Repurposing and selling LEGO minifigures as valve caps

[SamBrickCaps]

Hello all,

I run a website through which I sell LEGO Minifigure heads which I have modified by drilling and tapping threads into, to turn them into valve caps for bicycles and cars. As well as standard LEGO heads and hats I also sell valve caps made from LEGO licenced product lines (Star Wars, Marvel, Minecraft, etc).

From my previous research into this, I believe that what I am doing is on good legal ground because of the principle of exhaustion of rights, i.e. LEGO have agreed licences to produce (for example) Darth Vader minifigures which extend only to the point at which I buy the minifigure from LEGO. I am then free to modify and resell and thus don't need a separate licence with Disney to sell a product bearing the name and image of Darth Vader. The closest analogy I came across on this forum was this: viewtopic.php?t=1625 which involved someone modifying Star Wars t-shirts.

However I have the feeling this is probably a complex issue with several aspects and I'd appreciate anyone's more informed views.!

I think I can distil my questions as follows:
1) Is it okay to modify and sell LEGO minifigure heads?
2) Is it okay to refer to LEGO in the product title/description, i.e. "Custom LEGO® dust caps" or "made from genuine LEGO® Minifigure heads"?
3) Is it okay to use photos of my products, which are made from Minifigure heads, given that LEGO have successfully defended the Minifigure itself as a trademark?
4) Is it okay to sell products which are entitled "Darth Vader" or other licenced characters?
5) Is it okay to categorise my products to match the LEGO themes from which they are taken, e.g. have a "Star Wars" section?
6) Are there any other legal considerations I have overlooked?

Thanks,
Sam

[AndyJ]

Hi Sam,

It's worth stressing, and you seem to acknowledge this, that there is really no copyright involved here. Copyright doesn't apply to mass-produced items such as Lego. It can however cover the technical drawings used for the production of things like Lego bricks - although that's not an issue here (see the famous case known as Interlego A.G. vs Tyco Industries Inc from 1988). However your question centres on trade mark law and to a lesser extent on the tort of passing off, and just possibly design right law.

And in that context, the doctrine of exhaustion of rights does not provide a full and unequivocal defence to a claim for trade mark infringement (see section 12 (2) of theTrade Marks Act 1994).

So let's take each of your points in the same order.

1. Yes you can modify Lego minifigure heads which you have lawfully acquired (that is covered by the doctrine of exhaustion), but selling them would be subject to the answers below.

2. You need to take great care in how these items are marketed. The second choice of wording is probably better since you are acknowledging the trade mark but making it clear that they are items derived from the genuine Lego heads. The problem with 'Custom' is that it really doesn't put enough differentiation between the Lego product and your version. Even better would be to stress that these are not Lego authorised products, even though they are made from genuine Lego heads. The use of the word Lego plus the ® symbol in this context is made legally acceptable by section 11 (2)(c) of the TMA 1994. But because of section 12 (2) referred to above, you need to make it really clear that your modifications are in no way authorised by the Lego Group (Lego A/S).

3. Provided that you use your own photographs and don't just photoshop a Lego image to represent your version, then I can't see that infringing trade mark or copyright law, provided that the disclaimer discussed in 2. is located close to the image. If you don't need to use the trade mark word Minifigure, don't, especially if it's obvious from the photograph was is being talked about.

4. Theoretically using the Darth Vader etc marks comes under the same rules as explained in 2. above, but again if you can let the photographs do the talking, avoid the textual reference. The trouble is that by referring to any Disney licensed merchandise you are greatly increasing the risk of threatening letters from Disney's lawyers. They are very active in protecting their intellectual property (more so than Lego and that's saying something) and so they tend to fire off the cease and desist letters without much regard to whether there is a legal justification for them or not.

5. Again theoretically the answer is yes you can because you would be using the words Star Wars descriptively, but the same proviso about invoking the attention of Disney applies.

6. The major problem I foresee is that although you may stay just on the right side of law, that won't necessarily protect you from some fairly aggressive letters from both Lego and Disney trying to shut you down. If you intend to sell through market places like Amazon or ebay, you can expect Lego and or Disney get your account closed if they don't like what you are doing. It is the slippery slope argument: if they let you get away with selling some harmless derivatives, how long will it be before they are fighting off loads of lookalike products from China. They have resources to involve you in lengthy and expensive legal correspondence, and ultimately to take you to court in the hope that you can't afford to lawyer-up enough to beat them. One of the ways they may do this is to sue for the tort of passing off. This has some similarities to trade mark infringement, but proving passing off is based on a three factor test, rather than what an act of Parliament says. This article explains passing off so I won't go into here. Again I don't necessarily think that Lego or Disney would have a better chance using passing off, but it is a more flexible doctrine which provides high priced lawyers with the chance to propose novel legal arguments to the court.

