Fabrice Pigeaux has written an article ” Toys, intellectual property and counterfeiting ” published in the “Journal Special des sociétés” on Saturday, December 21, 2019.
Toys, intellectual property and counterfeiting
With the arrival of Christmas, sales of toys rocket for the delight of children and often adults. However, the toy industry, like other economic sectors with huge stakes, is targeted by counterfeiters.
In Europe counterfeit toys account for 14 % of seizures made by customs services, after cigarettes, but before clothing. The seizure of toys represents a greater value than seizures of medicines, according to an OECD study. EUIPO, the office tasked with registering trademarks and designs at Community level, published a study in 2015 on the economic repercussions of counterfeiting for the toy sector.
For counterfeiters, it is particularly easy and fast to copy toys, and to place them on the market.
There are, however, many ways of protecting toys from counterfeiting..
A toy may be protected cumulatively and distributively by intellectual property rights (trademarks, designs not only for the appearance of the product but also its packaging, patents for inventions relating to a technical aspect), all these rights having in common that they require completion of a formality, (filing at territorially competent offices, for example the National Institute of Industrial property – the INPI – in France), or by copyright, which comes into existence in an original work by the mere fact of its creation, without any need for filing – even if in some countries, copyright registration is possible in local legislation.
Somewhat on the margins of the toy industry, different elements of video games are also entitled to protection: software, databases, gameplay, graphics, music, audiovisual content. However, for all these products, technical protective measures are the first line of defense against counterfeiting.
A recent study by the INPI dated December 2016, and a long and detailed article on the website www.ipwatchdog.com, have given wide-ranging illustrations of different forms of protection available to several iconic toys: Sophie the Giraffe (whose whistle has been patented), the Barbie doll, Monopoly, Game Boy – are all names which are in addition meticulously registered by their owners.
The holders of these rights moreover often seek to be granted the broadest possible rights over their toys – the case of the Rubik’s Cube Case, in which it was sought to protect its shape by a three-dimensional trademark (and thus a perpetual right subject to renewal of the trademark) is a case in point.. The LEGO brick is moreover not just a brick – it is a trademark registered by the EUIPO, and the same goes for the Playmobil figurine. In legal terms, it has to be admitted that these toys are immediately recognizable – they are indeed indicators of origin and thus they are valid trademarks.
In all cases, it is essential to define very early on, well in advance of market launch, an effective protection strategy.
First of all, confidentiality and secrecy (protection by which has recently been strengthened by the law of 30 July 2018) are to be given precedence. Caution must also be exercised over the disclosure of toys, which could prevent the filing of a valid patent or design application.
Next, a filing strategy needs to be defined, by identifying the elements to protect. How should they be protected, and in which territories (countries in which the toys are sold and manufactured, but also the countries suspected of harboring the counterfeiters) ? Because protection is in principle acquired on a first come, first served basis, it is essential not to delay – counterfeiters are themselves frequently very quick to act.
Naturally, local specificities (requirement to file copyright, translation into the local language, sub-classification system used for filing trademarks in China, etc.) may constitute pitfalls to avoid to ensure portfolios are complete and effective.
The protection afforded to toys in this way will make it possible to thwart counterfeiters as effectively as possible. Press-releases announcing seizures of large volumes of toys illustrate this.
In France, in addition to the possibility of obtaining an end to acts of counterfeiting through an out-of-court settlement (which may simply be the result of negligence by a third party in good faith), the arsenal available to the holders of intellectual property (IP) rights is very extensive, and has already amply demonstrated its effectiveness: extended right to obtain information, infringement seizures, intervention by customs authorities, etc.
The financial consequences of counterfeiting should not be forgotten, with increased compensation since the law of 2014 (losses suffered, “moral injury”, profits and savings made by the counterfeiter) and drastic measures (publication of the condemnation, destruction of counterfeit goods, etc.) As counterfeiting may also constitute a criminal offense, heavy sentences are possible: three years imprisonment and a fine of 300 000 euros, and the closure of the establishments concerned.
The legal provisions have moreover recently been strengthened through law number 2019-486 of 22 May 2019, known as the PACTE law, and order number 2019-1169 of 13 November 2019, transposing a European directive from 2015 relating to means to combat counterfeit goods in transit (and not destined for placing on the EU market) and for tackling preparatory acts for counterfeiting.
However, in a global economy, it is frequently necessary to tackle counterfeiters abroad, and in particular in China, which counts for around 70 % of world toy manufacture.
The Chinese authorities are becoming increasingly sensitive to these questions: the Chinese Administration for Industry and Commerce (AIC) can be particularly effective, and local law is becoming ever stricter. The law of 23 April 2019, applicable since 1st November 2019, provides more effective measures against manifestly fraudulent trademark filings, while doubling the amount of compensation due in case of trademark infringement. As regards the Chinese customs authorities, a system for registering IP rights (trademarks, patents, copyright) gives entitlement to their intervention.
Furthermore, it is also possible to act against online sales, made on sites such as taobao.com, 1688.com or alibaba.com, by declaring the IP rights to the companies operating those sites.
Very widely publicized cases provide confirmation that China is not a state of lawlessness with regard to the counterfeiting of toys, as recently shown by cases concerning Peppa Pig (breach of copyright filed in China in 2014 for characters) and for instance Lego (also breach of copyright). The LEGO trademark has moreover been recognized as “well-known” by the Court of Beijing, reinforcing its protection on this crucial market for the toy industry.
Even so, despite positive change under pressure from partners in the West, the colossal volumes shipped from China cannot all be checked, and a substantial proportion of counterfeits may be placed on the market – the quality of the imitations frequently making their detection difficult.
In the final analysis, toy manufacturers are not powerless in the face of counterfeiters, and legal tools that are constantly being strengthened and adapted, provide effective protection. That being said, the issue is complex and international, and reflection upon suitable protection must be assisted by a professional.
Intellectual property attorneys are, on account of their comprehensive expertise in IP matters (patents, trademarks, designs and utility models), and their international network of contacts, the first point of call for these matters.
Intellectual Property Attorney,
2) Trends in Trade in Counterfeit and Pirated Goods, study conducted in partnership with EUIPO, 18 March 2019, https://www.oecd.org/newsroom/trade-in-fake-goods-is-now-33-of-world-trade-and-rising.htm
4) Les jouets vus par la propriété industrielle, https://www.inpi.fr/sites/default/files/etude_jouets0212.pdf
EU trademarks No. 4938635 and 10065258 respectively.
10) The attempt at out-of-court settlement is moreover a pre-requisite to filing a law suite since decree 2015-282 of 11 March 2015.
11 ) https://www.legifrance.gouv.fr/affichTexte.do;jsessionid=5DC91E88AE766475081C20BBF749948B.tplgfr21s_2? cidTexte= LEGITEXT000038497477&
15) https://www.scmp.com/news/china/society/article/2160776/chinese-firms-ordered-stop-selling-peppa-pig-themed-toys-after ; https://www.reuters.com/article/us-lego-china-copyright/toymaker-lego-wins-court-case-against-chinese-copycats-idUSKCN1NA2QF
16) Website of the National Institute of Intellectual Property Attorneys: https://www.cncpi.fr/