Mega Brands Inc., formerly known as Mega Bloks Inc. and Ritvik Holdings, is a Canadian children's toy company currently owned by Mattel. Mega Bloks, a line of construction set toys, is its most popular product. Its other brands include Mega Construx, Mega Puzzles, Board Dudes and Rose Art. The company distributes a wide range of construction toys, puzzles, and craft-based products.
In 1967, Victor Bertrand and his wife Rita founded the company as Ritvik Holdings (RH). Ritvik is a portmanteau word based on a combination of Rita and Victor. RH began by distributing toys made outside Canada and also facilitated contracts between foreign brands and Canadian manufacturers.
Wanting to expand beyond Canada, Victor Bertrand took an interest in construction block sets. He saw room for growth despite them being an industry staple since the early years of the 20th century when the Batima Block was released in Belgium in 1905. With Lego being the leading construction toy, Bertrand chose to make a similar set. Bertrand ignored friends and advisors, feeling he had two advantages in launching Mega Bloks: he aimed to produce jumbo-sized bricks for toddlers, who Lego bricks were not designed for, and he considered his expertise in injection molding would give him a price advantage.
A Mega Bloks "Micro" line was released in 1991; these were compatible with or a clone of Lego bricks. This finally placed Ritvik and The Lego Group in direct competition. Lego Canada soon sued Ritvik for unfair competition, claiming a likelihood of confusion between its Micro Mega Bloks and the Lego line. Since Lego's brick shape patent had expired, the lawsuit dragged on for years as sales grew worldwide (at an average 70% a year until the mid-1990s), but finally Ritvik won the case by clearly distinguishing its brand from Lego. Suits were filed in Europe and the U.S. with similar results.
Ritvik followed the late 1990s licensing trend in 1998, with its first licensing agreement being for Teletubbies, followed by an agreement with Fisher Price with its Sesame Street characters license. A NASCAR line was also introduced. Ritvik Toys, Inc. was amalgamated with Ritvik Holdings Inc. on June 30, 1998.
The toy market was in a down cycle from 2002 to 2003, with the construction toy segment losing 10 to 15%, but Mega Bloks experienced increased sales. Since 1986, the company had seen a run of 17 years of growth, becoming number two in the construction toy segment behind Lego.
With shares trading at almost $30, in 2005 Mega Bloks, Inc. acquired Rose Art Industries, including its Magnetix line of toys, for US$350 million. Soon, Magnetix was a source of lawsuits resulting from choking incidents, causing its share value to drop quickly. Magnetix was then recalled. The company acquired Board Dudes, Inc., makers of Board Dudes posting and marking boards and Locker Dudes locker products, in January 2006, through its Rose Art Industries subsidiary.
Rose Art was placed on the market in March 2008 as a result of inquiries from the previous owners and others. The former owners of Rose Art, Jeffrey and Lawrence Rosen, offered to purchase it back in April 2008. They then sued company management for insider trading in September 2008, alleging shares were sold prior to the Magnetix recall. Rose Art's base operation was shut down in New Jersey, and in 2010 the company moved its stationery and activities division, with some key employees, to Irvine, California, under new executive Thomas Prichard, a former executive at Crayola, Pixar, and Hasbro. The subsidiary was not sold, and was reintegrated into Mega operations by 2012.
Mega Brands currently has the licensing rights for Thomas the Tank Engine, video game franchises Call of Duty and Halo, Barbie, Hot Wheels, Power Rangers, American Girl, Monster High, Pokemon, Destiny , and the Despicable Me franchise. Mega Brands picked up the license for Nickelodeon franchises like SpongeBob SquarePants and Teenage Mutant Ninja Turtles after Lego discontinued carrying their version of the licensed sets. They also have the rights to produce sets based on Nick Jr. properties like Blaze and the Monster Machines and Shimmer and Shine.
The Lego Group has filed lawsuits against Mega Bloks, Inc. in courts around the world on the grounds that Mega Bloks' use of the "studs and tubes" interlocking brick system is a violation of trademarks held by Lego. Generally such lawsuits have been unsuccessful, chiefly because the functional design of the basic brick is considered a matter of patent rather than trademark law, and all relevant Lego patents have expired.
