Intellectual Property and Lego

I recently read a fun article about how Lego remains the dominant firm for plastic bricks even though it has no intellectual property protection in the product.  There is no Lego patent or copyright anymore, and there is no trade secret in making plastic pieces of different colors that fit together.  Lego does have a powerful brand secured by trademark law, but normally that would not be enough to maintain a significant competitive advantage. So what is the answer to its success?

One aspect is that Lego is very good at making the blocks.  Very few of them have defects.  Indeed, Lego puts a number on each block (and imagine how many there must be in the world) so that if there is a defect, they can track exactly where the block came from and fix the mould or process that made it. Quality control is critical when the products are highly similar.

Another key is that Lego has purchased the exclusive rights to popular franchises such as Star Wars and Harry Potter.  I could make a Death Star out of an alternative product, but it won’t be as good as the Lego version because the blocks cannot be custom made for a Death Star.  (Granted, some of Lego’s competitors have bought the rights to other franchises, but Lego appears to have the better ones.)

Finally, Lego does lots of clever marketing.  There are some Lego theme parks, Lego stores in prominent places such as Rockefeller Center, and so on.

Anyway, this is another good case study for someone who wants to understand how creativity can thrive in the absence of patent and copyright, along the lines discussed in The Piracy Paradox.

 

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3 Responses

  1. Margaret Tarkington says:

    Gerard-
    As a consumer–meaning a mother of children who love Legos–it is an understatement to say that “Lego is very good at making the blocks.” We buy Legos and we buy Mega Blocks (because Mega Blocks has purchased some rights to some popular franchises as well, such as Thomas the Train and Hello Kitty, which my children want) and sometimes other generic makers of such blocks. Legos are the ONLY brand that really work. They hold together, but they still come apart when you want them too. Sound simple, but apparently it is much harder to make perfect plastic blocks than you would think. Lego’s competitors cannot seem to do it–the blocks either stick together (and it is extremely hard to get them apart once you put them together) or they fall apart at the slightest touch–so much so that it is hard to build anything because you have to put some pressure on the block to build with them. It is EXTREMELY frustrating for little children to have their creations fall apart while they are trying to build it still. So while other block makers also buy rights to franchises, I would place the key to Lego’s success entirely in their quality control. Their products are always perfect–they fit together perfectly, they stay together enought to play with something you build, and they come apart when you want them to.

  2. Margaret Tarkington says:

    Sorry about the typos. It should have said “Sounds simple” and “enough” (not “enought”).

  3. Joe says:

    I’m always a fan of your posts, Professor Magliocca; and I agree with everything you have said in this one — but if I may add one point: not only does Lego design the individual bricks well and engage in clever marketing, but the actual set designs are usually well put together too. Typically they utilize fairly advanced building techniques or use bricks in unusual ways to create unexpected effects.

    Indeed, the designs of the 2010s are are somewhat at a high point. For a more thorough comparison of builds through the decades I highly recommend a blog I stumbled upon titled “Deconstructing Plastic Bricks.” You can really appreciate the evolution of the build designs in the post on Crane Trucks:

    http://www.deconstructingplasticbricks.blogspot.com/2010/06/6446-crane-truck.html