The Rubik’s Cube to lose its shape mark protection

In our latest issue, Joel Smith and Sarah Burke (Herbert Smith Freehills LLP) discuss the recent decision of the CJEU in Case C-30/15 P Simba Toys GmbH & Co. KG v EUIPO, concerning invalidity challenges brought against the registration of the Rubik's cube as Community trade mark (now EU TM) no. 000162784. The General Court, in Case T-450/09, had upheld the EUIPO's decisions (Cancellation Division here and Board of Appeal here) to dismiss the application for a declaration of invalidity. The CJEU, however, decided to set aside the judgment of the General Court, ruling that the application of Article 7(1)(e)(ii) of Regulation 40/94 (applicable here due to the timeframe of the facts in question) requires an assessment of the essential characteristics of a shape in light of the technical function of the actual goods concerned.

The Rubik’s Cube to lose its shape mark protection 

Joel Smith and Sarah Burke
Herbert Smith Freehills LLP
Emails: joel.smith@hsf.com and sarah.burke@hsf.com

In its decision on 10 November 2016, the Court of Justice of the European Union set aside the judgment of the General Court and annulled the European Union Intellectual Property Office’s (EUIPO) decision allowing registration of the 3D shape of a Rubik’s Cube as a trade mark; non-visible functional elements such as the Cube’s rotating ability should have been taken into account by the EUIPO and the General Court in deciding whether registration should be allowed.

Legal context 

Simba Toys sought to invalidate the Rubik’s Cube shape mark under various grounds within Council Regulation 40/94 (the Regulation) and the Community Trade Mark Regulation 207/2009: OJ 1994 L 11, p.1 (CTMR). Whilst the Regulation was replaced by the CTMR, the invalidity action started before it came into effect so Regulation 40/94: OJ 2009 L 78, p.1 is the relevant Regulation for the purposes of this case. 

Article 7 of the Regulation contains the absolute grounds for refusal of registration of marks. There are three specific exclusions in relation to shape marks as set out in Article 7(i)(e)(i) to 7(i)(e)(iii) of the Regulation. Article 7(i)(e)(ii) of the Regulation sets out that shape marks may be refused if the sign consists exclusively of the shape which is necessary to obtain a technical result. 

As the Court of Justice of the European Union (CJEU) upheld Simba Toy’s first ground of appeal in relation to Article 7(i)(e)(ii) of the Regulation, it did not consider the other grounds of appeal as advanced by Simba Toys, so the CJEU only considered arguments relating to the technical result of a shape. 

Facts 

The Rubik’s Cube is one of the best-selling toys of all time. In 1999, Seven Towns Ltd registered the following depiction of the Rubik’s Cube as a European Union Trade Mark (EUTM) in class 26 for ‘three-dimensional puzzles’: 

In 2006, Simba Toys filed a declaration of invalidity with the European Union Intellectual Property Office (EUIPO) (formerly Office for Harmonization in the Internal Market, OHIM), which was rejected by the cancellation division in 2008. An appeal was lodged by Simba Toys in 2008, but this was dismissed by the Second Board of Appeal in 2009. Simba Toys appealed to the General Court seeking annulment of the Board of Appeal’s decision. The General Court dismissed the cancellation action in November 2014, ruling that the Rubik’s Cube can be validly registered as a shape mark as the way in which the mark is graphically represented does not involve a technical solution. Simba Toys appealed. In May 2016, Advocate General Szpunar provided his Opinion (Simba Toys GmbH & Co. KG v EUIPO, C-30/15 P, EU:C:2016:350) and, finally, in November 2016 the CJEU handed down its judgment. 

Analysis 

Trade mark law constitutes an essential element in the system of competition in the EU and part of that system is that: (1) undertakings must be able to register trade marks in order to attract customers, and (2) trade marks shall enable consumers to distinguish the relevant undertaking’s goods and services from others which have a different origin. However, the purpose of Article 7(1)(e)(ii) of the Regulation is to prevent trade mark law from granting anyone a monopoly on technical solutions or functional characteristics of a product. 

Citing its previous judgment in Lego Juris A/S v OHIM and Mega Brands, Inc (C-48/09 P, EU:C:2010:516), the CJEU stated that ‘correct application of that provision requires that the essential characteristics of the three-dimensional sign at issue be properly identified’ (para 40). The General Court had previously found that the grid structure on each surface of the Cube at issue did not perform any technical function since the fact that the structure had the effect of visually dividing each surface of the cube into nine equal squares could not constitute a technical function for the purposes of the relevant case law. 

The CJEU disagreed with this finding. In order to analyse the functionality of a sign for the purposes of Article 7(i)(e)(ii) of the Regulation (which concerns only signs which consist of the shape of the actual goods), the essential characteristics of the shape must be assessed in the light of the technical function of the actual goods concerned (citing Lego Juris v OHIM). The General Court should have defined the technical function of the actual goods (ie a 3D puzzle) and should have taken this into account when assessing functionality of the essential characteristics of that sign. Accordingly, the General Court had interpreted the criteria for assessing Article 7(1)(e)(ii) too narrowly. The competent authority must carry out a detailed examination that takes into account material relevant to defining the essential characteristics of a sign in addition to the graphic representation and any descriptions filed at the time of the trade mark application. 

