Subject:
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SCC rules in favour of Mega Bloks in Lego battle
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Newsgroups:
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lugnet.mediawatch
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Date:
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Thu, 17 Nov 2005 17:00:31 GMT
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Viewed:
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3243 times
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From
http://sympaticomsn.ctv.ca/servlet/ArticleNews/story/CTVNews/20051117/mega_bloks_lego_051117
Mega Bloks Inc. did not infringe on Lego's trademark, the Supreme Court of
Canada ruled Thursday.
Danish toy maker Lego had appealed to the higher court, alleging that Mega Bloks
had copied the "look" of the tiny knobs that allow the blocks to snap together,
and that it was confusing to consumers.
However, today, the SCC unanimously ruled that the Montreal-based company should
be allowed to continue producing its product. It said "functionality" does not
confer a trademark.
"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,'' the Supreme Court
said in its unanimous decision.
"Dragons, castles and knights may be designed with them (toy blocks) without any
distinction.''
While Lego's worldwide patent had expired, the company argued in the Supreme
Court filing that the block itself should be their trademark.
But the SCC upheld a lower court decision that also went against Lego. That
decision said that Lego did not have trademark rights to the tiny knobs that fit
the blocks together.
"The court recognizes our full right and also the right for the end consumer to
have a choice, so this is the end of the Lego monopoly in Canada" Mega Bloks
spokesman Eric Phaneuf said, The Canadian Press reported.
Mega Bloks is the world's second-biggest toy building-block maker, with sales of
$234.5 million US last year. That is compared to about $1 billion for Lego.
The Montreal-based company estimates it has 40 per cent of the construction toy
company in Canada, while Lego has about 45 per cent.
However, CTV's Linda Sims said that Mega Bloks is making money, while Lego has
been losing it, and losing market share to Mega Bloks and other toy companies.
The brightly-coloured toy blocks are similar in design. Mega Bloks tend to be
larger, and do not link with Lego blocks.
Today's SCC ruling only applies to Canada. However, Mega Bloks has won lower
court decisions in other countries.
Earlier this year, Lego lost a trademark dispute in Germany, paving the way for
Mega Bloks entry into that market.
Trading of shares of Mega Bloks -- one of Canada's most successful toy companies
-- was halted on the Toronto Stock Exchange ahead of the SCC decision.
Now that trading has resumed, shares are up 73 cents at $25.40 Cdn in morning
trading. That's a gain of about three per cent.
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