HUGE Win in LEGO v. Lepin Case

[TWRAddict]

From Brothers Brick -
"Earlier today, a district court in China ruled against four companies for infringing multiple LEGO copyrights by producing and distributing LEPIN-branded imitation products. The companies were ordered to 'immediately cease producing, selling, exhibiting or in any way promoting the infringing products' and to pay LEGO 4.5 million RMB in damages (about $650,000 US)."

Read more here:

https://www.brothers-brick.com/2018/11/05/lepin-ordered-to-stop-making-and-selling-lego-imitation-products-by-chinese-court-news/

https://www.lego.com/en-us/aboutus/news-room/2018/november/lepin-case/

[PotatoBrick]

Woa! This is huge! Very nice news. The international pressure on China to cease IP infringement seems to be working. 

[Mylenium]

As with all these cases: Mostly irrelevant. Those factories will reopen tomorrow under a different name and bypass the regulations of the ruling in some way or another.

Mylenium

[MAB]

Plus it doesn't stop them doing it in future. The ruling only applies to those products in the case, not current and future ones. If the fines remain relatively low, the fakers will continue to fake sets, make their money during the court case then finally lose the court case and cease selling those sets and move on to the next batch.

[Johnny1360]

Yeah it's all just a sham so the attorneys can buy luxury yachts. 

[kibosh]

7 hours ago, Mylenium said:

As with all these cases: Mostly irrelevant. Those factories will reopen tomorrow under a different name and bypass the regulations of the ruling in some way or another.

Mylenium

Yep.  Tomorrow it will be Nipel.

[Lego Mike]

A symbolic win. I'm glad to see it, but as has been said, Lepin will disappear, retool, and come back as something else.

Anyone know how Lepin and the like can clone Lego properties so quickly and accurately? The blueprints, production info, etc., are pilfered from factories and funneled to Lepin in exchange for a handful of sweaty cash. China is the world capital of bootlegs because a) most of the originals are made there and b) the Chinese government often requires foreign businesses to register their IP information and partner with a domestic producer.

I live in South Korea, and it's somewhat the same, but by no means as bad. The government requires foreign businesses to partner with local businesses -- it's an old way of boosting the local economy -- but it also has the side effect of dumping tons of IP and confidential business details, strategies, and such into the hands of inept local businesses and producers who would never come up with such things themselves.

So long story short -- huzzah. Awesome achievement, Lego. But when it comes to China, you will absolutely never squash IP theft. There's too much money for the crooked bureaucracy to feast on. This was a symbolic move by the court -- "Look, Lego, we made a small gesture in your favor. Okay, back to business as usual, right? Right?"

Meanwhile, I'll walk about five minutes from my apartment and find a toy shop that's 80% Lego clones, all for about 30% of Lego prices. (In South Korea, the average set is at least a third more than the US, and even double is not uncommon. People can't get enough of Lego clones and couldn't care less about what some foreign company thinks about IP rights.)

</rant>

[anothergol]

23 hours ago, PotatoBrick said:

Woa! This is huge! Very nice news. The international pressure on China to cease IP infringement seems to be working. 

How is it nice news for you as a consumer?

In the best case, instead of clones of existing sets, you'll see more & more original sets (or stolen MOCs) pop up, and IMHO that's not good for Lego that's stuck to its own internal rules & will now face competition with sets that will be better because

1. based on unpaid licenses (this is China afterall, it's not gonna change anytime soon)
2. based on adult licenses (which doesn't necessarily mean "for adults", but kids love Predator or whatever more than Disney's stuff)
3. based on stuff that has proven to be very popular with kids: war (tanks, etc)
4. looking better because less strict on the strength

So Lego had unfair competition because of stolen IP, but ask yourself what is that IP really worth. Is it really "Ninjago" that sells? Also, ask yourself if Lego didn't replace the castles theme by that horrible Nexo for one reason: to one one more IP that they believe would have protected their sets, while they can't prevent any clone brand from releasing generic castles. And since Nexo flopped, what was it really worth? Perhaps Lepin would have sold more generic castles than Nexo clones, afterall. As for the sets themselves, if you think that the reason Lepin is so cheap is that they didn't have to invest in "R&D", then explain why Xingbao's sets are as cheap. LOTS of MOCers out there, it should be dirt cheap to design new sets. First because it's not a huge work, second because Chinese vs Danish salaries can't compare.

Lego will still have competition, they could only dream of blocking ALL compatible bricks (and they've tried), but that's already lost for them.
 

Edited November 7, 2018 by anothergol

[Cylo]

I saw a video one YouTube about this, TLG posted this yesterdayon their news section. Glad to see the counterfeit brands being brought to justice!

[Mylenium]

5 hours ago, Lego Mike said:

People can't get enough of Lego clones and couldn't care less about what some foreign company thinks about IP rights.

That's the part LEGO can't seem to get in their heads to begin with. Instead they are trying to abuse IP legislation as a weapon to prevent any competition...

