Heyuan factory raided, Fumot founder issues statement amid suspected IP infringement

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On the afternoon of November 10, a relevant person from Fumot International Co., Ltd. released an official statement regarding the infringement incident at the He Yuan factory on social media. It mentioned that the He Yuan factory, located in Shenzhen, has undergone a surprise inspection by the Intellectual Property Inspection Team of the Shenzhen Market Supervision Administration.

The following is a screenshot of the official statement released by the founder of Fumot International and the original text of the statement:

In the statement, Fumot International clearly stated that the reason for this surprise inspection was that He Yuan, as the OEM for IVG in China, allegedly produced products (e-cigarettes with four built-in 2ml pods) that directly infringed on Fumot International's patent rights.

Legal action has been initiated against He Yuan and its affiliated companies, and an application has been submitted to Chinese customs to detain the infringing products, hoping that He Yuan will cooperate with the relevant departments' inspections and immediately cease the infringing activities.

As a leading manufacturing enterprise in the industry, why was it suddenly sued? With this question, we conducted multiple verifications and had an exclusive connection with Owen, the founder of Fumot International. After communicating with Owen, we roughly understood the background and consequences of this incident—He Yuan had previously taken on a disposable OEM order, with the client being IVG mentioned in the statement.

However, this disposable patent is not held by IVG. The actual patent holder, Fumot International, recently reported the case to the relevant authorities, prompting law enforcement to swiftly act and directly approach the He Yuan factory as the OEM.

Is it true that the foreign brand IVG, which has always been perceived as valuing intellectual property, would engage in such blatant infringement? We found the patent holder, the founder of Fumot International, who explained the background and consequences of this incident to us.

According to Owen, the products involved in this enforcement action are a disposable product released last December, characterized by four built-in 2ml pods, which comply with the UK market's 2ml filling volume regulations while also adapting to the current trend of high puff disposable products, and can enhance the experience by rotating between four flavors, which attracted significant attention upon its launch.

IVG was one of the brands that took notice of this disposable product. Relevant individuals stated that just after this product was launched last December, IVG approached for cooperation, but Happy Vibes had no intention of granting external authorization.

However, despite not obtaining authorization, IVG went ahead and released a product directly copying Happy Vibes in June of this year, named IVG 2400. We also found news from that time (as follows):

It has been six months since the release of IVG's copied product; why has it only reached enforcement now? Regarding this question, relevant individuals from Happy Vibes were reluctant to elaborate, stating that they would formally announce related information later.

However, under repeated questioning from us, they indicated that the monthly shipment volume of IVG's copied product has reached several million units, which has harmed Happy Vibes' interests, making the decision to report the case a last resort.

Clearly, the final outcome of this incident will bring value to an industry currently facing severe competition.

Firstly, do OEM companies have an obligation to verify their clients' intellectual property compliance? In fact, our country has placed great emphasis on intellectual property protection. For instance, the policies released in April 2022 regarding the promotion of the legalization and standardization of the e-cigarette industry explicitly mention:

"Explore the establishment of a joint law enforcement mechanism involving multiple departments to jointly investigate and deal with the production and sale of counterfeit e-cigarette products, vaping materials, and nicotine for e-cigarettes that infringe on intellectual property rights, illegal operations, smuggling, and other behaviors, promoting relevant market entities to strictly conduct production and operation activities in accordance with the law and regulations, protecting public health and safety, and regulating the order of the e-cigarette market."

Secondly, can counterfeit products sold overseas by domestic OEMs rest easy? In previous communications with upstream practitioners, we have repeatedly learned that due to the lack of sound laws and regulations in some regional markets, some practitioners directly "clone" major brand products and sell them at low prices to engage in price wars.

The guidelines released in July 2023 regarding the promotion of the construction of a quality assurance system for exported e-cigarette products emphasized that enterprises should ensure that their exported products comply with the laws and standards of the destination country (region); if there are no relevant laws and standards in the destination country (region), they should comply with the relevant laws and standards of China.

Clearly, both the UK and China do not lack in their efforts to protect intellectual property.

However, due to the difficulties in enforcement involving cross-border disputes, many enterprises have had to swallow their grievances. If Happy Vibes ultimately succeeds in protecting its rights, it will signify a significant change in this situation. Given the current known enforcement efforts, it is evident that the relevant departments are taking this incident very seriously.