In this final leg of the litigation, the only issue still open was whether there were alternative forms which have the same functionality as LEGO bricks (i.e. are stackable, but not necessarily compatible with LEGO bricks) and not confusingly similar to them which are "at least as practical, at least as solid and can be manufactured without incurring higher costs."

A court appointed expert calculated that the manufacture of functionally equivalent alternative forms that fall outside the scope of protection of LEGO's 3D-marks costs between 1.326 % and 4.927 % more per brick than the LEGO bricks (yes, he did indicate the higher costs to the third decimal digit...). The Commercial Court of Zurich ruled that this was enough to make the alternative forms unacceptable for the competitor, and render the LEGO shape marks invalid because they are technically necessary, as it is not possible to market functionally equivalent products without incurring disadvantages.

LEGO argued in vain that less than 5% higher manufacturing cost was immaterial (given that the manufacturing cost are a small fraction of the whole sale price a not entirely frivolous argument). The Federal Supreme Court held that, given the eternal monopoly a 3-dimensional trade mark could confer on the sale of a product, a strict standard was appropriate. In essence, any higher cost in manufacturing makes a functionally equivalent form unacceptable.

The Swiss Supreme Court came therefore to the same conclusion as the ECJ in C-48/09 in September 2010 (IPKat post here) but using different arguments. In Switzerland, the availability of alternative forms is material for the question of technical necessity, and the availability of such forms is a question of fact.

German summary of decision 4A_20/2012 of 3 July 2012 (with link to full text; the reasons only just became available).

Correction: the original post stated that the alternative forms had to be compatible with the LEGO bricks. This was the original position of the Commercial Court of Zurich, but the Supreme Court had corrected this in an earlier decision, holding that the relevant question was whether there were any functionally equivalent, but not necessarily compatible, alternative forms available that were "at least as practical, at least as solid and no more costly to manufacture" than the trade marked shape. The post has been corrected to reflect this.