, Inc., et al. v. Ives Laboratories, Inc., "In general terms, a product feature is functional if it is essential to the use or purpose of the article or if it affects the cost or quality of the article."
The functionality of a product can be of two types: i) Utilitarian; ii) Aesthetic. Utilitarian Functionality considers whether the feature’s absence would render a product useless, whether its absence would affect the quality or cost of the product, whether its absence would put the competitors at a significant disadvantage. Example: If a company came up with the idea of cupboards and trademarks its outer view and handles, it would be unfair since without the handle the cupboards are useless. The 2001 US Supreme Court decision in Traffix Devices, Inc. v. Marketing Displays, Inc., states that a feature cannot be trademarked if it is essential to the use of the product or if it affects the cost or quality. In the above-given case, the court held that the use of two spring mechanism is essential while manufacturing traffic signs, without it the signs would be disturbed by wind (essential for use), and the competitors could not use more than two springs since that would increase the cost (thus, feature affects the cost of product).
Aesthetic functionality tests how essential the design is to attract customers. Example: Using Diya (lamp) shaped designs on Diwali gifts cannot be trademarked because the symbol of Diya is an important feature to attract customers towards Diwali products. This was further clarified in Pagliero v. Wallace China Co. in which a suit was brought against the usage of delicate flower patterns on china dishes. It was highlighted that a feature is aesthetically functional when the attractive design is the primary reason why customers flock to buy that product.
The idea behind the Doctrine of Functionality is to prevent a trademark owner from restricting legitimate competition. A manufacturer having a sole monopoly to include essential features to his products only; also places the customers at a disadvantage. The importance of this was further discussed in the case of Pagliero v. Wallace China Co., where it was held that a functional feature cannot be protected because it is the reason behind the commercial success of a product, and limiting its use would limit competition in the market. Thus, when a design or feature is at “the heart of consumer demand for the product” it cannot be protected under Trademarks.
However, the essentiality of the feature should not be related to its reputation. For example, a company cannot use the word “Xerox” for their photocopier machine just because people are more inclined towards buying Xerox’s machine since it is reliable. What serves as functional or not was discussed in the case of Qualitex Co. v. Jacobson Products Co., Inc., in this case, it was held that the color of a product like dry cleaning pads does not have any use other than distinguishing their products, limiting the use of color by competitors does not put them at any disadvantage since there are other options available to them. Thus, we can infer that a feature would be deemed as functional under this doctrine when it is so essential that the limitation of its use puts competitors at a disadvantage and thus limits the choice available to consumers.
With regards to the recent LEGO case, the brick design was held to be a non-essential feature since the flat plastic plate has the width of three studs, which only run down the center of the plate, with the surface to either side being smooth, thus the design is clearly not limited to a technical function and this function can be achieved by other designs as well. Hence, the General Court of the European Union held that companies like Delta Sports cannot use this design of LEGO bricks in their products.
LEGO’s approach to avoiding getting their designs to go unprotected is laudable and possibly inspired by a 2010 judgment against them in Lego Juris A/S v. Office of Harmonisation in the Internal Mkt. where their original brick design was declared as ‘not protected’ by Trademark since the stud design is an essential feature for inter-locking of bricks.
The LEGO case reignited the debate between free competition and trademark-holders rights. The Doctrine of Functionality reminds us that IPR also has some mechanisms for preserving market competition. The precedents show that the availability of utilitarian products to consumers is something that IPR law strives to achieve. But cases like LEGO, also prove that these protections are not aimed at limiting trademark holder’s privileges. If there is a way to ensure that consumer’s right to choose is not compromised, then the companies can still have perks by virtue of their trademark designs.
References:
Neil A. Smith, Ninth Circuit Report, (Apr. 25, 2021, 6 PM)https://www.sheppardmullin.com/media/publication/209_pub628.pdf
Benjamin Fox Tracy, Lego of My Technical Functionality: The Perpetual Evolution of the European Community’s Trademark Law in Comparison with the Law of the United States, Volume 14, No. 2 2011 TOURO INTERNATIONAL LAW REVIEW.
Kristen E. Knauf, Shades of Gray: The Functionality Doctrine and Why Trademark Protection Should Not Be Extended to University Color Schemes, Volume 21 Issue 1 (2010) Fall, Marquette Sports Law Review.
LEGO wins design patent case against German company at EU court, DW, (Apr. 20, 2021,8PM)https://www.dw.com/en/lego-wins-design-patent-case-against-german-company-at-eu-court/a-56978555.
Inwood Laboratories, Inc., et al. v. Ives Laboratories, Inc. 456 U.S. 844.
Traffix Devices, Inc. v. Marketing Displays, Inc. 532 U.S. 23 (2001).
Pagliero v. Wallace China Co., 198 F.2d 339 (9th Cir.1952).
Qualitex Co. v. Jacobson Products Co., Inc. 514 U.S. 159 (1995).
Lego Juris A/S v. Office of Harmonisation in the Internal Mkt. , 2010 ECJ EUR-Lex LEXIS 808 (Sept. 14, 2010).