- with Senior Company Executives, HR and Finance and Tax Executives
- with readers working within the Metals & Mining, Securities & Investment and Telecomms industries
In this article, we discuss a rare and long-awaited New Zealand Intellectual Property (IP) court judgment, one that seems to have generated significant interest, Zuru New Zealand Ltd v Lego Holdings A/S (2025) NZCA 650, 10 December 2025.
The issue of compatibility
The case focused on the issue of 'compatibility' in the context of trade mark law. The judgment, we're told...
'provides long awaited clarity for businesses on the lawful use of another party's trade mark, particularly in the context of advertising goods or services by reference to the goods or services of another trader'.
The parties to the dispute - there's Zuru
There's a company in New Zealand called Zuru New Zealand. The company makes, and has for some time made, a wide range of plastic toy building bricks. These toy bricks are sold under the trade mark MAX BUILD MORE.
And then there's Lego
Everyone knows Lego. Zuru's bricks are similar to, and designed to be compatible with (as in interlocking), LEGO products, and the company initially provided a clear compatibility statement on its packaging – this featured the word trade mark LEGO, but not the logo trade mark mark. To explain this design feature to customers, Zuru included the following statement on its product packaging:
LEGO® BRICK COMPATIBLE.
Compatibility – major brands
Zuru subsequently replaced the compatibility statement that referred to LEGO with this much broader statement - 'Compatible with major brands'. Variations of this compatibility statement were subsequently put forward but Lego objected. Which led to...
High Court legal proceedings
Zuru asked the court for declarations that the use of compatibility statements using the LEGO trade mark did not constitute any of the following:
- trade mark infringement
- breach of the FTA
- passing-off
The High Court's findings – not in accordance with honest practices
The New Zealand High Court ruled that the original compatibility statement infringed Lego's trade mark, and that there was no defence of comparative advertising (Section 94), or use indicating the quality of the goods (Section 95), because the use by Zuru had not been in accordance with honest practices.
The Court of Appeal
Interestingly, the Court of Appeal was split on this question.
Not use as a trade mark: The majority (Judges Ellis and Palmer) held that the use by Zuru was not 'use as a trade mark'. The judges were of the view that the trade mark had not been used as a 'badge of origin' for Zuru's goods. Put differently, the name Zuru was not being 'used to indicate the origin or trade source of Zuru's goods'.
The judges held that, in order to amount to use 'as a trade mark', a sign has to be used in such a way that consumers will think that 'this is telling me the product's source'.
Descriptive use: It followed that, as the LEGO trade mark was not being used to indicate product source, the term LEGO® BRICK COMPATIBLE was descriptive, indicating that 'despite not being a Lego product, it could still be used with Lego products'.
A minority view: Justice Cooke disagreed with the other judges and considered Zuru's use to be 'use as a trade mark'. The judge took the view that, as LEGO is a made-up word, any use of it must 'necessarily be trade mark use rather than descriptive use'. His reasoning was also influenced by the concern that, if Zuru's use was not trade mark use, then what would be the point of the comparative advertising defence?
An unusual and interesting case all round.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
