If you have ever wondered about the real reason for handing back Hong Kong to China, read on. It can be expressed in one simple phrase - Lego Wars. The battle began in 1983, when the big American toy maker, Tyco, decided to start manufacturing Lego-compatible building blocks in Hong Kong. Tyco's management and lawyers had convinced themselves that, because Lego's grip on the global toy building-block market was unshakeable, Tyco could only compete by selling a product that would fit the Lego jointing system. It did this by duplicating the basic Lego building kit, putting in more bricks and selling it more cheaply.
Within a very short time Lego's lawyers were on the case. After skirmishing in the lower courts in 1988, both parties went before the Hong Kong High Court. The Tyco people argued that all Lego's patents and registered designs had expired, and the copyrights Lego claimed for engineering drawings dated 1968 and 1976, were merely for mechanical copies of earlier drawings which thus were not in themselves artistic creations.
Not surprisingly, Lego's lawyers took a different view. They argued that although the engineering drawings for the 1968 and 1976 Lego blocks had been registered as designs, they were still artistic creations. In support they cited the 1985 case of Wham-O Manufacturing vs Lincoln Industries, wherein the mould for a frisbee was held to be an 'engraving'. The Wham- O precedent proved to be a killer. Lego won the first Hong Kong case and an injunction against Tyco. The High Court judges ruled that, unlike Lego's 'engravings', Tyco's engineering drawings were 'designs' because they 'had no eye appeal and their shape was dictated solely by their function'. As a result they were declared not to be works of art. Not surprisingly Tyco appealed against this verdict. Dramatically, it got it reversed and the injunction lifted in the appeal court. Tyco blocks appeared in the shops again. Lego resolved on a final effort. It appealed to the Privy Council, the highest court open to the then colony. But this time it lost. A trio of Law Lords ruled that the Lego engineering drawings were designs, and not works of art after all, because they were a 'blend of industrial efficiency with visual appeal' whose appearance was 'not entirely dictated by function'.
This left Lego in an invidious position vis-a-vis Hong Kong. Its patents had expired, its registered designs were indistinguishable from those of Tyco or any other interloper, and its copyright was faced with extinction instead of renewal once it became a matter of the mechanical reproduction of drawings. As a result of this ruling three things happened. First, Lego embarked on its present very successful policy of producing more and more specialised components (classified as works of art), diminishing the importance of the standard Lego blocks (classified as registered designs). Second, the whole business of legal definitions was tidied up - though by no means to everyone's satisfaction - by the Copyright, Designs and Patents Act of 1988. Third, the Western world washed its hands of the competitive manufacture of toy building-blocks in Hong Kong - by removing its whole legal system from China.