Lego has won a landmark legal case in China against rivals selling cheap imitation plastic blocks almost identical to the originals. The Danish toy firm said this is the first time it has won an unfair competition case against imitators in China, and the ruling could strengthen their market position.
On Thursday (7 December), China’s Shantou Intermediate People’s Court said that two Chinese companies selling “Bela” brand blocks similar to the Lego Friends line infringed copyright and ordered them to stop.
The victory follows a ruling earlier this year by a Beijing Court that said Lego’s name and logo are well-known trademarks in China, giving the firm stronger legal footing for pursuing copyright cases.
Peter Thorslund Kjær, vice president of legal affairs for the Lego Group, said: “We will continue our efforts to ensure that parents and children are able to make informed choices when they are buying toy products, and that they are not misled by attempts by irresponsible companies to make toy products appear as something that they are not.”
He added: “We think this is very important for the continued development of a favourable business environment for all companies operating in the Chinese market.” China is seen by Lego bosses as being key to the company’s future success amid recent disappointing sales in the West.
The company’s plastic brick toys have faced stiff competition from smartphone apps and video games. A decade-long sales boom ended this year after efforts to bolster growth in large but mature markets like the US and Europe faltered.
In September, Lego announced it would cut 1,400 jobs, about 8% of its global workforce, in the face of a decline in sales and profits in the first half of 2017. Its revenue dropped 5% to 14.9 billion kroner ($2.4bn) in the first six months of the year. Profits slipped 3% to 3.4 billion kroner.
Chairman Jørgen Vig Knudstorp said he was “pressing the reset button for the entire group” in a bid to arrest the decline and allow the company to react quicker to new trends He has spoken in the past of his ambition to make Lego China’s number one toy brand. The company opened its first factory in the country last year.