Trade Marks Act 2002 – trademark infringement, s 89 – compatibility statement likely to confuse – compatibility statement amounted to use of Lego’s trademark – compatibility statement not comparative advertising under s 94 – compatibility statement not honest practice under s 95 – Fair Trading Act 1986 – Zuru’s compatibility statement not a breach of the Fair Trading Act – Zuru’s compatibility statement not passing off its products as Lego’s – injunctive relief not given
Zuru New Zealand Ltd v Lego Juris A/S [2023] NZHC 1808 per Lang J.
The patents and copyright that Lego held on its products expired many years ago, but the registered trademark LEGO has remained in force.
Zuru did not begin marketing its products until the latter part of 2018. One of the selling points of Zuru’s products was that they could be used with Lego’s products. Zuru originally included on its packaging of products sold in New Zealand a “compatibility statement”, which stated “LEGO BRICKS COMPATIBLE”.
Lego immediately took action, sending Zuru and The Warehouse a “cease and desist” letter. Despite initially trying to persuade The Warehouse that Lego’s assertions were wrong, Zuru replaced the statement with a notice saying its products were “COMPATIBLE WITH MAJOR BRANDS”.
Two years later, Zuru tried to reintroduce the original compatibility statement. Lego responded as it had before.
In referring to Lego’s bricks in its compatibility statements, Zuru did not accept it could be stopped. Zuru sought declarations that it did not infringe Lego’s trademark, was not in breach of the Fair Trading Act and its actions did not amount to “passing off” its products as those of Lego’s.
Lego counterclaimed, arguing that Zuru’s past and future use of compatibility statements containing the word “Lego” constituted an infringement of its trademark. Lego also argued the compatibility statement amounted to Zuru passing off its products as Lego products and was in breach of the Fair Trading Act.
Zuru relied on s 89(2) of the Trade Marks Act, which excludes from infringement any use of a trademark that would not be likely to be taken as use as a trademark.
However, Lang J said Zuru’s use of the Lego name in the compatibility statements was seen to be taken as use as a trademark by a significant proportion of potential purchasers of toy building brick products. The use therefore breached Lego’s trademark.
Zuru contended it was undertaking comparative advertising to inform customers that its separate products were compatible and could be used together with Lego’s, which was a protection against infringement under s 94 of the Trade Marks Act.
Lang J held the wording in the compatibility statement prevented it from falling within the interpretation of comparative advertising.
The judge concluded Zuru did not use the Lego trademark in accordance with honest practice, thus the protection against infringement under s 95 of the Trade Marks Act did not apply. However, Lego failed to establish its remaining counterclaims of passing off and breaching the Fair Trading Act.
Lang J did not consider it was necessary to grant injunctive relief. Zuru had assured Lego and the court that it would not use the word “Lego” in its compatibility statements unless the court confirmed this would not infringe Lego’s trademark.
Applicable principles: Trademark infringement – likelihood of confusion – normative fair use – trademark protection – comparative advertising – honest practices – passing off – reputation and goodwill.
Held: Each of Zuru’s claims failed. Zuru’s use of the Lego name in the compatibility statements breached Lego’s trademark.
Lego failed to establish its remaining claims based on alleged breaches of the Fair Trading Act and passing off.
Jamie Dierick is a law clerk for an Auckland criminal defence barrister
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