Credit: LEGO® Star Wars™: The Force Awakens™
In the first part of this blog, we explored LEGO's history and its strategies for protecting intellectual property. Now, we will delve into various IP cases, highlighting the successes and challenges LEGO has faced over the years, and examine how these experiences are shaping its future strategies. Recently, LEGO has taken strong legal action against manufacturers of imitation products and sellers of counterfeit sets. The LEGO Group is actively working to prevent misuse that violates national and international IP protections. Let’s look at some notable cases where LEGO has both succeeded and faced challenges in enforcing its intellectual property rights.
Recent Legal Victories: LEGO's Triumph in IP Protection
In recent years, LEGO has secured several landmark victories that have strengthened its intellectual property position across key markets. These successes showcase not only LEGO's commitment to protecting its innovations but also highlight the evolving landscape of global IP protection.
Credits: LEGO® Star Wars™: The Skywalker Saga
Landmark Copyright Victory in China (2024)
In a groundbreaking case this April, Shanghai's court delivered one of LEGO's most significant IP victories to date. The court imposed a substantial fine of RMB 600 million (£66.5 million) on counterfeiters and sentenced two key perpetrators to prison terms of eight and nine years, respectively.
The case unveiled a sophisticated operation that had systematically replicated LEGO products between 2016 and 2022. The counterfeiters had established dedicated design, engineering, and production departments to create exact replicas of LEGO bricks and packaging, using authentic LEGO products as reference materials.
This victory is particularly significant as it demonstrates China's strengthening commitment to IP protection. Shanghai is increasingly establishing itself as a preferred venue for foreign rights holders seeking enforcement of criminal IP laws, with courts across China intensifying their efforts to combat counterfeiting.
Read more here.
Crucial Design Protection Victory in EU Courts (2021)
LEGO achieved a remarkable victory before the General Court of the European Union in March 2021. The court annulled a previous decision by the Third Board of Appeal of the EUIPO regarding the invalidity of a Community design for a specific LEGO toy brick.
The Court found that the Board of Appeal had erred in law by not considering the exceptions under Article 8(2) and (3) of the Community Design Regulation. Crucially, the Board had failed to examine all relevant features of the toy brick in question.
This decision created what’s now known as the "LEGO Exception," acknowledging that mechanical connecting elements can form an important part of innovative features and constitute essential marketing factors.
This ruling was particularly significant because it opened new pathways for protecting modular systems, recognising that technical features serving aesthetic purposes deserve protection. The decision provided LEGO with stronger legal grounds for safeguarding its iconic building system while establishing a precedent for innovation protection across industries.
Read more here.
The Remarkable Triumph Against a German Competitor (2024)
In January 2024, LEGO secured another significant victory when the EU's General Court ruled in its favour against Delta Sport Handelskontor. The dispute centred on a flat brick with four studs in the middle, which LEGO had registered for protection in 2010.
The Court dismissed Delta Sport's challenge, noting that the company had failed to present evidence showing that the LEGO toy brick did not meet the conditions required for modular system protection, particularly regarding novelty and individual character. This victory reinforced LEGO's design rights and strengthened its position in protecting its core product designs within the European market.
The ruling marked the culmination of a complex legal journey that began with the EUIPO initially annulling protection for the LEGO brick in 2019. Subsequent appeals and reversals ultimately concluded in LEGO's favour. While Delta Sport retains the option to appeal to the European Court of Justice, this decision represents a significant milestone in LEGO's ongoing efforts to protect its intellectual property.
These victories collectively demonstrate LEGO's sophisticated approach to IP protection and its ability to successfully defend its innovations across different jurisdictions. They also reflect the evolving nature of intellectual property law, particularly in key markets like China and the European Union, as courts strive to balance innovation protection with fair competition.
Read more here.
Significant Legal Challenges: Testing the Boundaries of IP Protection
As we have seen, LEGO has achieved remarkable success in protecting its intellectual property rights across different jurisdictions. However, the path to IP protection has not been without challenges. Several significant legal setbacks have tested the boundaries of what can be protected under various aspects of intellectual property law.
Credits: The LEGO Movie 2014
Landmark EU Trademark Defeat (2010)
One of LEGO's most significant setbacks came in September 2010, when the European Court of Justice (ECJ) upheld a 2004 decision to cancel LEGO's trademark for its iconic eight-studded brick. The company argued that the studs on top of the bricks made them highly distinctive and thus eligible for trademark rights. However, the ECJ found that the brick's shape served a purely technical function and, therefore, could not be registered as a trademark.
The case, brought by rival Mega Brands (maker of Mega Bloks), highlighted a crucial principle in IP law: technical solutions can only be protected for a limited time through patents. Mega Brands successfully argued that LEGO was attempting to secure "a potentially everlasting monopoly on a useful product configuration." The court agreed, stating that protecting the shape and function of a product would unfairly reduce opportunities for rival manufacturers.
Read more here.
Italian Market Transformation (2008)
Another significant defeat came on 29 February 2008, when the Italian Supreme Court ruled that LEGO could no longer prevent competitors from selling compatible construction bricks in Italy. This decision marked a dramatic reversal from the court's position just ten years earlier when it had granted LEGO protection under unfair competition law.
The case involved the Canadian company Mega Bloks, which sought to sell bricks compatible with the LEGO system in Italy. While LEGO argued that this created market confusion and constituted unfair competition, the Supreme Court emphasised that market competition required allowing compatible products. The court noted that consumers' desire for compatible bricks was an essential characteristic of the toy construction market and that preventing competitors from producing compatible bricks would effectively grant LEGO an infinite monopoly beyond its expired patent rights.
Read more here.
These legal battles, both won and lost, have significantly shaped LEGO's approach to intellectual property protection. Looking toward the future, the company faces new challenges in an increasingly digital landscape, requiring innovative approaches to safeguard its intellectual property while embracing technological advancement.
The Future of Lego’s IP strategy
Artificial intelligence stands at the forefront of emerging challenges, particularly in its impact on creative design and IP protection. While AI offers potential opportunities for innovation in toy design and manufacturing, it also raises complex IP questions. For instance, AI-generated designs that mimic LEGO's distinctive style could blur the lines between inspiration and infringement. LEGO must carefully balance protecting its intellectual property while fostering innovation and supporting legitimate competition.
LEGO's approach to this challenge appears to be multifaceted. Rather than viewing AI solely as a threat, the company is exploring ways to integrate new technologies into its IP strategy. This includes leveraging AI in design processes while ensuring that human creativity remains at the heart of product development. LEGO understands that while AI might enhance certain aspects of design, the brand’s essence lies in human ingenuity and problem-solving—qualities that cannot be replicated by artificial intelligence alone.
Looking ahead, LEGO’s IP strategy will likely extend beyond physical products to include its digital presence, such as virtual building experiences and augmented reality applications. This evolution reflects the company’s recognition that remaining a global IP leader requires adapting to new technological frontiers while preserving the core values that have made LEGO a beloved and trusted brand for nearly a century.
Read more here.
P/S
The LEGO case study underscores the pivotal role intellectual property (IP) plays in driving business development and innovation. From its origins as a small wooden toy manufacturer to its position as a global leader in the toy industry, LEGO’s success highlights the importance of protecting and leveraging IP. By securing patents for its unique brick design and trademarks for its brand, LEGO not only safeguarded its products from imitation but also laid a solid foundation for sustained growth and market leadership. This strategic approach has enabled LEGO to continually innovate and adapt, maintaining its competitive edge in an ever-evolving industry. LEGO’s journey demonstrates how effective IP management fosters long-term success and reinforces a company’s market position.
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