Shape of Lego® Blocks Not Protected by Trade-mark Law in Canada

In a much anticipated decision, the Supreme Court of Canada in Kirkbi AG v Ritvik Holdings Inc, 2005 SCC 65, commonly known as the Lego versus Mega Bloks case, upheld both the trial and appeal court decisions that functional elements cannot be protected either by registered trade-marks or by the common law tort of passing off. Kirkbi AG (Lego) had enjoyed patent protection for the interlocking studs and tubes of its toy construction blocks in Canada for many years, but the last of the Canadian patents expired in 1988. Since then, Ritvik Holdings Inc [now Mega Bloks Inc] (Mega Bloks) had been manufacturing similar bricks. Lego had sought registered trade-mark protection and design registrations for its blocks, but both applications were denied. Lego then alleged an unregistered mark in the distinctive orientation of the studs as the basis for this litigation. In its unanimous decision, the Court restated the doctrine of functionality which denies trade-mark protection, whether for registered or unregistered marks, for purely functional design elements. To allow such protection would be to unjustly perpetuate the monopoly rights accorded under a patent. Section 13(2) of the Trade-marks Act codifies the doctrine by stating "No registration of a distinguishing guise interferes with the use of any utilitarian feature embodied in the distinguishing guise." Furthermore, the Court found that the tort of passing off requires the establishment of goodwill in the distinctive designation or guise, deception of the public due to misrepresentation, and actual or potential damage. The plaintiff did not establish distinctiveness of its purported guise, since the product consisted of processes and techniques dedicated to the public on expiry of the patents. As the Court noted, in one sense this is a second application of the doctrine of functionality within the tort of passing off. The holding in Canada conforms to the decisions reached in parallel litigation in Great Britain and France. On an ancillary issue unique to Canada, Mega Bloks had challenged the constitutionality of Section 7(b) of the Trade-marks Act, on the grounds that the creation of a passing off cause of action within the federal statute is an improper intrusion into the constitutionally protected provincial domain of property and civil rights. On that matter, the Court held that the intrusion into the provincial domain in this instance is minimal, it is permitted by the general trade and commerce power accorded to Parliament under section 91(2) of the Constitution Act, 1867, and it is necessary to prevent a gap in the overall trade-mark scheme. For the Supreme Court of Canada judgment in the Lego versus Mega Bloks case, see: http://www.lexum.umontreal.ca/csc-scc/en/rec/html/2005scc065.wpd.html Summary by: Nicholas J. Whalen