What's Wrong With This Picture? Famous Car Intellectual Property Edition

Wintertime is coming, mama, the windows are filled with frost. So I went over to the nearby strip mall to get some thermal underwear. That doesn’t rhyme even half as well as Dylan’s most forced rhymes, but it’s really what happened. There’s a C.W. Price store in the mall. It used to be a location of the A.J. Wright chain that went under, and from the looks of things, all they needed to change were the signs. C.W. Price carries pretty much the same overstocked and distressed merchandise as A.J. Wright. Not quite as depressing as shopping at Big Lots but definitely not the Somerset Collection. While I was at the store of course I had to check out the cheap R/C cars that they had on sale for $6.99 and $7.99 with the other Christmas toys. At first glance they looked like Ferraris, Lamborghinis, Bugattis and Ford GTs. Actually, at second and third glance they still looked like those cars, scale models accurate down to the Veyron’s distinctive black hood, horseshoe Bugatti grille and exposed mid-mounted W16 engine.

Nowhere, though, do the words “Ferrari”, “Lamborghini”, “Bugatti”, or “Ford” or those companies’ badging appear anywhere on the R/C cars or on the packaging. In some unintentional irony filtered through the joys of “Chinglish”, the Ford GT does have a decal at the top of the windshield that reads “FAMOUS CAR”.

Welcome to the wonderful of Chinese manufacturing where out the front door your vendor sells you your patented or licensed goods and out their back door they sell essentially the same products, only without branding, to dollar store distributors. It’s not a new story. Years ago Georgena Terry, founder of Terry Precision Bicycles for Women, found knock offs of her patented woman’s bike saddle on sale in the US that, based on the molding markings, had to have been made by her own supplier in China.

My guess is that something similar happened with these R/C cars. Xiangda Toys Factory, and Hunson Trading Co. are the brand names on the toys. What little that I could find out about the companies is that Xiangda makes R/C toys and the Hunson distributes R/C toys and other toys to dollar stores in North and South America. The Hunson labeled toys carry the XTR brand, which I’m guessing stands for Xiangda Toy Racing.

Here’s what I think is going on. If Xiangda or Hunson want to reply, we’ll give them an opportunity to do so. I think that Xiangda is the manufacturer and the Hunson is the distributor of all of these, regardless of how the specific toys are branded. On the multitudinous Chinese goods trading sites, you can find Hunson offering toys branded with names like Lamborghini so it’s possible that one or both of the companies has a legitimate license to make scale models. The toys could be complete knock offs, but they appeared, as I said, to be fairly accurate in terms of body shape, so they just as likely could have been molded with tooling made to produce licensed goods. I’m guessing that someone thought that they could make a few extra yuan by diverting some goods to market without the additional cost of paying a royalty fee.

There appears to be little risk. After all, this is being done in plain sight. Since they don’t sell the cars branded with the real car company names, as long as those brand names never appear on shipping manifests or customs documents nobody will ever be the wiser. Bugatti, Ferrari and Lamborghini’s licensing agents and lawyers don’t typically shop in stores like C.W. Price. Ford’s lawyers might have driven by the Price store on Telegraph in Redford, on their way to the Glass House in Dearborn, but again, they’re not likely shopping for their kids’ toys at dollar stores and deep discounters. Though it’s likely to be under the radar of white shoe law firms and their clients, dollar stores and deep discounters are still big business. There are over 20,000 stores operated by the three largest dollar store chains. Licensing deals typically pay 7-12% of wholesale prices as royalties. That means that for every one of these R/C cars that are distributed, somewhere between 25 and 50 cents doesn’t get paid to a car company that is rightfully theirs. That may not sound like much but when you consider that these toys are shipped over by the container load the IP infringement from quasi knock offs like these must represent significant sums of unpaid royalties.

Of course, these days cars’ shapes are protected under intellectual property laws just as surely as Ferrari’s prancing horse and Lamborghini’s pawing bull are protected trademarks. My day gig is custom machine embroidery and I’ve gotten cease and desist letters from car companies unhappy about my embroidery designs that portray their cars. They were overreaching but it seems to me that while artists and photographers might have some leeway and fair use rights to create original art depicting a protected car design, there’s no doubt that if a car’s shape is copyrighted, making and selling scale models of that car would be infringing on the car company’s intellectual property, with or without a logo decal.

It happens with race cars too. When A.J. Wright was still in business, during the holiday season they’d sell R/C Formula One cars that looked just like the Ferrari and McLaren F1 cars, down to the coloring of the sponsors’ decals. Only if you looked closely the sponsors’ names were close but actually fictional, and nowhere did it say the team names or F1. It reminded me of a store that would advertise selling “names like Hitachi and Sansui” and when you get there they are selling knock off brands named Hatichi and Sunsai.

This isn’t going to stop. As long as there’s a market for quasi knockoffs and as long as the Chinese government and Chinese industries benefit from those knock offs they will continue to be made. If General Motors couldn’t get Chery to stop making the QQ, a copy of a real car, Ford isn’t going to get Xiangda to stop making scale model Famous Cars.