Spin Master: Full confidence in China's IP protection

After winning a number of legal victories in China, Canadian toymaker Spin Master said it has stronger confidence in China's protection of intellectual property rights.

"We wish our legal moves and victory will send a positive signal to the North American toy industry that China is no longer the rumored habitat of counterfeits," said Christopher Harrs, executive vice-president and general counsel of the company.

With its innovative ideas and technology, Spin Master has altered the industry with its unique toy products. Harrs said Spin Master has always been trying its best "to create unexpected toys and bring a happy surprise to the world".

China is one of the world's largest toy manufacturers and exporters, but many foreign brands have had concerns about counterfeiting problems. Spin Master is making an extensive plan to expand its existence in China because of its confidence in the nation's protection of intellectual property.

Since 2004, Spin Master has filed trademarks, copyrights and patents for its products. It also has launched over 20 civil lawsuits, and some administrative and criminal lawsuits in Shantou, Guandong province.

"Spin Master was faced with many counterfeiting problems over the past 12 years, but achieved great success in IP protection upon taking positive measures," said Harrs.

Innovative technology

When the founders of Spin Master started the company, they realized that, to survive the fierce competition in the toy industry and grab a share of the market from more well-established toymakers, the key was design, specifically in developing innovative products and astonishing customers with fresh ideas.

"We are not an ordinary toy company. We have been trying to create toy technologies and develop scientific toys that provoke the imagination," said Harrs.

Using this business philosophy, Spin Master introduced bestseller after bestseller, such as the Flutterbye, a toy doll that can sense the user's hand and fly toward it, and the robotic toy dog called Zoomer that follows a user's orders.

Every year, the American Toy Industry Association selects the best toys within 12 categories. Since 2005, Spin Master has been nominated 58 times and won 14 awards. It has been nominated for the annual best innovative toy 11 times, far more than any other competitor.

The innovations of Spin Master originates from its global research and development networks of toy designers, inventors, engineers and technicians.

Its design centers in Toronto and Dongguan, Guangdong province, have an R&D focus on flying and control systems, while its engineers in Los Angeles convert digital designs into production.

"The focal point of global R&D is to integrate advanced technologies and ever-evolving game models into products. We have been trying to diversify our global cooperative relations through unswerving endeavors for breakthrough technologies and innovations," said Harrs.

War against fakes

Flutterbye is one of Spin Master's star products, twice nominated for the annual best toy award by the American Toy Industry Association. It has also encountered the highest number of counterfeits in China. In many domestic airports, people can buy counterfeits of the Flutterbye called the "flying fairy" or "magic fairy".

When you activate the authentic Flutterbye, the doll's skirt twirls and flies up. It then senses the movements of the user's hand and flies toward it. The counterfeits, however, frequently act like lost kites. A video on YouTube shows a girl whose mother bought a counterfeit Flutterbye on a Chinese e-commerce website. After she activates the toy, it flies beyond the view of the camera and never returns.

Harrs said Spin Master spent millions of dollars designing the Flutterbye. To achieve high accuracy of height control, the R&D team used special designs for the swirling axis and the frame of the skirt, including infrared sensors.

Inmost countries, Flutterby is sold for $46, while in China, consumers can easily find similar products priced at about 10 percent of the price by searching for "flying fairy" on e-commerce websites.

"Counterfeits have not only heavily reduced our sales, but also diminished the investors' enthusiasm," Harrs said. "These counterfeits have created a bad reputation for our brand because some of them fly to the ceiling and crash, some fly into the sky until no one can find them, while others have had their batteries catch on fire or explode."

Spin Master was confronted with an awkward situation where, due to counterfeits, they had to reconsider the possibility of opening factories in China and avoid introducing its products, especially its new ones, into the Chinese market.

Since 2004, Spin Master has launched, with the help of their legal counsel Rouse&Co International LLP, a series of anti-counterfeiting actions to protect their intellectual property on Flutterbye, Bakugan, Zoomer, "Zero Gravity Car" and the Paw Patrol. Infringements upon Bakugan and the Paw Patrol concerned trademark protection, while most others are about copyrights and patents on animation figures.

In the Flutterbye case, Spin Master filed and won nine civil lawsuits over the past three years. In the Bakugan case, more than 50 factories producing counterfeits were shut down.

"In China, the enforcement moves of administrative agencies are quick and effective. The claimant does not even need to pay the lawyer's fee," Harrs said, adding that it is difficult to stop the reoccurrence of counterfeits due to a weakness in punishments.

The China plan

Harrs said that he has accumulated much experience because of the company's anti-counterfeiting actions, and has seen great progress in China's IP system.

"Every country has its own judiciary protection that is different from others," he said. "China and the US are the only two countries that grant a copyright to a toy image. In China, the copyright registration does not cost much while the speed is remarkably high. For applications for utility patent, the time span is short, only in about six months, as no physical examination is conducted.

"If you do some in-depth research into the IP protection mechanism, I believe there will be means for you to stop the counterfeiters."