New Balance win a boost for foreign brand protection

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The Shanghai Pudong People’s Court has issued a first-instance judgment of the unfair competition case of New Balance Athletics (China) v New Barlun (China) and Chengpeng Sports Shoes Store, finding that New Barlun needs to pay New Balance RMB10.8 million (US$1.5 million) for economic losses and reasonable expenses, and ordering it to halt unfair competition to eliminate the public impact on the New Balance brand.

New Balance
Carol Wang

Carol Wang, head of the Shanghai litigation group at Lusheng Law Firm, who represents the plaintiff, told China Business Law Journal: “The trend is that China is taking efforts to enhance protection for genuine IP holders, and is much less tolerant of bad-faith trademark registrants.”

Peter Huang, who also participated in the case when he was in Lusheng, said trademark protection had regional characteristics, and rights holders should seek relief based on the legal system of the country where they are located. He is now the senior partner of Hiways Law Firm‘s Shanghai office.

Huang said that, in dealing with trademark cases, rights holders should consider whether there is a bad-faith pre-emptive registration, and trademark infringement. The former examines the “legitimacy of trademark applications”, while the latter examines the “legitimacy of trademark use”.

Since New Balance entered China’s market in the 1990s, it has confronted dozens of Chinese companies in court. According to Lusheng, this case has dragged on for 16 years, and New Balance had provided a lot of evidence about market confusion about the brand.

Wang, from Lusheng, said the most challenging part of this case was “the international right holder should be able to prove its prior rights before the trademark application dates of the other parties”. She added that there were few domestic cases for her team to learn from.

New Balance, in this case, successfully argued that their decoration, “the capitalized letter “N” on both sides of their shoes”, used by the defendant New Barlun, enjoyed certain popularity prior to New Barlun’s marks being applied for trademark registration.

Disputes between international brands and Chinese trademark registrants are common and include Jordan’s trademark administrative disputes series, MUJI (Shanghai) Commercial and Beijing MUJI Investment trademark infringement disputes; and Metro-Goldwyn-Mayer Studios, MGM, and Shenzhen MGM Films’ unfair competition disputes.

Huang said the lawsuit was a positive sign for foreign companies defending their rights in China. It has also provided a new way for prior rights holders to guard against pre-emptive registration besides proving trademark invalidation. New Balance had claimed RMB30 million in this case.