Danish toy brick maker Lego Juris A/S has failed in its bid to overturn a European trade mark decision canceling European trade mark protection for its standard 2 by 4 red Lego brick in a September 14 ruling of the European Court of Justice. Lego went to court after a Canadian firm had made blocks that were so like lego blocks that they even fit the real blocks made by Lego. The European judge decided that the design of the lego blocks is not protected by European trademarks and so anyone can make the blocks.  Struggling toy maker Mega Brands Inc. is the winner in this battle as it is attempting to restore the company’s financial health through the introduction of new products.

Questions:

1. Lego patented its design in 1958.  When did those patents expire?  How is a trademark different from a patent? How are they similar? 

2. Lego is the overall world leader in construction blocks for all ages, selling C$1.6 billion worth of the blocks each year, with half the sales located in Europe. It is estimated that MegaBlocks sells about $250 million worth of the plastic blocks annually, with about one-third being bought in Europe.  If you assume that these two companies make up the total market of blocks, what percentage does each control?

3.  What type of journal entries or financial disclosures would either company have in connection with this court decision?  

4.  Do you think the court was right in its decision?  Discuss.  Why or why not?

Source:

CNN Video. (2010). Lego loses big battle, September 15 (Retrievable online at http://www.cnn.com/video/)

Gordon, M. (2010). EU Court: Lego Red Brick Trademark Not Registrable, Wall Street Journal, September 14 (Retrievable online at http://online.wsj.com/article/BT-CO-20100914-707120.html)