Decades ago, Lego sought and received a Canadian patent for its blocks. The patent did what it was supposed to do: it protected Lego's invention for a limited time, and then it expired, so that anyone could make compatible products. That's the patent bargain: in exchange for asking the government to keep your competitors at bay, you agree to let the public copy your invention for free when the period of exclusivity is expired.
Lego is a great beneficiary of this: the machines, processes, materials, tools, and even the roads, power and sewer lines that feed the Lego business contain innumerable inventions on which the patents have expired. If Lego had to pay a royalty to every inventor whose work they built upon, a single Lego brick would cost a million dollars.
But Lego wanted to renege on the deal. They proposed that their trademark should protect their exclusive right to their blocks forever. They argued that anyone who buys a Lego-shaped brick is doing so because he believes he's buying official Lego product and not Mega Bloks, even if it says Mega Bloks on the package.
In other words, Lego argues that its customers are so stupid that they need to be protected from their inability to distinguish official Lego from lower-cost competing products, and the government should therefore ensure that no one ever undercuts their pricing.
The Supreme Court didn't buy it. They threw out Lego's claim and opened the door to competitors. Now Lego joins the same pool of inventions that has served it so well -- a pool from which anyone can freely draw to create new products and services as innovative as that first Lego brick was, all those decades ago.
On Thursday, the Supreme Court justices concurred with a lower court judge who found that "purely functional" features, such as the well-known geometrical pattern of raised studs on the top of the bricks, could not be the basis of a trademark.Link (Thanks, Michael!)
"Trademark law should not be used to perpetuate monopoly rights enjoyed under now-expired patents," the Supreme Court says.
Update: Greg sez, "In your post about the Lego/Megablocks ruling you implied that the two are 'compatible'. As a father of three I can tell you that they are not: they look and work the same, but you can't connect them in any useful way. Which just makes Lego's position even even more more ridiculous."
Update 2: Dominic sez, "I was of the same opinion until recently my wife got me over my shortsightedness and made me buy the Imagination Bucket of Megablok pieces for the kids. I can honestly say that they integrated perfectly with our Lego collection and the kids are able to build without knowing one from the other. Maybe Greg is thinking of older the older Megablok style, which was not compatible, or else some of the junior sets?"