Publication
title
Kirkbi & Lego Are Blocked from Asserting a Functional Trade-Mark
DATE
November 25, 2005
EXPERTISE
LEGO building blocks have fired the imagination of children and those young at heart for many years. More recently, they have also fired up heated legal debates about the protection of unregistered trade-marks, and more specifically, debates about whether the functional shape of a product can be a trade-mark. The Supreme Court of Canada has now ended those debates by rendering judgment in Kirkbi AG v. Ritvik Holdings Inc.[1]
BACKGROUND
Various generations of LEGO building blocks have been protected by patents, dating back to 1940. The patents have now expired. These patents related mainly to the interlocking function of the building blocks created by the arrangement of studs in a regular geometric pattern on one face of the block, and corresponding cavities on the opposite face of the block.
In 1991, and after the expiry of the patents, Ritvik (now Mega Bloks) began making and selling building blocks adopting the interlocking studs under its MICRO line of MEGA BLOKS construction toys.
Five years later, Kirkbi, the Danish Manufacturer of LEGO building blocks, and Lego, the Canadian distributor, sued Ritvik for passing off under subsection 7(b) of the Trade-marks Act.[2] Kirkbi claimed to own an unregistered trade-mark in the form of the shape of its building blocks - what is referred to as a "distinguishing guise". More specifically, the claimed trade-mark was the upper surface of the building block - referred to as the "LEGO Indicia" - which has eight studs arranged in a regular geometric pattern.
Justice Gibson of the Federal Court came to the conclusion at trial[3] that the LEGO Indicia was primarily functional, and could therefore not be a valid trade-mark. In his opinion, all of the aspects of the LEGO Indicia, with the exception of the inscription of the mark LEGO on each stud, were dictated by their interlocking function, and the LEGO Indicia was therefore purely utilitarian. He also dismissed Kirkbi's argument that the functionality of the mark only went to the questions of registrability and expungement of a mark.
On appeal,[4] two of three judges from the Federal Court of Appeal upheld Justice Gibson's decision. The majority came to the conclusion that there was no palpable and overriding error in Justice Gibson's finding of fact that the LEGO Indicia was purely functional, and they agreed that the action had to fail because the functionality doctrine kept the LEGO Indicia from being a valid trade-mark under the Trade-marks Act.
Additionally, the majority noted that Kirkbi had already obtained protection, under the form of several patents, for the functionality of its bricks, and could not "evergreen" this monopoly by resorting to the trade-mark regime.
SUPREME COURT JUDGMENT
Justice LeBel, writing for a unanimous Court, dismissed Kirkbi's appeal.
The subsection 7(b) passing-off action failed because the trade-mark - the LEGO Indicia - is functional. The functionality doctrine establishes that a mark which is essentially the functional structure of the wares themselves is not a legitimate trade-mark: "A purely functional design may not be the basis of the trade-mark, registered or unregistered."
The Court, like the majority in the Federal Court of Appeal, took a rather dim view of Kirkbi's attempt to extend its patent protection by claiming an unregistered trade-mark: "The law of passing off and of trade-marks may not be used to perpetuate monopoly rights enjoyed under now-expired patents." The Court concluded that the market for building blocks which fell within the now-expired patents is "open, free and competitive":
The fact is, though, that the monopoly on the bricks is over, and MEGA BLOKS and LEGO bricks may be interchangeable in the bins of the playrooms of the nation - dragons, castles and knights may be designed with them, without any distinction.
Justice LeBel offered some interesting observations about the nature of Canadian trade-mark law. He observed that: "The foundation of a trade-mark is distinctiveness because only a distinctive mark will allow the consumer to identify the source of the goods." He also observed that "a mark must not be confused with the product - it is something else, a symbol of a connection between a source of a product and the product itself."
Justice LeBel also went on to find that the functionality doctrine goes to the essence of what a trade-mark is: "It reflects the purpose of a trade-mark, which is the protection of the distinctiveness of the product, not of a monopoly on the product."
The Court found that the functionality doctrine is a well-established principle of Canadian trade-mark law, that it has been consistently applied by the Federal Court of Canada, and that it is consistent with legislative and jurisprudential developments in other countries.
The Court also considered at length whether subsection 7(b) of the Trade-marks Act was constitutionally valid. Some twenty-eight years before, the Supreme Court of Canada had the opportunity of considering the validity of subsection 7(e) of the Trade-marks Act in MacDonald v. Vapor Canada Ltd.[5] In the MacDonald decision, the Supreme Court of Canada found that subsection 7(e) was unconstitutional. Although many courts have had the opportunity of considering the constitutionality of the remainder of section 7 since the MacDonald decision, and the consistent approach has been that the remaining subsections were constitutional as long as they were seen to be connected to some other form of intellectual property - be it trade-marks, patents or copyrights - the Supreme Court of Canada had not directly considered the issue of whether subsection 7(b) was constitutionally valid until this case.
Although it was not specifically challenged on this appeal, Justice LeBel considered the constitutional foundation of the Trade-marks Act as a whole, as a step towards his finding that subsection 7(b) is constitutional. As to the whole of the Act, Justice LeBel saw it as constitutional, and as regulating both registered and unregistered trade-marks. With respect to subsection 7(b), he noted that while the subsection - which essentially codifies the common law tort of passing off - appears to encroach on the provincial property and civil rights power, the intrusion is minimal and subsection 7(b) is sufficiently integrated into the scheme of the Trade-marks Act as a whole to be constitutional nonetheless.
Finally, in finding the Trade-marks Act as a whole valid, and in finding that the Act establishes a regulatory scheme for both registered and unregistered trade-marks, the Court definitively resolved any uncertainty as to the appropriate forum for bringing a passing-off action. If a passing-off action relates to trade-marks, then it can properly be brought under subsection 7(b) of the Trade-marks Act, and it can be brought nationally in the Federal Court of Canada, rather than on a province-by-province basis.
[1]. http://www.lexum.umontreal.ca/csc-scc/en/rec/html/2005scc065.wpd.html
[2]. http://laws.justice.gc.ca/en/t-13/106520.html
[3]. Kirkbi AG v. Ritvik Holdings Inc., 2002 FCT 585; http://decisions.fct-cf.gc.ca/fct/2002/2002fct585.shtml
[4]. Kirkbi AG v. Ritvik Holdings Inc., 2003 FCA 297; http://decisions.fca-caf.gc.ca/fca/2003/2003fca297.shtml
[5]. [1977] 2 S.C.R. 134
The purpose of this document is to provide information as to developments in the law. It does not contain a full analysis of the law nor does it constitute an opinion of Ogilvy Renault LLP or any member of the firm on the points of law discussed.
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