LOS ANGELES (CN) - A competing toy company claims Lego uses underhanded tactics to stay top dog in construction toys, and misled U.S. Customs to block importation of its closest rival's products.
UPDATE: Lego spokesman Michael McNally told Courthouse News that Mega Brands' lawsuit was withdrawn on Jan. 20.
"Lego Juris A/S and Lego Group informed Mega Brands that the Lego Group had not made a direct claim against them and that U.S. Customs and Border Protection will not interfere with the importation of Mega Brands products," McNally said in a statement.
In a federal antitrust complaint, Mega Brands, of Canada, says Lego falsely claimed "exclusive rights to the functional cylindrical stud element that is commonly used in construction blocks," even though courts have ruled that Lego "cannot re-monopolize a once patented invention under the guise of trademark law."
"Mega Brands brings this action to stop Lego's illegal efforts to monopolize the construction toy market through illegal anti-competitive practices including, but not limited to, use of fraudulently obtained IP [intellectual property] rights to interfere with Mega Brands' right to continue to import certain competitive products into the United States," the complaint states.
Mega Brands and Mega Brands America sued Lego Juris A/S and Lego Group.
Mega Brands describes itself as the second-largest construction toy company in the world and Lego's "strongest and most innovative" rival.
Lego commands more than 85 percent of the U.S. market for older children, according to the complaint.
"Before their use by Lego or Mega Brands, cylindrical studs (alternatively referred to as 'pins' or 'projections') were used as a key functional element on toy construction bricks developed by Harry Fisher Page of Kiddiecraft (a U.K. Company) in the 1940s," the complaint states. "Mr. Page was granted patent protection for the brick in the UK, France and elsewhere. Unbeknownst to Mr. Page, Lego copied the Kiddiecraft product configuration in a jurisdiction (Denmark) where there was no active patent protection. Lego further improved the brick in the 1950s by adding 'tubes' or secondary projections in the hollow cavity of the brick. Lego was also granted patent rights in the improved brick and enjoyed these rights until the patents expired in the 1980s." (Parentheses in complaint.)
Mega Brands says it has used the studs as a functional component since it entered the market with competing construction toys in 1991.
In 1988, a U.S. judge threw out Lego's first attempt to win trademark protection for its brick design, Mega Brands says.
"Courts throughout the world have likewise held that Lego cannot maintain a monopoly on a once-patented technical invention under the guise of trademark law. Lego has failed in its efforts to claim exclusive rights to the functional cylindrical stud element in various actions around the world. Although Lego has aggressively pursued infringement litigation against its competitors (including Mega Brands), courts repeatedly have rejected Lego's efforts to claim exclusive rights to the functional elements of its building blocks for at least 10 years," the complaint states.