NB Wins Trademark Infringement Case in China
New Balance Athletics, well-known as simply New Balance, has won a trademark infringement case after a Chinese court has ordered that three domestic shoemakers must pay the company more than 10 million yuan, or $1.5 million, in damages and legal costs infringing the U.S. sportswear company’s signature slanting “N” logo. The case is said to be the largest trademark infringement award ever given to a foreign business in China, according to lawyers.
“I haven’t heard of a foreign company getting this level of damages,” said Douglas Clark, an international property lawyer who practiced in China and Hong Kong for the last 25 years.
However, the total amount of compensation that New Balance has won was relatively small based on global standards. It also depicts a change in China’s perception toward piracy and recent adjustments to its corresponding legislation. Before China passed a new trademark law in 2014, damages in infringement cases often fell below the maximum legal amount of $75,000. The new legislation increased that amount to $450,000.
“Although this sort of decision is still rare, it sends a strong and powerful message that should make it easier for foreign brands doing business here,” said Carol Wang, a lawyer at Lusheng Law Firm, which represented New Balance.
The victory is not just for New Balance, but also for many other foreign firms that have long complained that Beijing has not done enough to guard their brands. It followed a speech by President Xi Jinping last month in which he promised to penalize intellectual property transgressors. U.S. President Donald Trump recently ordered an investigation into China’s IP practices amid estimates that IP theft by the country could be as high as $600 billion.
“The winning of this case has given us confidence to continue our productive brand protection strategy in China,” Angela Shi, brand protection manager of New Balance, said in a statement.
In China, trademarks are awarded to the first company to file for them, unlike in the U.S., businesses typically don’t have to give a reason for filing for them. Due to this, the three companies in question, New Boom, New Barlun, and New Bunren, in which New Balance faces challenge with, are all protected.
In the decision, the Suzhou Intermediate People’s Court, near Shanghai, ruled that three defendants that made shoes under the brand New Boom “seized market share from New Balance” and “drastically damaged the business reputation of New Balance,” according to a copy of the decision. It is also said that the three defendants should stop infringing the American company’s iconic trademark and their deceiving promotion of products.
New Balance has not been completely successful, but is surely going in the process. In April 2015, a Chinese court fined the company around $16 million after it lost to a lawsuit to a man who had registered the trademark for the Chinese name of New Balance. New Balance appealed, and the fine was later reduced to about $700,000.
In April, a court in the eastern city Hangzhou awarded New Balance $500,000 in damages after ruling that a company that made New Bunren shoes infringed New Balance’s trademark. That same month, the Suzhou court fined five companies for breaking an order prohibiting them from selling shoes with the ‘N’ logo. New Balance is also suing New Barlun, Daniel McKinnon, New Balance’s senior counsel for intellectual property, said.
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