In a case that spanned nearly nine years, Dimock Stratton lawyers successfully defended Canadian toymaker Mega Brands and its toy MEGA BLOKS bricks against Lego's allegations of passing off.
Lego's patented toy blocks, sold in Canada since 1961, had an array of cylindrical studs on their top surface, which were used to interlock with the bottom of other blocks. Montreal-based Mega Brands (then known as Ritvik Holdings) began making and selling its "Micro" size MEGA BLOKS bricks in 1991 after Lego's patent expired. To be compatible with Lego blocks, Ritvik's blocks were made with essentially the same dimensions and shape as the Lego blocks, including an array of cylindrical studs arranged to interlock with other blocks. However, Lego claimed its extensive use of the toy block over decades had vested Lego with common-law trade-mark rights in the array of cylindrical studs, and that the array of studs acted as a source identifier in the minds of Canadian consumers. Lego Canada and its parent Kirkbi AG therefore sued Ritvik, alleging passing off under section 7(b) of the Trade-marks Act.
On the evidence, the trial judge found that Lego's cylindrical studs were "functional in all respects" with the exception of the inscription of the name LEGO on each stud. The trial judge then followed the Federal Court of Appeal decision in Remington Rand Corp. v. Philips Electronics NV -- a case on functionality and registered trade-mark rights handled by Dimock Stratton -- and dismissed Lego's action, ruling that the array of studs therefore could not act as a trade-mark.
The trial judge's decision was upheld on appeal by the Federal Court of Appeal. Lego appealed again to the Supreme Court of Canada, which also dismissed Lego's appeal, noting that "trade-marks law is not intended to prevent the competitive use of utilitarian features of products" and that "[c]ompetition between products using the same technical processes or solutions, once patent rights are out of the way, is not unfair competition." The Supreme Court also confirmed that the doctrine of functionality applied equally to registered and unregistered marks.
Kirkbi AG v. Ritvik Holdings Inc., 2002 FCT 585, 2003 FCA 297, 2005 SCC 65