Recently, the Ministry of Public Security announced 10 typical cases of cracking down on intellectual property infringement crimes in accordance with the law. Among them, there was a case of intellectual property infringement of private enterprises cracked by the Juye police in Heze, Shandong. The suspect reassembled and sold a large number of defective washing machines commissioned by brand washing machine companies to be dismantled and scrapped to seek illegal profits. At present, the police have destroyed 4 production dens and 5 sales dens, with a case value of more than 150 million yuan.

The 4 production dens destroyed were worth more than 150 million yuan

On September 8, 2023, the Juye County Public Security Bureau of Shandong Province received clues transferred by the Heze Municipal Public Security Bureau and requested to verify a case of selling suspected counterfeit brand-name washing machines. The Juye County Public Security Bureau selected elite police forces to set up a special task force and quickly launched an investigation.

Xue Yongliang, instructor of the Food, Drug and Environmental Crime Investigation Brigade of the Juye County Public Security Bureau: It was discovered that a man named Zhang from Juye operated a home appliance store with a relatively small scale. After investigation, we found that he rented two relatively large warehouses, in which there were more than 2,000 washing machines of the brand involved in the case. His sales price was very different from the market price, which was basically one-third of the market price.

The police officers in charge of the case randomly selected 50 washing machines from the more than 2,000 washing machines and contacted the brand manufacturers for identification. The results showed that all of them were counterfeit products. At this time, Zhang, a criminal suspect from Juye who sold this batch of counterfeit brand washing machines, had already absconded. The police of the special task force immediately seized the batch of washing machines and began to look for the source of the products.

Liu Gaolei, deputy captain of the Food, Drug and Environmental Crime Investigation Team of Juye County Public Security Bureau: We tracked that the goods were sent from Changzhou, Jiangsu, so we locked the source of the goods to this area.

The police of the special task force immediately rushed to Changzhou to conduct an investigation.

Liu Gaolei, deputy captain of the Food, Drug and Environmental Crime Investigation Team of Juye County Public Security Bureau: We found thousands of washing machines in the warehouse. We contacted the landlord of the warehouse directly and learned that the warehouse was rented by a dismantling company in Changzhou. After discovering this company, we contacted the brand to see if they had any business dealings. From the feedback from the brand, we learned that this dismantling company had signed a dismantling task of 110,000 washing machines with the brand, and it obtained the dismantling business through bidding.

Defective products that should have been scrapped and dismantled have flowed into the market again

Through visits to brand washing machine manufacturers, the police of the task force learned that in order to prevent defective products from flowing into the terminal market, the company once commissioned a resource recycling technology company in Changzhou to dismantle and scrap and destroy 110,000 defective washing machines through public bidding. So why did these defective products that should have been destroyed appear again?

Liu Gaolei, deputy captain of the Food, Drug and Environmental Crime Investigation Team of Juye County Public Security Bureau: The dismantling business contract they signed stipulated that first, the brand side would drop the washing machines to be dismantled from a high altitude and drill holes in the operating panel, causing them to be destroyed before leaving the factory; then the dismantling company would dismantle them, sort out all the plastics, metals and motors after dismantling, and then issue a complete dismantling task instruction to the brand side.

However, what the company did not expect was that this part of the washing machines that should have been dismantled and recycled actually appeared in the sales channel again, and were sold both online and offline.

Liu Gaolei, deputy captain of the Food, Drug and Environmental Crime Investigation Team of Juye County Public Security Bureau: The brand side was very surprised when they heard the news, because the dismantling company had already issued them a letter of commitment to complete the dismantling task, so why did these washing machines still appear?

Afterwards, the task force began to directly contact the resource recycling technology company in Changzhou. Through investigation, the police learned that the dismantling and scrapping business signed with the well-known brand was handled by the then sales manager Xing. However, Xing had resigned more than two months ago, and the company could not get in touch with him. The police immediately listed Xing as a criminal suspect and pursued him online.

On October 13, 2023, the task force launched a roundup and arrest operation, and seized more than 5,000 counterfeit washing machines of well-known brands and one batch of counterfeiting equipment in the warehouse involved in the case. On October 16, the criminal suspect Xing was arrested.

70,000 defective machines to be disassembled were reassembled and sold

According to the criminal suspect Xing, when he was employed by Resource Recycling Technology Co., Ltd., he was responsible for the dismantling and destruction project of damaged and scrapped washing machines of a well-known electrical appliance company that the company had won the bid for. In order to seek illegal profits, he colluded with He, Gong, Xu, and Zhao to replace parts of some damaged washing machines that should have been disassembled and resell them.

The police investigation found that among the 110,000 washing machines commissioned by the company for scrapping and dismantling, only about 40,000 were disassembled in accordance with the contract, and the remaining approximately 70,000 were all reassembled and sold as genuine washing machines from regular channels.

Liu Gaolei, deputy captain of the Food, Drug and Environmental Crime Investigation Brigade of Juye County Public Security Bureau: Gong refitted and assembled these washing machines, posted energy consumption labels, replaced panels and accessories, and then resold them, but the sales price was far lower than the price of genuine products on the market, making profits from it.

In order to facilitate the disassembly and assembly operations, the criminal gang rented a warehouse on the spot in Changzhou. The sales network of 70,000 counterfeit brand-name washing machines involved many places in China, and the case involved a value of more than 150 million yuan.

Xue Yongliang, instructor of the Food, Drug and Environmental Crime Investigation Team of Juye County Public Security Bureau: The number of washing machines involved in this case reached more than 70,000, and the amount involved was more than 150 million yuan. This is also the largest case involving intellectual property rights in the dismantling industry in China that we have found so far. So far, we have seized more than 7,000 washing machines involved in the case, and the six suspects have been taken compulsory measures by the public security organs.

At present, the special task force of Juye County Public Security Bureau is continuing to track down the whereabouts of the remaining counterfeit brand-name washing machines involved in the case, and strive to crack down on the entire chain.

Li Mingxuan, director of Juye County Public Security Bureau: The reason why this well-known company has a scrapping and dismantling system is to prevent defective products from entering the market and affecting consumers' use, and it is also to maintain its own brand image. However, in order to make illegal profits, some lawless elements have modified these washing machines that should have been destroyed to enter the market, which poses certain safety hazards to consumers who buy them, and for companies, it damages their intellectual property rights and brand image.

Xue Yongliang, instructor of the Food, Drug and Environmental Crime Investigation Team of the Juye County Public Security Bureau: We remind consumers that when purchasing household appliances and other consumer goods with relatively large amounts of money, try to purchase them through some formal channels and do not be greedy for cheapness. Purchasing inferior household appliances that do not meet safety standards will cause some safety hazards.

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