The "Lego exception" – one less block in the road

The General Court of the European Union ("GC") has confirmed that Lego's toy bricks qualify for registered Community design ("RCD") protection despite several attempts by a rival toy company to declare Lego's registration invalid.

In its decision handed down on 24 January 2024 (T-537/22), the validity of Lego's RCD "Building blocks from a toy building set" was confirmed, with the GC noting inter alia that Article 8(3) of Council Regulation (EC) No 6/2002 of 12 December 2001 on Community Designs (the "Regulation"), which allows the registration of RCDs for products comprised of modular systems so long as they show novelty and individual character, was not infringed.

Lego's RCD No.001664368-066

To be capable of registration under the Regulation, a design must be new and have "individual character". A design will not be capable of protection if its features are solely determined by the product's technical function or by the need to interconnect with other products to perform a technical function (known as the "must-fit" exception). However, modular systems, those that serve the purpose of allowing the multiple assembly or connection of mutually interchangeable products within a modular system, are capable of registration. This caveat for modular systems has come to be known as the "Lego exception".

Brief history of the dispute

In 2016, a rival toy company, Delta Sport Handelskontor GmbH ("Delta") challenged Lego's RCD (seen above) by applying to the EUIPO for a declaration of invalidity. It argued that all features of the appearance of the product were solely dictated by their technical function and therefore not capable of protection under Article 8(1) of the Regulation. In 2017, the EUIPO's Invalidity Division rejected Delta's application since Delta had not established that fulfilling a technical function was the only factor determining the appearance of the product. However, Delta appealed and in 2019, a decision by the Board of Appeal of the EUIPO (the "Board") declared Lego's RCD invalid.

The matter was then brought before the GC following Lego's appeal. By a 2021 ruling, the GC annulled the Board's decision to invalidate Lego's RCD noting, in particular, its consideration of the following six features of the Lego brick in reaching the 2019 decision:

1. the row of studs on the upper face of the brick;
2. the row of smaller circles on the lower face of the brick;
3. the two rows of bigger circles on the lower face of the brick;
4. the rectangular shape of the brick;
5. the thickness of the walls of the brick; and
6. the cylindrical shape of the studs.

The GC found that the Board, in considering only the six features above, had erred in failing to also consider the flat surface on either side of the four "studs" on the upper side of the brick (see View/Vue 7 above). It was therefore wrong to conclude that the entire design was solely dictated by technical function. The Board had also erred in its failure to consider whether the design met the requirements of Article 8(3) of the Regulation. The matter was then referred back to the Third Board of Appeal.

In 2022, the Third Board of Appeal decided that Delta's application for invalidity was "utterly unsubstantiated, apart from based on a misinterpretation of the  reference in Article 8(3)…[which] refers to the design as a whole and not only to the must-fit features" [36] (R-1524/2021-3). Delta appealed once more.

The 2024 GC decision

Delta put forward the following three arguments:

1. Article 8(2) of the Regulation would be infringed where just one of the seven features identified and considered by the Board (in this case the flat surface area) was required to necessarily be reproduced in its exact form and dimensions in order to allow the product to connect with another to perform a function;
2. that the Board had erred in its application of Article 8(3) of the Regulation by considering the design as a whole and placing the burden of proof concerning novelty and individual character on Delta; and
3. the Board infringed Article 63(1) of the Regulation in failing to consider certain well-known and/or undisputed facts when assessing the disclosure of earlier designs, as well as information provided by screenshots of a website and a reference to an ECJ judgment.

As to the first argument, the GC disagreed, noting that an RCD will be declared invalid in accordance with the provisions of Article 8 of the Regulation "only in the case where all of its characteristics are excluded from protection. If at least one of its characteristics is protected, in particular due to the application of the exception provided for in Article 8(3) of that regulation, the design remains valid” [37-38].

The second argument concerned Delta's view as to how the Board should have applied methods to determine the design's novelty and individual character. However, the GC held that it was unnecessary to consider these since they are presumed during registration. Further, the application of this presumption of validity does not depend on the ground for invalidity being relied on and, in any event, since Delta did not point to disclosure of an earlier design, assessing novelty and individual character was unnecessary. As to the burden of proof, the GC outlined that "it would be contrary to the very logic of the system of Community designs to require…the holder of a registered design wishing to rely on the exception provided for in Article 8(3) of Regulation No 6/2002 to prove compliance with the conditions of novelty and individual character" [61]. To do so would impose a burden of negative proof.

Finally, Delta's third argument was dismissed since it failed to provide sufficient evidence to establish the disclosure of the earlier designs before the date of filing of the application for Lego's contested RCD. The Board did not make an error of assessment, in that it based its findings concerning that disclosure on the factual assessment of the evidence submitted by the applicant in this regard. Indeed, Article 63(1) specifies that in proceedings before it, the Office shall examine the facts of its own motion.  However, in proceedings relating to a declaration of invalidity, the Office shall be restricted in this examination to the facts, evidence and arguments provided by the parties and the relief sought. Further, the GC noted that, "the disclosure of an earlier design cannot be considered to be a well-known fact which is not required to be demonstrated, even in the event that the products in which that design is incorporated or to which it applies would have been present on the market for a long time and would be generally known to the public" [88].

Conclusion

Whilst the decision is not binding on UK Courts since it was decided after the end of the Brexit transition period, it will be interesting to see how the UK Courts might nonetheless interpret the 'Lego exception'. For example, considering that the Lego brick is a quintessential example of a modular system, we eagerly await any decisions concerning other products that might fall within the remit of Article 8(3) of the Regulation.

Overall, the decision highlights that a design will be declared invalid in accordance with Article 8 of the Regulation, where all of its characteristics are excluded from protection. Indeed, if at least one of its characteristics is protected, in particular due to the application of the exception provided for in Article 8(3) of the Regulation, the design remains valid. The decision also reinforces that the burden of proof as to whether a design lacks novelty and individual character remains with the applicant for a declaration of invalidity.

Notably, the present decision can be further appealed to the CJEU, so it remains to be seen whether this long-running saga will continue.