9-Year Prison Sentence and 600 Million RMB Fine for Criminal Copyright Infringement of Lego Sets
On April 22, 2024, the Shanghai No. 3 Intermediate People’s Court affirmed the Shanghai Huangpu District People’s Court earlier ruling against principal defendants Long XX Company, Chen XX and Chen YY in a case of criminal copyright infringement of Lego sets. The Court sentenced Long XX Company to a fine of RMB 600 million RMB; sentenced the principal defendant Chen XX to nine years in prison and a fine of RMB 20 million RMB; sentenced the principal defendant Chen YY to eight years in prison and fined 15 million RMB. The remaining accomplices were sentenced to fixed-term imprisonment of one year, six months to four years, and corresponding fines.
The court found that from January 2016 to August 2022, the defendant company Long XX established a design department, an engineering department, a production department, a sales department and other departments without the authorization of the Lego company, and purchased authentic Lego products. After sampling, molding, injecting, etc. the bricks and copying the outer packaging and instructions the Long XX duplicated the Lego products 1:1.
During this period, the defendants Chen XX and Chen YY were brothers and managers of Company Long XX. Chen XX was mainly responsible for the production and sales of products, and Chen YY was responsible for financial fund management. The defendant Chen ZZ assisted the management company in copying, producing, and selling Lego products and responsible for sales to overseas customers; the defendant Zhu XX was responsible for purchasing copied samples, taking customer orders, soliciting customers, and selling products externally. After investigation, the 54 building block set toys produced by Company Long XX are basically the same as the building block set toys produced by the Lego Company, forming a copying relationship. After audit, Company Long XX was found to produce and sell counterfeit Lego building block toy products, with a total sales volume of more than 1.113 billion RMB, and the seized toys for sale have a value of more than 30 million RMB. On August 4, 2022, the defendants Chen XX, Chen YY, and Chen ZZ were arrested and brought to justice by the public security organs. On September 28 of the same year, other defendants surrendered.
After trial, the Shanghai No. 3 Intermediate People’s Court held that the proportionally sampled styles of the bricks involved in the case were substantially similar to Lego brick products after comparison and identification and the outer packaging and instructions of the toy products involved were basically the same as those of the corresponding Lego toys. Combined with Company Long XX’s design drawings, packaging drawings, instructions, and the confessions and testimonies of multiple employees, it is sufficient to determine that the brick products involved in the case produced and sold by Company Long XX are substantially similar to Lego toy products . The evidence in the case has been able to prove that Chen XX is mainly responsible for the financial management of the company’s funds in Company Long XX, participates in the management of the company’s business activities, is the supervisor of Company L, and plays corresponding decision-making and management roles. Neither Chen XX nor Chen YY, as the supervisors of Company Long XX voluntarily surrendered, so Company Long XX should not be deemed to have surrendered. The sentencing penalties reflects, to a certain extent, a strict crackdown on intellectual property infringement crimes, safeguarding the legitimate rights and interests of rights holders, and is appropriate. Accordingly, the Shanghai No. 3 Intermediate People’s Court affirmed the lower court.
Senior Judge Gao Weiping stated,
Innovation is the first driving force for development, and protecting intellectual property rights is protecting innovation. Strengthening the protection of copyrights cannot only stimulate the creative enthusiasm and initiative of creators, but also effectively maintain the competitive order of the market economy and promote the optimal allocation of social resources. In this case, for more than six years, the defendant unit and the defendants, without the permission of the right holder, Lego Company, counterfeited Lego Company products on a large scale and sold them externally, and the illegal business amount was extremely huge. At more than 1.1 billion RMB, this is a major criminal case of copyright infringement, and the defendant unit and the defendants were once judged to bear civil liability for infringement of intellectual property rights, but they still did not repent and moved the production location and warehouse to other places to avoid investigation, which indicates crime was extremely vicious, the circumstances of the crime were particularly serious, and it caused a bad social impact. Therefore, the court sentenced the defendant unit to a fine of 600 million RMB in accordance with the law, and sentenced the two managers to fixed-term imprisonment of nine and eight years. That the sentences of the two persons were basically close to the maximum sentence for this crime reflects the Shanghai court’s concept of severely cracking down on serious intellectual property infringement crimes. At the same time, other directly responsible personnel of the defendant’s unit shall be punished based on the amount of crime involved, status and role, statutory, discretionary circumstances and guilty plea. The attitude of accepting punishment and imposing a lighter punishment than the principal offender in accordance with the law has implemented the criminal policy of combining leniency with severity to a certain extent.
The original announcement from the Shanghai No. 3 Intermediate Court is here (Chinese only). The original announcement from the Shanghai Huangpu Court can be found here (Chinese only).
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