A. Background
The American sportswear company New Balance has won a major case against one of China's most famous copycat brands. New Barlun was judged by Shanghai Huangpu District Court on January 5, 2021, to pay New Balance RMB 25 million in damages for trademark infringement. This compensation is one of the largest granted to an IP holder in the sportswear sector in a Chinese court.
This decision is the latest in a longstanding legal battle between New Balance and New Barlun. New Balance's battle against the copycat brand has now lasted 16 years.
In 2019, New Balance filed for damages of RMB 10.8 million in Shanghai Pudong District Court for a similar violation. In the spring of 2019, the Shanghai Pudong Court ("PPC") decided that New Balance's commercial apparel rights and trademark rights were separate types of intellectual property, with different scopes and terms. Regardless of whether New Barlun received a registration for the “N” brand, the use of the brand in a certain format/placement on its shoes, which corresponds to that of New Balance, leads to an infringement of rights and to unfair competition.
Previously there were years of defeat for New Balance in the form of opposition and nullity proceedings against the registration of the “N” brand by New Barlun. New Barlun had successfully obtained trademark registration for a similar brand long before New Balance. Trademark registrations and the use of trademarks that are almost identical to the trademarks of foreign trademarks with only minor changes to avoid objection during the registration process are one of the most popular tactics used by Chinese trademark infringers.
B. Opponent
New Barlun is a Chinese sportswear company that has been trading its name and various brands for more than 15 years. New Barlun is considered one of the “most productive and aggressive copycat brands” in the Chinese sportswear sector. New Barlun had registered a trademark for its own "N" logo before New Balance took legal action. This meant that New Balance had to prove a malicious trademark application by New Barlun to have it deleted. The court decided that the manufacture and sale of shoes with the N logo by New Barlun and co-defendant Shanghai Shiyi was in violation of New Balance's trademark rights. The court also pointed out, that the Shanghai Lusha distributor should also be held jointly and severally liable for a total amount of RMB 100,000.
C. Legal perspective
The Shanghai Huangpu District Court decided that New Barlun and Shiyi's practice of manufacturing and distributing sneakers with an uppercase "N" that closely resembles New Balance's "N" was a trademark infringement. The brands of the two parties are similar both visually and conceptually.
New Barlun's sneakers generate significant income for the company. These are largely due to New Barlun exploiting the fame and prestige of the New Balance brand and its “N” brand in China. The court announced that the defendants acted in bad faith in continuing their practice, even after the court issued an injunction banning them from making and selling the offending shoes for the duration of the proceedings.
The defendants still have the right to appeal. The case may therefore not be over.
Should you have any further questions, please do not hesitate to contact us. We look forward to hearing from you.