Subject:
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Re: A VERY interesting article on the Lego Business
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lugnet.general
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Thu, 21 Dec 2000 17:02:23 GMT
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In lugnet.general, Richard Marchetti writes:
> Anyone have access to Lexus/Nexus? =)
This is the case (I don's know how to cite this properly):
Tyco Industries, Inc., Plaintiff, v. Lego Systems, Inc. and Interlego, A.G.,
Defendants
Civil No. 84-3201(GEB)
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY
1987 U.S. Dist. LEXIS 13193; 5 U.S.P.Q.2D (BNA) 1023
August 24, 1987, Decided; August 26, 1987, Filed
Yep...here's some excerpts (and yes, they actually talk about "butterfly ads"
in section three:
II. BACKGROUND
The plaintiff, Tyco, is a Delaware Corporation with its principal place of
business in Moorestown, New Jersey. For over 50
years, Tyco has been a manufacturer and distributor of toys in the United
States. The defendant Interlego, A.G. is a Swiss
corporation located in Zug, Switzerland. For purposes of this trial only,
Interlego speaks for a group of related Interlego
companies in Denmark and Switzerland which perform various functions in
connection with Lego Products. The defendant Lego
Systems, Inc., is a Connecticut corporation wholly owned by Interlego, A.G.
with its principal place of business in Enfield,
Connecticut.
Lego products consist primarily of plastic building blocks and elements
developed for children. Lego began selling its
Lego-brand block sets in [*4] the United States in 1961. The basic Lego
building block, also referred to as a brick, is
approximately 9.5 mm. high, by 15.5 mm. wide, by 32 mm. long. The underside of
the block has three tubes. The blocks
interlock with one another. As one block is placed on another, the knobs or
studs on the top of one block fit in the spaces
between the outer edge of the tubes and the interwall of the other block.
The gripping force that holds the blocks together is called "clutch power".
Lego blocks are designed so that once a structure is
built with the blocks, the clutch power will hold it together under normal
conditions, but the clutch power is also low enough that
a child can disassemble the blocks using normal force.
Since the pieces in all Lego sets are intended to work with each other, Lego
has adopted a clutch power for its blocks which is
uniform over the entire range of the Lego line, but is most appropriate for
children ages five to nine. The clutch power selected
by Lego is sometimes too tight for children younger than six or too loose for
older children who build more complex structures.
Lego makes blocks with a wide variety of patterns of studs on top. These are
referred to by [*5] the number of rows and the
number of studs on each row. For example, a "2x2" has two rows of two studs
each, and a "1x3" has one row of three studs.
The basic Lego block is called a "2x4" because it has two rows of four studs
each.
In addition to the brick shape blocks, Lego makes other pieces, known as
elements, which are non-block pieces. Lego makes
approximately 470 elements, including windows, doors, windshields, wheels and
axles, propellers, wind-ups, electric motors,
cranes, pneumatic pumps, rooftops, miniature human figures, lighted blocks, and
base plates.
Since 1959, Lego has sold a pre-school size block in the United States, at
first under the trademark "Lego Pre-School," and
since 1977, under the trademark "DUPLO." The basic Lego and DUPLO blocks use
the same system of interlocking and are
of the same general overall configuration as the Lego blocks. The DUPLO block
was designed so that all Lego blocks which
have two or more studs in each direction may be mounted on top of a DUPLO
block. To accommodate this direct connection,
studs on the DUPLO block are cored out to receive the internal tubes of the
Lego blocks.
Lego sets are age graded. The DUPLO blocks are suitable for [*6] children
below four years of age, and are sold in sets
designed for children from ages 18 months to about three years. Sets of
standard sized blocks are designed to be suitable for
various ages from three and up.