Contrary to what the General Court had found, the CJEU held that ‘the essential characteristics of a shape must be assessed in the light of the technical function of the actual goods concerned’ (para. 46). As such, the General Court should have taken non-visible elements of the graphic representation of the Rubik’s Cube into consideration, including the rotating capability of the individual elements in the Rubik’s Cube 3D puzzle. It was irrelevant that the trade mark application as filed did not mention rotating capability. The court was still entitled to take these functions into account. As the General Court had erred in law, the CJEU annulled its decision on the ground of infringement of Article 7(1)(e)(ii) of the Regulation. 

Whilst the EUIPO will have to re-assess its decision on the validity of the trade mark in due course, it seems highly unlikely that it will allow the mark to remain on the trade marks register in light of the CJEU’s judgment on technical result. 

Practical significance 

Following this decision, life will not be any easier for brand owners wishing to protect shapes as trade marks: this case follows a line of case law (including the ‘KitKat’ decision in Société des Produits Nestlé SAv Cadbury UK Ltd, C-215/14, EU:C:2015:604, in 2016), which makes it clear that shape marks are very difficult to obtain and keep. 

In this case, the CJEU looked beyond the graphic representation of the trade mark and considered the Cube’s invisible technical qualities. It does not matter if the graphical representation of a trade mark does not specifically show a technical function—a competent authority is still entitled to consider how the mark as depicted might function as a shape in real life and this makes it more likely to fall within the Article 7(1)(e) exclusions to registration for shape marks. This decision may well make registry proceedings involving shape marks more complicated as it is clear that invisible features of the sign and/or evidence of how the shape is used in practice may come into play in deciding whether to allow registration of the sign at hand. 

Public policy considerations will always be paramount with shape marks. This is so because a shape mark is a very powerful right which can offer a perpetual monopoly. From this perspective, the decision is perhaps not altogether surprising. The Rubik’s Cube was previously protected by a patent and although this was not taken into consideration by the CJEU, it is of course possible to draw analogies with the Lego Juris vOHIM case, where the Lego brick was refused protection as a shape mark with one of the reasons being that it had previously enjoyed patent protection. 

Whilst third parties will now be able to manufacture and sell puzzles in this same shape, the decision does not mean that third parties can now freely copy the Rubik’s Cube: other forms of IP protection might be available. Indeed, in a statement following the judgment, the owners of the Rubik’s Cube have stated that ‘the Rubik Brand is fortunate in having other trademarks, copyright, passing off and unfair competition protection to rely on which will continue to ensure its exclusivity’ (The Guardian, 10 November 2016).   

© The Author(s) 2017. Published by Oxford University Press. All rights reserved. 

Validity of the Rubik's Cube as a shape mark upheld

Authors: Joel Smith, Sarah Burke and Silja Nordmeyer-Andrez (Herbert Smith Freehills LLP)

Simba Toys GmbH & Co KG v OHIM Case T-450/09, 25 November 2014, General Court of the European Union

Journal of Intellectual Property Law & Practice (2015) doi: 10.1093/jiplp/jpv010, first published online: February 26, 2015

The General Court has dismissed a cancellation action by Simba Toys in respect of the Community trade mark registration for the 3D shape of the Rubik's Cube. The way in which the mark is graphically presented does not involve a technical solution and, therefore, it can be validly registered as a shape trade mark.

Legal context

Simba Toys sought to invalidate the Rubik's Cube shape mark on eight different grounds under Council Regulation 40/94 on the Community trade mark and the Community Trade Mark Regulation 207/2009 (CTMR). While the CTMR replaced Regulation 40/94 in 2009, the invalidity action had started before the CTMR came into effect, so some of Simba Toys' arguments were based upon the old Regulation and some were under the CTMR.

Simba Toys advanced arguments under Articles 75 and 76(1) of the CTMR saying that the Office for Harmonization in the Internal Market (OHIM) should state the reasons on which it has based its decisions and that it should examine the facts of its own motion, but in proceedings for refusal of registration, it shall only have regard to the facts, evidence and arguments provided by the parties and the relief sought.

Article 7 of Regulation 40/94 contains the absolute grounds for refusal of registration of marks. Simba Toys relied upon all three of the exclusions in relation to shape marks in Article 7(1)(e)(i) to (iii) of Regulation 40/94, which set out that shape marks may be refused if (i) the signs consist exclusively of the shape which results from the nature of the goods themselves; (ii) the signs consist exclusively of the shape of goods which is necessary to obtain a technical result; or (iii) the signs consist exclusively of the shape which gives substantial value to the goods.

