A new episode in the Rubik’s Cube saga

Rubik’s Brand v EUIPO – Simba Toys (Case T-601/17)

by Laura Gastaldi, Lara Mastrangelo and Alessandra Tozzi

Whether you are from the 20th century or a millennial, the Rubik’s cube will immediately bring you back in time. Indeed, such multicolored three-dimensional puzzle is one of the most popular toys of all times, with more than 350 million units sold worldwide. Yet, there are few things that not everybody knows about the Magic Cube. The first one is that it was not originally meant to be a toy: Ernõ Rubik, an Hungarian professor, invented it in 1974 in order to help his students to understand three-dimensional problems. As luck would have it, the cube was awarded as Toy of the Year in the UK in both 1980 and 1981 becoming an icon in the 80s.

The second one is that it has been facing a long and exhausting legal battle against the German toy maker Simba Toys, which came to an end (at least for now) on October 24, 2019, after more than ten years. Why did it take so long? Let’s start from the beginning.

The UK-based toy company Seven Towns Ltd, which at the time owned Rubik’s cube IP rights, registered the cube as a three-dimensional EU trademark with the EUIPO in 1999; the registration was then assigned to Rubik’s Brand Ltd (“Rubik”) in 2014.

The legal battle began in 2006, when the competitor Simba Toys filed an application for declaration of invalidity of the mark, on the ground that it implied a technical solution (the rotating capability) which should have been protected with a patent. The Cancellation Division of EUIPO rejected the application for declaration of invalidity and two years later, in 2008, the Second Board of Appeal confirmed such decision and dismissed the appeal, on the ground that the registration of the 3D mark was not contrary to Article 7(1)(ii) of the Regulation 40/94, according to which signs consisting exclusively of the shape of goods which is necessary to obtain a technical result are not to be registered.

Yet, Simba Toys brought an action for annulment of EUIPO’s decision before the General Court (“GC”) (T-450/09). On November 25, 2014 the GC dismissed the action on the grounds that the essential features of the cube did not perform any technical function. Once again Simba Toys lodged an appeal before the CJEU, which for the first time ruled in its favor (C-30/15 P). Contrary to the previous decisions, the CJEU stated that a comprehensive analysis should include not only the graphic representation of a mark, but also other elements – even invisible ones – related to the functionality of the good itself.

Further to this judgement, EUIPO First Board of Appeal annulled the original decision of the Cancellation Division and declared the contested mark invalid. In other words, it concluded that the sign as a whole fell within the scope of the prohibition set out in Article 7(1)(e)(ii) of the Regulation 40/94 (now Article 7(1)(e)(ii) of Regulation 2017/1001).

At this point, Rubik applied to the GC (Case T-601/17) seeking annulment of the decision by the Board of Appeal of EUIPO. In this case, Rubik relied on four pleas in law, but the GC conducted an in-depth analysis of the first one, i.e. the alleged violation of Article 7 (1)(e)(ii) of Regulation 40/94, while it shortly considered the others. In particular, Rubik stated that the Board of Appeal (i) did not identify correctly the essential characteristics of the mark, (ii) interpreted and defined the intended technical results of the goods concerned too narrowly and (iii) incorrectly assessed the functionality of the essential characteristics identified.

First of all, the GC underlined that the key provision, i.e. Article 7 (1)(e)(ii), seeks to protect the public interest by preventing trademark law from “granting an undertaking a monopoly on technical solutions or functional characteristics of a product”.

According to the GC’s settled case-law, the correct application of such provision indicates that the essential characteristics of a sign are its most important elements, which must be assessed on a case-by-case basis. The competent authority may either base such assessment directly on a simple visual analysis and on the overall impression of the sign or on a detailed examination of each component of the sign itself. After having identified the essential characteristics of the shape of the goods, the analysis shifts to the technical functionality, which consists in determining whether the essential characteristics all perform a technical function with regard to the goods at issue.

In the case at stake, as to the identification of the essential characteristics of the sign, the GC ruled that the Board of Appeal correctly conducted a simple visual analysis and took as a basis the perception of a “reasonably discerning observer”. Conversely, the GC stated that the Board erred in identifying that “differences in the colors of the six faces of the cube” constitute an essential characteristic of the mark, although such mistake does not affect the legality of the appealed decision. In the end, according to the GC, the essential characteristics can be found in the “overall cube shape” and in the “black lines and little squares on each face of the cube”.

As to the assessment of the functionality of the goods, firstly, the GC noted that the black lines are necessary to obtain the intended technical result: they create a physical separation which is necessary to rotate the different rows vertically and horizontally by means of a mechanism located at the center of the cube. The GC added that “without such a physical separation, the cube would be nothing more than a solid block in which none of the individual elements could move independently of the others”.

Secondly, according to the CG, the overall cube shape is also necessary to obtain the same technical result. In fact, it is inseparable from the grid structure consisting of the black lines and from the function of the actual goods at issue, which is to rotate vertically and horizontally the rows of the small cubes. “In the light of those factors, the shape of the product is necessarily that of a cube, that is, a regular hexahedron”.

In the assessment of the invalidity of the sign, the GC stressed that the essential characteristics of it must all be technically necessary to obtain the intended technical result of the goods concerned, even if they are not sufficient in themselves to achieve that purpose.

Therefore, since the two characteristics of the contested mark have been correctly identified as essential and are both necessary to obtain the intended technical result, the mark falls within the ground for refusal referred to in Article 7(1)(e)(ii) of Regulation 40/94. Consequently, the GC dismissed the appeal brought by Rubik.

After all these proceedings, Simba Toys obtained the confirmation of the ruling that it sought for a decade. This decision is likely to have consequences on trademark law since it overruled a consolidated practice by EUIPO. In fact, the interpretation of the absolute grounds for refusal in Article 7(1)(e) EUTMR proved to be challenging and uncertain, leading to contradictory decisions over the past years.

The correct application of the grounds may still give rise to uncertainties since the GC confirmed that such an assessment shall be carried out in the light of the relevant circumstances at issue and on a case-by-case basis.

The Rubik’s Cube saga may not be over: Rubik is entitled to appeal the decision. Stay tuned!

If you want to discuss further this topic, please contact laura.gastaldi@dlapiper.com, lara.mastrangelo@dlapiper.com, alessandra.tozzi@dlapiper.com.