Lego size sets for ages three and up (Lego 3+ sets) are the natural progression
from DUPLO and are made up of blocks and
elements. All of the blocks in 3+ sets have at least two rows of at least two
studs each so that they may be connected directly to
DUPLO blocks and so that they are large enough to be easily disconnected by
three and four year olds. The direct attachment
of Lego to DUPLO has been widely promoted by Lego on shelf strips which are
attached to retail store shelves, in
point-of-sale brochures, and in Lego print ads, generally accompanied by the
phrase "Lego bricks work together with DUPLO
blocks."
Lego 5+ and 7+ sets generally contain a wider variety of sizes and shapes of
pieces than the Lego 3+ sets. This is particularly
true of the larger, more expensive sets. Most of these sets include 1/3 height
blocks and pieces, blocks having one stud in one
or both directions, and a variety of other complex elements. These smaller
pieces lend greater realism to models [*7] and
permit greater detail.
From about 1973 to the present, Lego and DUPLO brand building toys have held a
commanding lead in the sales of plastic
block construction toys, and the sales in the United States are believed to
have equalled or exceeded the sales of all other
brands of plastic building block toys combined. From 1977 to 1983, surveys
conducted by Lego indicated that approximately
40 percent of all families in the United States with children 14 years of age
or younger owned Lego products. At all relevant
times, Lego has been and remains by far the most widely known and largest
selling brand of interlocking plastic toy blocks in the
United States.
In 1983, Tyco decided to market a toy construction block in both standard and
pre-school sizes. Tyco began to offer and sell
its blocks to the trade in early 1984 under the trademark TYCO SUPER BLOCKS (in
standard size) and TYCO PRE
SCHOOL SUPER BLOCKS (in pre-school size). Tyco was aware that Lego dominated
the market for such toys, and
decided to market a block which would fill part of the large demand for Lego
sets. It is not disputed that Tyco has the right to
manufacture and sell a high quality block that works together with [*8] Lego
blocks.
Tyco copied the physical appearance of six basic Lego blocks almost exactly,
except that Tyco deliberately altered the "feel" of
Tyco blocks by slightly reducing the dimension of the tubes and studs so as to
make the Tyco blocks feel looser and to make
them more easily detachable. n2 No Tyco set is identical in piece makeup to any
Lego set. Except for the basic blocks, Tyco
pieces are not copied from similar Lego pieces. All Lego sets contain pieces
not found in Tyco sets, and no two Lego and Tyco
sets are the same in piece type or array.
n2 Another difference is that Lego places its name inside each of the studs;
Tyco places its name on the plate between the studs.
Tyco's pre-school blocks also differ from DUPLO blocks. The studs of the Tyco
pre-school blocks are not cored out as are
the DUPLO studs. Since the Tyco pre-school studs are not cored out, standard
Tyco (and Lego) blocks cannot be mounted on
a Tyco pre-school block. Tyco has a 2x4 grey adapter block which fits on the
Tyco pre-school block to connect it with a
standard block. The block is available only in Tyco standard size sets (except
in set numbers 5205 and 5207). No Lego block
fits directly on Tyco's [*9] pre-school size blocks.
III. PART ONE: THE FALSE ADVERTISING CLAIMS
In its complaint, Tyco sought entry of judgment declaring that the value
comparisons used on its packaging and promotional
materials did not infringe on Lego's statutory or common law rights. Lego
counterclaimed pursuant to § 43(a) of the Lanham
Act seeking to enjoin advertising and certain statements on Tyco packaging on
the grounds that the statements are literally false
and/or tend to deceive consumers. Neither party claims damages.
A. Tyco's Advertising: The "Toy Box" Concept
Lego's challenges are directed at claims made by Tyco: 1) that Tyco "looks and
feels like Lego", 2) that "you can't tell the
difference" between Tyco and Lego so that "your child can keep right on
building with either one"; 3) that one can "build a
bigger" structure with Tyco than Lego for the same money; 4) that Tyco's
standard and pre-school sizes connect to each other,
and 5) that Tyco sets are less expensive than "comparable" or "comparably
priced" Lego sets.
