World News

MGA cracks down on Chinese counterfeit L.O.L. Surprise! products

Published on: July 24th, 2018

The toy company has repeatedly sued alleged counterfeiters over the past 12 months as it ups its efforts to halt the trade in fake goods. 

The runaway global success of L.O.L. Surprise! makes the brand a tempting prospect for counterfeiters. Now, MGA Entertainment is escalating its efforts to find – and stop – those responsible.

The company’s latest lawsuit centres on the online Chinese marketplace TomTop, which MGA alleges has been knowingly selling counterfeit L.O.L. dolls. A lawsuit was filed in March in US District Court, LA, after a limited edition L.O.L. Surprise! Big Surprise, ordered from the site and delivered to MGA’s headquarters, was revealed to be a fake.

In an interview with the LA Times, MGA founder and chief executive Isaac Larian commented: “Once a toy becomes hot, the Chinese counterfeiters focus on that, and they quickly knock it off and bring it to the market. What I haven’t seen until now is how openly blatant they are about it.”

TomTop, in response to the lawsuit, says it “has never sold, offered for sale, used, imported, distributed or marketed any product or work” of MGA. The makers of L.O.L. Surprise! says its latest case against counterfeiters highlights the challenges many toy companies are currently facing in protecting their IPs.

Counterfeit toy seizures vary year on year; in 2011, the US Customs and Border Protection agency seized 495 shipments with a list-price value of $26m, whereas two years later seizures were at the lowest number in around a decade at 175. However, numbers have be steadily increasing again, with 449 seizures, valued at £12m, made last year. With counterfeiters employing ever more creative means to get their shipments across the US border, with products often arriving in multiple shipments in containers containing both counterfeit and genuine products, it’s likely the number of fake toy making it to American soil from China is far higher.

All these factors make it very difficult for toy companies to have the majority of shipments checked for counterfeits; infiltrating the counterfeiting chain via the use of private investigators is not only expensive, it’s also very tricky.

Instead, pursuing legal action is often the only route companies are left with, aggressively enforcing IP rights and cracking down on sales. In April, MGA was granted a default judgment of $1.2m and a permanent injunction against 81 sellers selling counterfeit toys online, including on Alibaba, AliExpress and DHGate, all China-based online retail platforms. A court ordered that PayPal and Alipay turn over money from the sellers’ accounts to MGA.

The case against TomTop features an unusual element – TomTop has a warehouse in the US. While MGA is suing both Shenzhen-based TomTop Technology Group and TomTop Group Ltd. TomTop’s attorneys are arguing that the US arm of the company doesn’t sell product, it only ships sealed product from China and returns, and is therefore a separate entity.

Benjamin Jonson, an attorney at MGA, says the company is on a mission to find out who is making the dolls, stating: “If it’s not TomTop itself manufacturing, we can find out who it is, and hopefully rip the snake’s head off at the source.”

The case is ongoing.

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