An IP toy story – The significance of IP’s role in the toy market

11 Sep 2018

IP plays an extremely significant role in the world of toys, as a number of news reports have made very clear.

We’ve recently heard that a trade mark dispute involving Hasbro and DC Comics has been settled in a New York court. In this case, Hasbro, the owner of a trade mark registration for Bumblebee (the name of a Transformers character), had sued DC Comics for trade mark infringement as a result of that company’s use of the name Bumblebee for a teenage girl superhero.

In another recent case in New York (one that didn’t directly involve toys, but certainly did involve the little people for whom toys are made), Disney failed to get summary judgment against a business that livens up children’s parties by sending out individuals who go under the names “the Princess” and “Big Hairy Guy”, and who are apparently based on the Disney characters Leia and Chewbacca. The judge said that confusion was unlikely, making the point that the companies compete in very different markets, and that children’s parties are in fact organised by adults and not children. The mere fact that in some online reviews customers actually referred to the names Leia and Chewbacca was not enough.

There’s no surprise in any of this, toys and IP have a long history. A few months ago, we heard the news that Hasbro had managed to get that rarest of things, a scent trade mark registration. The US registration is for the smell of Play-Doh, a product that’s apparently been around since 1956. The registration is described as follows: “A sweet, slightly musky, vanilla-like fragrance, with slight overtones of cherry, and the natural smell of a salted, wheat-based dough”. This registration is significant – not only do competitors of Hasbro have to avoid any name that’s similar to Play-Doh, but they can’t mimic the smell of the product either.

Toy manufacturers haven’t always enjoyed IP success. In Europe, there was a great deal of litigation about Lego bricks. The company did have patents for its product, but when these expired it tried to use trade mark law to retain its competitive advantage. But it failed, with the Court of Justice of the European Union (“CJEU”) eventually holding that the blocks breached the prohibition on trade marks that consist exclusively of shapes necessary for the technical function of the goods. The court said that a trade mark will consist exclusively of a shape that is necessary for a technical function when all the essential characteristics of a shape perform a technical function, even if there are also non-essential characteristics that have no technical function. It expressed the philosophy behind the trade mark prohibition as follows:

“In the system of intellectual property rights developed in the European Union, technical solutions are capable of protection only for a limited period, so that subsequently they may be freely used by all economic operators.”

In Europe, we also had the famous Rubik’s cube case, which involved a three-dimensional trade mark registration for what at the time was said to be the world’s best-selling toy. The registration had been challenged by a company called Simba Toys, and the case went all the way to the CJEU. The court overruled earlier decisions and held that the trade mark registration was invalid because it contravened the prohibition on functionality. The court made it very clear that trade mark law cannot be used to protect technical solutions, something that is the domain of patent law.

In the UK Supreme Court, there was the Trunki design case in 2016 – PMS International v Magmatic Limited. The issue here was whether a Community Registered Design for the Trunki ride-on children’s suitcase had been infringed by a rival product called Kiddee. The Supreme Court held that there was no design infringement – the decision had much to do with the fact that the rival product did not feature the contrasting colours that had been specified in the registration.

Interestingly, toy companies have been enjoying some success in what is surely the world’s most lucrative market, China. In a very recent case, a Chinese toy manufacturer was fined for infringing copyright in the Peppa Pig character – the copyright belongs to the British company Entertainment One. The Chinese toy company had in fact been authorised to manufacture Peppa Pig-themed kitchen sets for children, but its licence had expired.

Lego has also had successes in China. It won a case against two companies that manufactured and sold toys that looked very similar to the Lego Friends range, seemingly on the basis of copyright and unlawful competition. The Lego name and logo have apparently also been recognised as “well-known trade marks” by a Chinese court.

Currently, there is a dispute regarding the Toy R Us brand in Asia and who will own this very powerful brand in the toy industry. The process will require an evaluation of the brand, perhaps by the Asian consumers themselves. We will have to wait with bated breath to see just how valuable the Toy r Us brand is in Asia.

Given the size and value of the toy market, and the obvious potential for confusion in this market, it really is no surprise that IP plays such a big role.

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(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)

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