When a trademark owner registers its marks with the U.S. Customs and Border Protection (CBP), CBP may seize imported counterfeits based on trademark claims. CBP may also seize shipments from abroad based upon copyright infringement. See 19 C.F.R. §§ 133.41-46.

As stated by CBP, “In regard to copyright infringement, articles that are determined by CBP to be clearly piratical of a protected copyright, i.e., unauthorized articles that are substantially similar to a material protected by a copyright, are subject to seizure.”[1]

An ongoing case relating to such a copyright-based seizure involves toymaker Lego and its “minifigures.” Lego has been manufacturing its minifigures since 1978, and registered copyrights of the toys with the U.S. Copyright Office. In 1998, Best-Lock Construction Toys began selling its own similar toys in the U.S. In July 2011, after Lego recorded its copyrights with CBP, the agency began seizing Best-Lock toy shipments.

CBP asserted that the seizures were being carried out because the toys infringed one of Lego’s registered copyrights. Lego followed with a suit claiming that the Best-Lock toys infringed Lego’s registered copyrights. See Complaint. Best Lock counterclaimed seeking declaration that the Lego copyrights are invalid and that its toys do not infringe the copyrights. See Counterclaim.

Best Lock moved for preliminary injunctive relief. See Memo. for Prelim. Inj. In the motion Best-Lock asserted that: the Minifigure Copyrights are invalid, that Lego is estopped from asserting them, and that Best-Lock is suffering continuing and irreparable harm as a result of CBP’s seizures of its products. Lego, of course, opposes the Motion on the grounds that Best-Lock has been infringing the Minifigure Copyrights, and that Lego will likely succeed on the merits of its Complaint. (Lego Slip Op. at 3)

The court deemed Lego’s opposition to the Best Lock motion to be “the functional equivalent” of its own motion for preliminary injunction. See Lego Slip Op.

A crucial issue for the court was whether Lego’s decision not to sue Best-Lock until 2011 barred the toymaker from asserting its copyright claims under the equitable doctrines of estoppel or laches. The court ruled that Best-Lock was not entitled to prevail on estoppel because “pure inaction does not create estoppel in the face of an affixed copyright notice.”

The court also held that Best-Lock was not ignorant of the “true facts” because it was aware of Lego’s copyright. The court had, on its own initiative, raised the separate question of whether laches could bar Lego’s claims that were brought with the 3-year statute of limitations. On this issue, the court concluded additional discovery was needed to determine whether Lego “unreasonably delayed” bringing its suit.

CBP Seizure Permitted

Without ruling on the CBP seizure issue, the court concluded, in a 55-page opinion, that the record was insufficient to allow full consideration of the preliminary injunction motions and ordered additional discovery. At least for now in this case, the CBP seizure was allowed.

Sources: Case No. 3:11-CV-1586, Lego A/S v. Best-Lock Constr. Toys, Inc. (D. Conn.); U.S. Customs and Border Protection website; U.S. Government Printing website.

This article was prepared by Sue Ross (sross@fulbright.com / 212 318 3280) and Saul Perloff (sperloff@fulbright.com / 210 270 7166) in Fulbright’s Intellectual Property and Technology Practice.

[1] U.S. Customs and Border ProtectionKnow Before you Go,” at 50 and “Prohibited and Restricted Items.”