Simba Toys also argued that the Rubik's Cube mark was devoid of distinctive character under Article 7(1)(b) of Regulation 40/94, and that it consisted exclusively of signs or indications which may serve to designate a characteristic of the goods under Article 7(1)(c) of Regulation 40/94. Finally, Simba Toys put forward an argument under Article 7(3) of Regulation 40/94, to the effect that OHIM had not considered whether the trade mark had become distinctive for the goods concerned through use.

Facts

A Community trade mark (CTM) for the following sign was registered for ‘three-dimensional puzzles’ in Class 26 by Seven Towns Ltd in 1999:

In 2006, Simba Toys filed a declaration of invalidity with OHIM, which was rejected by the Cancellation Division in 2008. An appeal was lodged by Simba Toys in 2008, and was dismissed in 2009 by the Second Board of Appeal of OHIM (the ‘contested decision’). Simba Toys appealed to the General Court seeking annulment of the contested decision, and argued that OHIM had breached the Regulations on the grounds mentioned above.

Analysis

The General Court dismissed Simba Toys' action in its entirety, holding that all eight pleas were unfounded. The CTM for the Rubik's Cube had been validly registered.

Article 76(1) of the CTMR: the General Court found that the Board of Appeal had exhaustively examined the arguments and evidence before it. In any event, following the 2013 case of Fürstlich Castell'sches Domänenamt v OHIM (T30-10), there is no requirement for a Board of Appeal to examine facts of its own motion in invalidity proceedings, if it does not consider such an analysis relevant to the proceedings.

The first sentence of Article 75 of the CTMR: as established by Anheuser-Busch v OHIM (T-191/07) in 2009, the Board of Appeal's reasoning can be implicit and it does not need to consider every point. The General Court held that the Board of Appeal's analysis of the distinctive character of the Rubik's Cube constituted sufficient analysis.

Article 7(1)(e)(i) of Regulation 40/94: the General Court dismissed Simba Toys' claim that the Board of Appeal failed to take into account that the individual features of the mark were dictated by the ‘function’ of the product. It was clear that 3D puzzles can assume a multitude of shapes, and it was in no way essential for 3D puzzles to assume the shape of a cube with surfaces bearing a grid structure.

Article 7(1)(e)(ii) of Regulation 40/94: the General Court considered the 2008 and 2010 decisions in the Lego Juris v OHIM (T-270/06 and C-48/09P) cases in determining the essential characteristics of a sign. The question is not whether the essential features have a technical function, but whether the shape of the goods is ‘technically causal of, and sufficient to obtain, the intended technical result’ (Lego Juris v OHIM, 2008). As the cube per se and the grid structure of the cube constitute the Rubik's Cube essential elements, there was no causal link between the shape and the rotating capability. The General Court distinguished the 2002 Philips case (Koninklijke Philips Electronics NV v Remington Consumer Products Ltd, C-299/09), in which the shape claimed clearly indicated the technical function of shaving.

Article 7(1)(e)(iii) of Regulation 40/94: as Simba Toys' claim related to functional features of the Rubik's Cube and not to a substantial value flowing from the ‘aesthetic aspect’ of its shape, the General Court held that this claim had not been validly established and that Article 7(1)(e)(iii) does not apply.

Article 7(1)(b) of Regulation 40/94: in order to establish the distinctive character within the meaning of Article 7(1)(b), the distinctive character must serve to identify the product in question as originating from a particular company. The General Court affirmed that there is a presumption of validity for registered CTMs, and that it is for the applicant to provide evidence to the contrary. The General Court held that the mere fact that there is a puzzle available on the market which resembles the Rubik's Cube was not sufficient to indicate a lack of distinctive character. The Rubik's Cube has distinctive character which enables consumers to identify the producer of the goods.

Article 7(1)(c) of Regulation 40/94: there is no real link between the Rubik's Cube and 3D puzzles in general. The relevant public is to be assessed by reference to the average consumer and not to professionals in the field. For the relevant average consumer, the bold black lines on the Rubik's Cube do not automatically link to the rotating capability of the Rubik's Cube.

Article 7(3) of Regulation 40/94: the General Court agreed with the Board of Appeal's finding that the Rubik's Cube mark was inherently distinctive. Therefore, it followed that it was not necessary to examine whether distinctive character had been acquired through use.

Practical significance

Shape trade marks offer a limited monopoly. In this case, the mark as registered does not allow the trade mark owner to prevent third parties from marketing all types of 3D puzzles with rotating capabilities. The monopoly is strictly limited to 3D puzzles that have the shape of a cube with a grid structure on its surfaces.

A mark will be unregistrable if the shape of the goods is ‘technically causal of, and sufficient to obtain, the intended technical result’. However, a CTM cannot be refused on the ground that the shape merely incorporates a technical function. The rotating capability of the Rubik's Cube does not result from the black lines or the grid structure but from an internal mechanism (which is not visible in the graphic representation of the mark).

Care should be taken in the way in which shape marks are graphically represented as protection will be limited to the observable features and not necessarily include technical functions, unless such a function is the logical consequence of the respective sign. In this case, the image of a 3D cube did not necessarily imply a rotating function so there was no protection afforded to the trade mark owner for this feature.