[SamBrickCaps]

Hello Andy,

Firstly thank you so much for the detailed and very speedy reply. How generous of you to write up such a considered and informative set of responses... very highly appreciated.

As I suspected this topic seems to be a minefield. And, as you say, if one of the very large companies in question were to take exception, it is highly unlikely I would be able to challenge them due to disparity in access to resources.

I would like to do everything I can to continue running this website and selling my valve caps, on the correct side of the law. Given everything I have read on the matter, including your comments, it is my best understanding that this is a legal thing for me to do, provided I am very careful with wording and marketing to avoid passing off the products as something they are not (official/licenced). But what am I risking here? Is the likely worst case scenario a cease and desist letter? Or is it possible the large companies involved may leap to more draconian means of shutting me down? As I am doing this through the vehicle of a limited company, is the absolute worst case scenario in the eventuality of litigation that the company is forced to shut down? Or is there a mechanism by which this could come back on me personally? Does the fact I ran this website for around three months as a sole trader before incorporating change the answer to this?

And finally, do you have any advice about what I should do now in order to continue selling these products? E.g. would it be normal to seek an official sort of written stance from a law firm, or would this really be quite useless in the event of future contact from LEGO/Disney/etc? Would it be a completely crazy idea to talk to LEGO directly.?

Thanks again for the help on this.

Sam

[SamBrickCaps]

Also: is there a type of insurance which would assist in challenging any hypothetical future legal actions by any of the companies mentioned previously? I don't much like the idea that the law is of secondary consideration to which party has the deepest pockets for expensive lawyers (although I know that's sadly how the world works much of the time).

[AndyJ]

Hi again Sam,

It's hard to say what might be the worst case scenario if Lego and or Disney decide they don't approve of what you want to do. Obviously if they can achieve the result without going to court, for instance by wearing you down with threats and by ensuring that the major platforms won't carry your products, then that will probably satisfy them. They won't want to take the chance that a court will find in your favour, if they can avoid that. If a court did get involved and you lost, that could be expensive both in terms of the legal costs and the damages which might be awarded against you. But possibly the greatest effect is that this would be stressful and drawn out over many months if not a year or more, distracting you from your business. As I say, that is the worst case, I think.

The fact that you are a limited company doesn't really change things much, other than that all these measures might bankrupt the company and force you into liquidation. If you are the only employee of the company, and the matter went to court, there is a fair chance that the claim would be against both the company and you personally as joint tortfeasors, since you were obviously the controlling mind behind the alleged infringing activities. Clearly, that would need to be proved in court, but with a heavy-weight legal team against you, that might not be too difficult. The fact that you operated for some time as a sole trader would obviously come into that equation.

You can certainly get insurance which which would cover you for this kind of liability, but I'm not sure the cost of it would be economic if your operation was fairly small.

You could approach Lego about a licensing deal. I don't think you would also need to include Disney as, if Lego agreed to a licence, this would include their licence from Disney over the Star Wars brand. I have no idea how Lego would react to such a request, or the likely cost of a licence.

I know this sounds really gloomy and I don't want to entirely discourage you. But protecting brand reputation is an important thing for these companies so they tend to put a lot of resources into it and they can afford to do so. If you haven't already read this page on Lego's own website, you should do so now to get a feel for exactly how much they care about this. Furthermore, I would be unsurprised to find that they actively trawl the internet to find instances of where their brand name is appearing and so they may already be aware of this forum posting.

But as this is all about your core business model, don't just take the advice of some person on the internet. Get some proper legal advice tailored to your specific situation. I suggest that this would be best done by approaching a trade mark attorney as they are specialist lawyers in this field. You can find one through the Chartered Institute of Trade Mark Attorneys. You may even be able to get some free advice, initially.

[SamBrickCaps]

Thank you Andy. Invaluable advice. I will leave this thread open and return if any updates come up... good or bad. I have also approached https://minifiglabs.com/. They produce products built using LEGO parts and seem very well established (client list including the biggest company names imaginable!). I'm interested to hear if they are able to share any interactions they've had with LEGO before, and LEGO's stance on them, assuming their existence is known to the LEGO group. It may be that they are a model example of how to indicate use of LEGO elements without passing off. Although they don't do any Star Wars etc products so it's perhaps only half of the equation.
Sam

[AndyJ]

Hi Sam,

Yes, that's interesting. I note that they say on their website "We are in touch with The LEGO® Group’s legal consultants and we follow The LEGO® Group’s legal policies." That suggests that Lego are aware of their operation, so maybe that bodes well for what you want to do.