The Court That Gets It
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Friday November 18, 2005
The Supreme Court of Canada yesterday issued its much-anticipated (by trademarks practitioners anyway) decision in the trademark battle between Mega Blocks and Lego (the case is formally known as kirkbi ag v. ritvik holdings inc.)
The unanimous court found for Mega Blocks, ending Lego' s attempts to use trademark law to limit the marketing of a competitive product. After Lego' s patent on the lego interlocking bricks expired, Mega Blocks, a Canadian toy manufacturer, began selling a competing product that also featured interlocking bricks. Lego sought to rely on an unregistered trade-mark, the "LEGO indicia", "which consists of the well-known geometrical pattern of raised studs on the top of the bricks as the basis for a claim of passing off" under the Trademarks Act. Their action was dismissed at trial, the dismissal was upheld on appeal, and now the SCC has again affirmed the initial dismissal.
The first half of the decision involves an analysis of the constitutionality of the Trademarks Act (the federal government relies on its powers under the trade and commerce clause for the statute). Nothing particularly new here, but the discussion does bring to mind two potential future cases that may raise similar issues: a constitutional challenge to PIPEDA and to anti-circumvention provisions in a future Copyright Act.
More noteworthy is that the court again demonstrates that it clearly gets the marketplace impact of intellectual property rights and the need for balance and limits in how IP rights are addressed. Copyright does not play a role in this decision (the court obviously discussed the limits and need for balance in Theberge, CCH, and the Tariff 22 cases), but similar concerns appear in patent and trademark law.
With regard to patents, the court cites with approval language from several years ago that states "patent protection rests on a concept of a bargain between the inventor and the public. In return for disclosure of the invention to the public, the inventor acquires for a limited time the exclusive right to exploit it."
On the trademark side, the court also notes the limitations to trademark, stating that "trade-marks law is not intended to prevent the competitive use of utilitarian features of products. . . In Canada, as in several other countries or regions of the world, this doctrine is a well-settled part of the law of trade-marks. In the law of intellectual property, it prevents abuses of monopoly positions in respect of products and processes."
In light of the balance and its analysis of trademark law, it forcefully concludes that:
"In the end, the appellant seems to complain about the existence of competition based on a product, which is now in the public domain. As "LEGO" and LEGO-style building blocks have come close to merging in the eyes of the public, it is not satisfied with distinctive packaging or names in the marketing operations of Ritvik. It seems that, in order to satisfy the appellant, the respondent would have to actively disclaim that it manufactures and sells LEGO bricks and that its wares are LEGO toys. 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."
It has been apparent now for several years but it bears repeating about the Supreme Court of Canada -- no high court in the world better understands that the right balance in intellectual property law depends as much on the laws' limits as its protections.
Friday November 18, 2005