A local skirmish in what is a world-wide assault by the Mowbray family business Zuru to dis-establish Lego’s trademark foundered in the New Zealand courts. In the US, Zuru is arguing that the word Lego has lost trademark protection, going the same way by common usage as trademarks Cellotape and Velcro.
Marketing can be too successful, with a trademarked name becoming common usage as a name used to describe comparable products.
One of Mowbrays’ manufacturing strategies for toys has been to take an existing product, produce a close clone and then market its product as being compatible with and able to be used in conjunction with the existing market leader. Mass production in China keeps costs down; promised compatibility boosts market share, bootstrapping Zuru’s product to the market leader’s commercial reputation.
Lego came down hard on Zuru’s infiltration of its market. Lego has been in existence for nearly ninety years. The Danish company has long since lost copyright protection for its product. Trademark of the name Lego is used to protect its market value.
The High Court was told Zuru sounded out US retailing giant Walmart in 2017 about stocking a Lego-compatible plastic building brick. Walmart was enthusiastic, but rejected sample packaging describing the Zuru product as being compatible with Lego bricks. Walmart approved packaging stating the product was ‘compatible with major brands.’
Following success with the Walmart launch, Zuru stocked its product in New Zealand the following year through The Warehouse. New Zealand packaging described the bricks as ‘Lego bricks compatible’ with a notation over Lego to acknowledge it was a trademarked name. Lego immediately fired off a ‘cease and desist’ letter, threatening legal action. The Warehouse dropped the product until this issue was sorted out. Zuru sent Lego samples of proposed packaging, seeking prior approval for any of several offered options using the word ‘Lego.’ It did not receive a favourable response.
Zuru and Lego then fronted up to ten days of evidence and legal argument in the High Court at Auckland over use of Lego-compatibility wording on packaging.
Justice Lang ruled any use of the word ‘Lego’ on Zuru packaging was a breach of Lego’s trademark. Zuru’s claim that ‘Lego’ had become a generic descriptive term describing interlocking toy blocks was dismissed. Zuru’s claim that using ‘Lego’ on packaging was an honest attempt to provide consumer information about the use and quality of its product was also dismissed.
Use of Lego’s trademark was an aggressive attempt by Zuru to obtain leverage for its product, Justice Lang said.
Zuru New Zealand Ltd v. Lego Juris A/S – High Court (12.07.23)
23.114