Lego Group of Denmark lost its nine-year legal battle with Canadian rival Mega Bloks Inc. to stop it from selling a competing version of the popular plastic building-block toy.
Lego had claimed that Mega Bloks had infringed its trademark rights to the look of the knobs that snap the blocks together.
Canada's highest court rejected Lego's claim yesterday, and accepted Mega Bloks' argument that the knobs are a functional part of the toy, which can only be protected by patent law. Lego's last patent on the blocks expired in 1988. Currently, patents expire after 20 years, opening the market to competitors.
Yesterday's court ruling clarifies federal trademark law, says Abraham Drassinower: trademarks are intended to protect only the visual cues, such as signs and words, that companies use to identify their products in the marketplace.
Lego has launched numerous legal battles against rivals around the globe in defence of its business. The company owns about two-thirds of the world's estimated US$1.4 billion annual market for construction toys.