Nation & World

Toymakers continue to battle counterfeiters

Sales of fakes becoming more 'blatant,' U.S. companies say

Los Angeles Times/TNS

Isaac Larian, chief executive and founder of MGA Entertainment, is surrounded by MGA’s L.O.L. Surprise! dolls at his company’s headquarters in Van Nuys, Calif.
Los Angeles Times/TNS Isaac Larian, chief executive and founder of MGA Entertainment, is surrounded by MGA’s L.O.L. Surprise! dolls at his company’s headquarters in Van Nuys, Calif.
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LOS ANGELES — Earlier this year, lawyer Jennifer Marrow visited TomTop.com, an online marketplace, to buy one of the most popular toys in America.

The site based in China claimed it had a deal on the priciest version — the limited-edition L.O.L Surprise! Big Surprise, a rose-gold case with 50 small toys, including dolls, miniature outfits, accessories and stickers.

The price was only $79.99, a steal for the hard-to-find item, which sold on some third-party websites for multiple times its $69.99 list price.

But Marrow wasn’t buying a gift. She was ordering evidence.

What TomTop didn’t know was that it mailed the package to Marrow’s office at MGA Entertainment, the Van Nuys company that has created, patented and trademarked L.O.L Surprise! dolls.

Inside, Marrow found a product claiming to be a Big Surprise, but with clear indications it was counterfeit — the color was off, the label had mistakes and the materials were inferior, according to court records.

The real surprise would come later, when MGA filed a lawsuit in March in U.S. District Court in Los Angeles, arguing that TomTop knowingly sold the bogus dolls to unsuspecting customers.

“Once a toy becomes hot, the Chinese counterfeiters focus on that, and they quickly knock it off and bring it to the market,” said MGA founder and CEO Isaac Larian.

“What I haven’t seen until now is how openly blatant they are about it.”

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Established in 2004, TomTop is a wholesale and retail online shopping site, headquartered in the southern Chinese city of Shenzhen. Neither TomTop nor its attorneys responded to multiple emails and calls requesting comment.

However, in response to MGA’s lawsuit, TomTop has argued in court records that it “has never sold, offered for sale, used, imported, distributed or marketed any product or work” of MGA.

MGA says their case highlights an issue many U.S. toy companies are facing: China-based websites that advertise discounted versions of sought-after toys, when the sites are really schlepping cheaply made counterfeits or knockoffs, slightly altered versions that still amount to a theft of their intellectual property.

Last September, customs officers seized 3,004 counterfeit Barbie dolls at the Canadian border in Minnesota, and made a similar bust in June, netting 60,180 mermaid and fashion dolls.

In December, the Lego Group won its suit against two Chinese companies making and selling counterfeit Bela blocks.

At this year’s American International Toy Fair in New York, the largest annual industry gathering in the Western Hemisphere, two issues were on the minds of many companies — the looming closure of Toys “R” Us and the sale of counterfeit toys.

“People were managing their concerns about Toys ‘R’ Us, but there was huge, huge outcry that we all have to come together against counterfeiting,” said Steve Pasierb, CEO of the Toy Association, which organizes the event.

Figures from U.S. Customs and Border Protection show that toy seizures fluctuate year by year.

In 2011, the agency seized 495 shipments of counterfeits, with a list-price value of $26 million. Two years later, agents made 175 seizures, the lowest number in about a decade.

Since then, though, seizures have climbed back up, with agents making 449 seizures, valued at $12 million, in 2017.

But it’s likely that the number of bogus toys that make it to U.S. shores is much higher than that.

As trade between the United States and China has risen sharply — imports soared 60 percent to nearly half a trillion dollars in the 10 years leading up to 2016 — counterfeiters have taken advantage of an overloaded system, operating much like drug cartels.

Counterfeiters send their products through in multiple shipments, sometimes filling a container with both legitimate and counterfeit products.

Last July, officers at the Charleston, S.C., seaport found counterfeit Power Rangers and James Bond characters in a shipment from China, destined for a North Carolina-based importer.

Of the 284 cartons of toys in the shipment, 27 contained 34,690 counterfeits.

The counterfeiters leverage the fact that customs officers don’t have the capacity to stop every shipment entering a U.S. port of entry.

“If we stop every single container, the economy would collapse tomorrow,” said customs spokesman Jaime Ruiz.

To get customs officers to check a specific container suspected of containing counterfeits, companies typically must hire private investigators to ferret out the tracking number.

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“It’s very difficult for the company to successfully get that information unless they can really infiltrate into the counterfeiting chain, which is really hard to do,” said Daniel Chow, an Ohio State University professor who has testified before the U.S. International Trade Commission about Chinese intellectual-property infringements.

Instead, many companies take the legal route like MGA, which has been aggressive in trying to protect the sales of its L.O.L. Surprise! dolls — but so far with limited success.

Premiering in October 2016, the toy line has been an unexpected hit for MGA, which also makes the popular line of sassy, pouty-lipped Bratz dolls.

L.O.L. Surprise! dolls are ball-shaped toys with five to nine layers to unwrap. Each layer comes with its own surprise, and inside the ball there’s a small, wide-eyed plastic doll.

The toys range in price from $6.99 for L.O.L Surprise! Lil Sisters to $12.99 for L.O.L. Surprise! Confetti Pop.

The toy also is sold in packages of multiple dolls and accessories, such as the $29.99 L.O.L. Pearl Surprise and the $69.99 Big Surprise.

The doll was the top-selling toy of 2017 in the United States, United Kingdom and Canada, and continues to be a top seller this year, according to market research company NPD Group.

Neither NPD nor privately held MGA release units sold.

Online, the dolls have a substantial following, with the L.O.L. Surprise! YouTube channel amassing more than 500,000 followers and almost 162 million views since late 2016.

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Even Larian, whose Bratz dolls ate into Barbie sales when they premiered in the early 2000s, says he has been surprised at its success.

“In 40 years, I’ve literally never seen something like this,” he said.

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