Mylenium

[Lego Mike]

Yeah. I mean, I'm with Lego. I'm a writer by profession, so I'm all about IP rights -- oh wait, just a second. I just finished downloading the first season of Frasier. Where was I...?

Oh right. I'm all with Lego, but they have to understand that in East Asia the prices are just crazy. I know they put a ton of time and energy into figuring out what the market will bear in terms of price and selection...but that doesn't explain why I still see local retailers awash in 2015 Nexo Knights sets and shelf space gradually losing space to knock-off brands like Oxford Blocks. (Though in all fairness, Oxford does not clone Lego. They actually have some really nice licensed sets, like a Dunkin' Donuts shop and Baskin-Robbins ice cream truck.)

For example, I wanted to buy the Fantastic Beasts "Grindelwald's Escape" (75951). I bop on down to the local big-box retailer -- whoa! $34 USD?! I feel like I've been mugged, and I haven't even paid anything. Looking on Aliexpress -- $14 for an uncanny clone. (Do I buy it? No way! But the point remains.)

They can chase IP rights all they want (and they should), but that just isn't the culture over here. People simply don't get that unique creations belong uniquely to the creator. From a Western perspective -- boo, hiss, thumbs down, yeah. But in East Asia, it's clone or be cloned. China's not going to do diddly as long as Chinese companies are making bank and officials are getting their "donations." And even if they did, it's just not hard-wired into the culture to think that copying is bad.

You have to price yourself to compete. That's the bottom line. You can't expect to get by on reputation or quality, though I wish that were the case. An office worker looking for a fun gift for his kids isn't ultimately going to care whether that Downtown Diner is by Lego or Lepin; he's going to care whether it's $190 (in South Korea) or $85 (Aliexpress). And I can't say I blame him. Which really sucks.

[Mylenium]

1 hour ago, Lego Mike said:

You have to price yourself to compete. That's the bottom line. You can't expect to get by on reputation or quality, though I wish that were the case.

Arguably that's no different here in Europe. In the end LEGO live by their mythical reputation here in Europe and having walled themselves in nicely by building a monopoly. If competing companies like Oxford, Mega, Cobi and so on actually weren't as complacent (or had the huge production and marketing capacities required for that matter) we'd sure be talking differently. I'd sure love to see someone give LEGO some heat, if only to knock them back into reality...

Mylenium

[Johnny1360]

2 hours ago, Lego Mike said:

 

For example, I wanted to buy the Fantastic Beasts "Grindelwald's Escape" (75951). I bop on down to the local big-box retailer -- whoa! $34 USD?! I feel like I've been mugged, and I haven't even paid anything. Looking on Aliexpress -- $14 for an uncanny clone. (Do I buy it? No way! But the point remains.)

 

 

In all fairness, this sounds more like a pricing issue within whatever country you happen to be in. More to do with the government not LEGO. Here in the US that set is $19.99, which anyone that regularly buys lego knows, is a joke. By simply waiting a couple weeks it will be on sale, or shop around, or price match, it will be $15.99. Which is the price I got it for, a little more reasonable for sure than your example of $34.

[gantarat]

I don't think this is HUGE wins for Lego.
Those 18 sets are original IP (Nexo Knight,Ninjago and Chima) and Retired sets.
and lepin will find a way to sell by no box,lego instruction download link instend book.

 

[Mylenium]

2 hours ago, Johnny1360 said:

In all fairness, this sounds more like a pricing issue within whatever country you happen to be in. More to do with the government not LEGO. Here in the US that set is $19.99, which anyone that regularly buys lego knows, is a joke. By simply waiting a couple weeks it will be on sale, or shop around, or price match, it will be $15.99. Which is the price I got it for, a little more reasonable for sure than your example of $34.

Nothing to do with governmental policies at all beyond possible punitive tariffs and regular cost for customs fees, taxes and whatnot. In some regions of the world LEGO is simply more expensive - there may be no suitable distribution network, the region may generally be difficult to reach, raising even the simplest international shipping cost to crazy heights, there may be steep sales taxes and so on. No offense, but you can't apply your typical simplistic US logic here. Combine that with lower average income or the fact that LEGO likes to translate prices 1:1 e.g. from USD to EUR without compensating for exchange rates or possibly reduced initial cost due to regional production and you can take a guess at how expensive a set can become. In fact it's even worse in that lately LEGO has started to price out sets that cost 30 or 70 USD at 40 and 80 EUR, respectively, so there's already a built-in surcharge despite Billund being closer to Germany than LEGOs Mexican factory to the US. If things can be that bad in Europe already I don't even want to dream about how costly LEGO can be in some remote parts of the worlds where the next factory or distribution center is thousands of miles away. So with all respect, perhaps you should consider those points before applying a redneck "blame your government for everything" stance. @Lego Mike sounds smart enough to me to already have considered all options and clearly judging from his words, waiting things out for some magical discount to happen may not be an option when you don't even have a choice between retailers in a market where copycats are more prominent than the original.

