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A Tarnished Lego-cy?

Posted in Mixed Bag of Nuts

It appears that Lego is at it again.  As some of you might recall, I previously authored a post reporting on a Smart Blocks Inc’s efforts to get its product released from customs after they had been seized during importation.  It appears that Lego has now enraged another ostensible competitor who has decided to get a bit more aggressive with their allegations.  Mega Brands, Inc., allegedly the “second largest construction toy company in the world” after Lego, similarly had its product tied up in customs and is alleging that its problems were the result of an inappropriate and fraudulent effort by Lego to mislead customs about the scope of its intellectual property rights.  Mega Brands filed a lawsuit not only requesting an order to invalidate Lego’s purported trademark, but it also brought antitrust claims alleging that Lego is attempting to monopolize the market for construction toys.

This raises an issue which occasionally arises in defense of intellectual property infringement claims, but has a sketchy history when used as an affirmative claim for relief: intellectual property misuse.  Patent misuse has a relatively well-developed history in United States law.  Trademark misuse, however, has generally lost ground as a basis for defending against trademark claims.  (See here.)  Ultimately, it appears that Mega Brands did a good job here of avoiding explicitly characterizing its claim as one for “trademark misuse,” since courts have recognized that its not an affirmative claim for relief.  Nonetheless, in my view, misuse of trademark is the functional basis for the antitrust claim in this case.

The interplay between intellectual property rights and antitrust law is always interesting because there is an inherent conflict.  Intellectual property rights are, in essence, legalized monopolies.  Accordingly, parties need to be make sure they are not carelessly exceeding the scope of those legalized monopolies, lest they get in trouble for unlawful monopolization.