Challenge

The client, a former Nissan mechanical engineer, invented a toy that would allow his pre-teenage daughters to make colorful and fun “friendship” bracelets and other kinds of jewelry. The client began to label these toys as “Rainbow Loom” kits and procured limited U.S. trademark and copyright protection. The Rainbow Loom kits essentially include a plastic pegboard, a crochet needle and a bag of multi-colored rubber bands that allow users to “weave” different toys.

The rest of the story unfolds like a lottery-style dream venture. The client invested his life savings into manufacturing well-made Rainbow Loom kits and, with persistent hard work, eventually sold millions of Rainbow Loom kits across the world. In 2014, the toy was selected as the #1 toy in America. When Michelle Obama and Chris Christy proudly wear their Rainbow Loom friendship bracelets made by their children during their public speeches, you know you have created something really special.

Because popular toys are also frequently counterfeited, the client turned to Harness IP when Asian counterfeiters started making cheap and potentially unsafe Rainbow Loom kits. The client was unable to enforce his U.S. registered IP rights in Asia, and asked Harness IP to step in and provide global assistance and STOP the counterfeit activity in Asia.

Solution

One of the many initial steps taken by Harness IP was to record the client’s registered rights with U.S. Customs and to enlist the U.S. Customs Officers (with whom the Firm maintains long and well-established professional relationships) to make sure that any products imported into the U.S. that included the Rainbow Loom mark or included the copyrighted Rainbow Loom package design were seized and destroyed, or sent back to Asia. Our team also developed Product Manuals and webinars to teach domestic Customs Officers to identify Rainbow Loom products and recognize counterfeit goods in order to further aid in the enforcement of the client’s rights.

As a U.S. based law firm with attorneys engaged in providing guidance and counseling on procurement and enforcement of virtually all IP rights in Asia for more than two decades, Harness IP understands the law and business throughout the region, and therefore sprinted into action. One of the challenges of intellectual property law in Asia is that it can potentially take years to obtain registrations. Since enforceable rights in Asia arise only by virtue of those registrations, significant additional steps needed to be taken. The Harness IP team sought and obtained expedited copyright registrations in most of the PRC. The team recorded the newly procured rights with the Customs Offices in Asia, which resulted in stopping unsafe counterfeit goods from ever even leaving Asia.

Our team also conducted AIC raids in China and Hong Kong in order find the true “players” and seize counterfeit merchandise that was then notarized and used as evidence in the two law suits filed on behalf of the client in China and Hong Kong. These steps ultimately resulted in “freezing” multiple bank accounts where counterfeit money had been deposited, shutting down counterfeit merchandise sold on Alibaba in China and the U.S., and stopping eBay sales of counterfeit goods. In the end, Harness IP obtained judgments against all three defendants involved in the wrong doing. These enforcement efforts and the ensuing litigation on multiple fronts were both serious and complex, and involved the extensive use of trusted local investigators and associates in multiple countries with varying rules and regulations.

Our lawyers were generally successful in shutting down the actual factories or facilities where the seized or counterfeit items were made and shipped out of Asia. In those limited cases where counterfeit products could not be found or seized before leaving the country, our team used the evidence obtained from different factories in Asia that were using the counterfeit dies or molds to make the counterfeit Rainbow Loom kits. The team also traced counterfeit shipments through review of online shipping manifests and Bills of Lading, and then provided “tips” to U.S. Customs about shipping containers containing counterfeit goods that were expected to arrive at certain ports which resulted in counterfeit goods being seized, detained, and destroyed upon arrival in the U.S.

In short, our strategic plan involved stopping most of the counterfeit goods from leaving China, and if any happened to slip through, we would have them stopped and destroyed if and when they arrived in the U.S. Having a multi-layered plan of action was essential to obtain the highest degree of success in combating the counterfeiting operation.

The client was particularly satisfied with Harness IP’s swift results. Many law firms simply “stir things up” in Asia or play what is essentially a game of “whack-a-mole” where counterfeiters “pop-up” again and again. Harness IP, however, was able to actually STOP the counterfeiting by obtaining permanent injunctions and final judgements that solved the problem and achieved a tangible victory with lasting ramifications.

Many lawyers and businesses do not fully understand how to deal with or file lawsuits in Asia to enforce IP rights, and they do not have trusted Asian associates to assist in satisfying the complex procedural requirements — not to mention taking a lawsuit to conclusion and then actually stopping the counterfeiting. Harness IP was able to protect the Rainbow Loom mark and package design much sooner than it would typically take to even obtain rights in Asia, which resulted in an overall increase in the client’s sales by clearing out the “fake” competition. We were pleased to be able to assert and enforce those rights quickly, fervently, and globally to the client’s high satisfaction.