600M RMB fine and 9-year sentence imposed on Lego counterfeiters

On April 22, the Shanghai No. 3 Intermediate People’s Court upheld a lower court’s ruling in a case of criminal copyright infringement involving Lego sets. The court imposed a fine of 600 million RMB on the defendant company Long XX, while sentencing the principal defendants Chen XX to nine years in prison and a fine of 20 million RMB, and Chen YY to eight years in prison with a fine of 15 million RMB. Other accomplices received sentences ranging from one year and six months to four years of imprisonment, along with corresponding fines.

The court found that between January 2016 and August 2022, the defendant company Long XX illicitly set up departments including design, engineering, production, and sales, without authorization from Lego. Long XX procured genuine Lego products, conducted sampling, molding, injecting, and other processes to replicate Lego products precisely. This involved duplicating the outer packaging and instructions, resulting in exact 1:1 replicas of Lego products.

The principal defendants Chen XX and Chen YY, who are brothers, jointly operated Long XX Company. The company originally engaged in the legitimate production and sale of toys in Guangdong until the brothers discovered the lucrative market potential and substantial profits associated with Lego bricks, prompting them to decide to replicate and sell Lego toy bricks.

Between September and November 2017, Long XX Company was found by the Guangdong Shantou Intermediate People's Court to have infringed upon Lego Company's rights through the production and sale of Lego toy products. Despite a court order to cease production and sales, Long XX Company continued to replicate, produce, and sell Lego products.

Long XX Company produced and sold over 1,600 models of building block toy products, replicating over forty series of Lego products, with a total sales amount exceeding 1.13 billion RMB. Evidence revealed striking similarities between Long XX's products and Lego's, including brick designs, packaging, and instructions.

The Shanghai No. 3 Intermediate People’s Court underscored Long XX's deliberate infringement and the significant financial gains, underscoring the severity of intellectual property crimes. The verdict aimed to deter future infringements and protect the rights of legitimate holders. Thus, the Court affirmed the original ruling made by Shanghai Huangpu District People’s Court.