Police in China have busted a gang that was making and selling $30 million worth of counterfeit Lego toys, including designs copied directly from real toy blueprints and sold for a fraction of the price.
The operation took place in the southern city of Shenzhen, where police say a group was creating imitation Lego sets that were taken from real Lego blueprints for designs like Star Wars ships and scenes. As the BBC reported, a raid of the gang's manufacturing facility uncovered more than 630,000 finished products that were about to head to the open market.
The investigation into the counterfeit Lego gang reportedly started last year but was just announced this week, with authorities detailing the massive size of the operation.
"In October 2018, the Shanghai police found that Lepin building blocks available on the market were extremely similar to that of Lego," law enforcement officials said."Across more than 10 assembly lines, over 90 molds had been produced... [police seized] some 630,000 completed pieces worth more than 200 million yuan ($30M)."
The fake Lego sets were all sold under the Lepin name and made to imitate popular sets but sold at a fraction of the price. As the BBC noted, the Lepin products were sold for $3 while their Lego equivalents were listed at $15.
The police operation underscores a growing issue in China with the theft of intellectual property, which critics say is rampant in the country due to little government oversight. The United States Trade Representative's Office released an annual report on intellectual property protection that placed China on its "priority watchlist," suggesting that China do more to stop the theft of intellectual property.
As the Washington Examiner reported, the USTR warned that China could face additional tariffs if it does not do more to protect intellectual property.
"The report states that, while China did enact some modest reforms to its judicial system in the last few years, it has not amended other key laws that facilitate the intellectual property violations, including online piracy, counterfeiting, and registering trademarks in bad faith, among other actions," the report noted. "Additionally China has refused to curb the sale and export of counterfeit goods, the administration alleges."
The raid on the counterfeit Lego gang could signal a stronger approach from the Chinese government to crack down on counterfeiters and others who steal intellectual property.Police in China said the investigation into the counterfeit Lego operation is ongoing. Four people were arrested so far, but the report did not list their charges.