Mylenium

[anothergol]

7 hours ago, Mylenium said:

. In fact it's even worse in that lately LEGO has started to price out sets that cost 30 or 70 USD at 40 and 80 EUR, respectively, so there's already a built-in surcharge despite Billund being closer to Germany than LEGOs Mexican factory to the US.

Pretty sure Lego could be considered a luxury business nowadays, with street prices so so far away from production costs. The prices in a country are most likely simply what Lego can get away with. I live in Belgium, a neighbor of France & Germany. Sets are more expensive in Belgium, like up to 10% (while VAT is only slightly higher here).

The other day I bought a kinder surprise egg (sorry US people, something you'll never get because of silly laws). I was surprised (..) at the quality of the toy (a Smurf dude). In the past, such toys were just 1 big lump of plastic, possibly badly chain-painted. But here it looked like multi-molded, perfectly clean seams, really high-quality stuff. And Kinder can put this in a plastic egg, with chocolate around, for 80 cents and still make mad profits. What's the price of a minifig blind bag again?

[3797]

13 hours ago, Lego Mike said:

For example, I wanted to buy the Fantastic Beasts "Grindelwald's Escape" (75951). I bop on down to the local big-box retailer -- whoa! $34 USD?!

It's the same situation over here in Germany. Grindelwald's Escape is pretty much the only Harry Potter set that always seems to be in stock at the local shops, because people aren't even buying it when it's marked down to 24.99€. Newt's Suitcase is a much better deal even at MSRP. I really want that Seraphina Picquery figure, though. Love that sand blue hat.

Spoiler

 

[Johnny1360]

Thanks for the dressing down @Mylenium I needed that. 

[Lego Mike]

11 hours ago, Mylenium said:

waiting things out for some magical discount to happen may not be an option

Actually, yeah, I wanted to mention this. And it's a sidebar, really having nothing to do with the Lepin ruling, but it does underscore the general mood among consumers in South Korea when it comes to Lego.

Things rarely go on sale here. The only time they do is when there's old sets they want to flush off the shelves. I mean, there's a fairly nice toy store here (where toy stores are a rarity themselves). It's been open two years in a huge department store in a large-ish city. It's still trying to sell Chima, TMNT, and Angry Birds sets. Popular items never go on sale. Junk they can't unload? On sale maybe three times a year, if you consider 30% off a sale on items that are marked up 50% over online retailers. Anyway, they don't sell, they stay on the shelf until next time they're discounted, they don't sell, they stay on the shelf... Rinse and repeat.

Nevermind that South Korea seems to be one of those markets where all the overstock gets unloaded from overseas. Justice League BrickHeadz, anyone? Buy an armful of Aquaman BrickHeadz -- just $13 each. How about the 2016 Vampire and Bat Halloween set (40203)? The aforementioned toy store has had literally about 80 of them stacked up on a shelf for the low, low price of $15 each. Case upon case of Series 16 CMFs, anyone? Just $5...per minifigure.

Now I'm just complaining again. My point is, Lepin and other knock-off brands will never really go away because they're out-classing Lego by price at every turn. And as I said, I'm not super-excited about that fact myself, but if I were an eight-year-old I sure as heck wouldn't care as long as I got a ton of bricks to play with.

As someone else said, yeah, Lego is a luxury brand. It's ridiculous. I tell someone here that I'm an AFOL, and it's like, wow, I must be rich. What is my job? Doctor?

[gantarat]

Beside income/prices. Many people/parent/kid who are not AFOL think lego,lepin and other knock-off brands are not different.

One Expensive One Cheap That it

[MAB]

11 hours ago, anothergol said:

Pretty sure Lego could be considered a luxury business nowadays, with street prices so so far away from production costs. The prices in a country are most likely simply what Lego can get away with. I live in Belgium, a neighbor of France & Germany. Sets are more expensive in Belgium, like up to 10% (while VAT is only slightly higher here).

 

I agree here, prices are what they can get away with, and not really reflecting production costs. I imagine some people pay full RRP for LEGO, buying from the LEGO store. Part of it is the experience. However, the same sets will be sold for 33% off in supermarkets at some stage.

 

I feel sometimes LEGO sets prices knowing that they will be discounted from RRP. The Friends Friendship box 41346 has an RRP of £44.99, here is the amazon price tracker chart for it actual sale price ...

 

[Johnny1360]

13 hours ago, MAB said:

 

 

I feel sometimes LEGO sets prices knowing that they will be discounted from RRP. The Friends Friendship box 41346 has an RRP of £44.99, here is the amazon price tracker chart for it actual sale price ...

 

 

Yes that is the way it seems, to me as well and was the point I was trying to get across before being called a redneck with simplistic views but it was okay because no offence was intended.