Thanks guys! I got my project done, and I think it was a pretty convincing and legitimate argument as to what measures should be taken.
The key thing here is to find legal ways to get over the fact that LEGO doesn't have a patent since theirs expired in 1989. The point of a patent is to protect inventors from having their designs stolen off after inventing something - essentially, it creates a government-approved monopoly for the duration of the patent. So when the tube-and-stud pattern expired, rip-offs could be made. LEGO tried to get a trademark in the EU in 1999, but it was overturned in 2010. These types of rulings have also happened in other places, like Canada.
Now, it is possible to transfer trademarks - such as when LEGO has purchased the rights to make LEGO sets for Star Wars, Indiana Jones, etc. But this assumes companies like Mega Bloks have trademarks, that they would be willing to sell them, and that LEGO would want to buy them. It isn't ideal at all. I think that LEGO could have a case to sue companies that produce similarly-named sets as their current designs, but aside from that there isn't that much else that can be done, to my knowledge, to reinstate the tube-and-stud patent as a trademark, aside from a reform of patent/trademark law.
Just for the record, the case over the red 2x4 brick was over whether the IMAGE of the 2x4 brick was trademarkable. The 2x4 brick itself is a matter of patent rather than trademark law, since it is a functional design rather than a matter of brand identity, and clone brands have been allowed to produce their own 2x4 stud-and-tube bricks ever since TLG's patent expired. However, TLG is quite insistent that mimicking the visual design of their bricks misleads customers, and in many cases they have a point-- I've seen people mistake PLAYMOBIL for LEGO, for crying out loud, and with actual brick-based products confusion is even more prevalent.
Here is a BBC news story on the EU court case results, though it may not be the best source since it mistakenly refers to Mega Bloks as Mega Briks. Here is the LEGO.com press release on the case, though being published by the LEGO Group, it is not an impartial source and you should seek additional sources to get a clearer, less disputable picture of what transpired.
Hopefully these sources will help you further yourown research into the matter.
Thanks for the CNN link, Toa Nidhiki, I used that. And thanks Aanchir for TLG's statement, that was useful. Of course the stud-and-tube system is, as you said, public domain now- but I argued that the exact dimensions and part designs of the LEGO system were distinctive features of the LEGO brand, and not necessary to make a building block. Therefore those qualities should be eligible for trademark protection, right? And let's face it, if the clone brands weren't compatible with LEGO most of the problems we have will clone brands would dissapear. It would clear up consumer confusion significantly, for one.
One problem with this is that clone brands have been producing LEGO-like bricks for too long now for TLG to claim exclusive rights to the brick design. While TLG may have once been able to argue that the LEGO brick's proportions and design were trademarkable, it has now become generic and many courts will consider it such. An example of a well-known trademark that has become generic is the word "aspirin". Originally, this was a trademark of the Bayer company, and still is in some countries, but over time it became used as a commonplace term for that chemical pain medication, which otherwise went by a cumbersome scientific name.
Even if a design like that of the LEGO brick WERE trademarkable (which courts dispute), at this stage it would be difficult for a trademark to be registered for this reason, since it would have to follow the same rules as word-based trademarks.
I don't think they have to RAISE their prices as a result of clone brands, but rather I think it has stopped them from thinking they have to LOWER their prices. One of the big realizations during TLG's turnaround in the last decade was that LEGO was treated as a premium brand, and so people were comfortable paying premium prices. And the other side of the coin was that TLG could never maintain their reputation as a premium brand if they were constantly trying to compete with clone brands in price-- because no matter how much TLG reduced prices, clone brands with less of a reputation for quality to maintain could sell their products for cheaper. Basically TLG decided that they should focus on promoting and improving their quality, not on making their prices a selling point.
Part if me wants to say that Lego should have gotten the patent. but than again, permanent monopolies have proven to work solely for the company and not for the consumer.
So, if we took all of the cheap lego clones off the market, Lego would no longer have to innovate in order to attract customers, as they would be the only brick based toy. And than the prices could skyrocket, and before you know it, you have the Apple of building blocks.
Lego isn't immune to the monopoly problems, but I feel that clone brands make them have to raise their prices more than they would if they had a monopoly. And their are always other building systems for them to compete against.
Actually, clone brands tend to make prices lower, since lower prices mean higher demand. higher prices generally dont translate to more profit. unless you are running a monopoly. why do you think food at a baseball game is really expensive? no competition.
But what Aanchir was saying is that Lego realized that trying to constantly lower prices was a fool's game. Lego has a certain standard of quality, and companies which don't care as much about quality will always be able to price their products cheaper, no exceptions. Decreasing prices anyway would mean having to decrease quality, which would in turn decrease demand. Instead, Lego wagered that maintaining and emphasizing the quality of their brand would create more demand than lowering prices, and given how the company turned itself around under this direction, it seems they were correct. So no, clone brands have less of an impact on the price of Lego's own products than you'd assume.
It's not a fools game. I'ts economics. I can almost guarantee that the only reason megabloks is still around is because they are cheaper than Legos.
But lego is better in pretty much every way.
by selling at a lower price, you sell more products, except for some exceptions. but you are also able to make and sell a lower amount of that product.
But I will almost always go with lego, as they are better quality, and have better service. but not everyone cares about that.
But that's the point. Lego could never price themselves lower than Mega Bloks without cutting so many corners that it ceased to be the superior choice. Lego's domination of the construction toy market is primarily due to their quality and reputation. If they threw that away, they would lose that.
Premium brands can exist in their own niche and price point without losing customers. For example, I have a very nice Tilley hat. There are thousands of hats on the market, with some going for less than five dollars. I don't remember what my Tilley cost; at least $30, maybe as much as $50. How does a company like that stay in business? Simple: they offer unmatched quality. Sure, they could lower the price if they stopped caring about quality; but then instead of being in a small market of premium hats, they'd be in direct competition with thousands of other bargain hat manufacturers.
The same applies to Lego. As it stands, a large market is aware of Lego's superior quality and reputation. If Lego decided to discard that just to drop prices, then all of a sudden instead of being in a class of their own, they'd only one option out of many competing companies: Mega Bloks, Oxford, Kre-O, Best Lock, and Cobi, not to mention hundreds of bootleggers who could still price their products lower simply by stealing designs instead of making their own, and using cheaper, less ethical labor. What would they have gained? People who already buy Mega Bloks and similar brands would have no reason to switch to Lego if Lego sacrificed their reputation for quality, but people who may have once bought Lego wouldn't think twice before switching to a competitor if Lego were no longer the superior option.
Supply and demand are the basics of economics, but they're not the be-all and end-all of it. Product quality matters too, and without some way to stand out from the competition, Lego would almost certainly lose its market dominance.
Almost forgot what my pint was.... while yes, you generally get what you pay for, that was not my original point. my point was that Lego being the only option is not in the consumers best interest. you can try to argue against that all you want, but I can assure you that I can back it up.
yes, Lego is a better option, you are also paying more per unit. and that does not appeal to everyone, fortunately, it appeals to enough people to make it a sustainable business model.