In 1985, Tyco advertised its TYCO SUPER BLOCKS to the consuming public in
variations of one print ad and one television
commercial. In addition, in 1985, Tyco advertised [*10] its "outer space"
theme sets in one print ad. Tyco's marketing plan
was intended to convince the trade and the public that Tyco's new product
looked like, felt like, was of the same quality as
Lego, and that the only difference was that Tyco was much less expensive. As
Mr. Grey, Tyco's President, testified, "The ad
says buy Tyco instead of Lego because you get better value. It's the same
merchandise or substantially the same, it looks the
same, it feels the same, it works together . . .". As Tyco's counsel stated in
his opening remarks, Tyco's ads make the claim one
can get the same bricks for less money. Tyco claims it never intended, however,
to make "sets" of blocks and elements that
were in any sense the same as Lego sets.
In his testimony, Mr. Grey described what was referred to throughout the trial
by Tyco as "the toy box" concept. Tyco's theory
is that Tyco and Lego sets are substantially the same and can be mixed up in
the same toy box and the pieces can be used
interchangeably. Thus, when the child reaches in the toy box for piece to build
with, it doesn't matter whether the piece is a
Tyco or a Lego piece. As Mr. Grey testified on direct examination:
Literally, what it [*11] means is that a child could reach into a box, toy
box, bucket container of some kind, pull out a block
and not care whether it's a Tyco block or a Lego block. That is fully
compatible.
However, Mr. Grey also testified that it was never Tyco's intention to
duplicate the entire line of Lego pieces or sets:
It was never our intention to produce at any time every element and shape that
Lego had. There were certain basic shapes and
sizes and elements that should be identical or very, very similar, and beyond
that, we planned and in fact have gone our own
way and developed other blocks, other shapes that we felt were suited or more
suited to the kinds of projects that we felt
American kids would be happy with.
The "toy box" concept was conveyed on the 1984 print media "Butterfly" ad n3
and the basic 1985 print ad, as well as on the
bullet and the legends on Tyco's packaging. n4 (Tr. 253). Tyco felt that for
the "toy box" concept to be accepted, the pieces
which were the same had to look the same (Tr. 144, 229-31), and a difference in
the appearance of similar Tyco and Lego
blocks would be unacceptable to the consumer. (Tr. 255-56). However, while only
some of the pieces were intended [*12]
to be "identical", this fact was not and is not disclosed in Tyco's advertising
and packaging.
n3 The "butterfly" ad was a print ads which showed a butterfly constructed out
of both Lego and Tyco blocks. In large letters
on either side of the butterfly appear the words: "Which part is Tyco? Which
part is Lego? If you can't tell the difference, why
pay more?" The ad goes on to include inter alia the statements, "Tyco looks
like and feels like Lego" and "Tyco works with
Lego."
n4 The "bullet" on the Tyco package shows a picture of a Lego 2x4 and a Tyco
2x4 connected together. The written message
is that Tyco works with Lego.
The "toy box" concept also included the fit, since a child, Mr. Grey testified,
might care if Tyco and Lego fit differently (Tr.
273). Indeed, Mr. Grey admitted that Tyco pre-school was offered as compatible
with DUPLO in the "toy box" sense, as
emphasized in Tyco's ads and packaging (Tr. 263 and 280-81), and acknowledge
that it "is not unlikely that the mother who
has the Tyco pre-school and the DUPLO in the toy box would be of the belief
that after reading the [package insert] she would
not be able to tell the difference between the products." (Tr. [*13] 284-85).
However, the Tyco Pre-School block is in fact
different from the DUPLO block and the two are not interchangeable if the child
is using the blocks with either party's
regular-size sets.
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Message is in Reply To:
 | | Re: A VERY interesting article on the Lego Business
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| (...) That article points up precisely all the reasons to simply not care whether TLC succeeds or not. Most of the details are available elsewhere, but this article nicely redacts those sources into a nice, concise unit -- it's a great reference! (...) (24 years ago, 21-Dec-00, to lugnet.general)
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