New Balance: Pull back a set in the battle against Infringement in China

As a world-wild famous brand, New Balance suffers legions of trademark infrigements in China. However, it haven't stopped its fighting against counterfeit. Even if it got lost in a Cybersquatting Case, New Balance pull back a set in a  Piracy Case which is seen as a rare win.

Cybersquatting Case
Outcome: Lost

New Balance is known in China under the the translation “Xin Bailun”, but the trademark for “Xin Bailun” had already been registered by a local sales company before New Balance entered the Chinese market. So on the 24th of April 2015 New Balance was fined 98 million RMB for infringement of trademark, which is equal to half of the profits that New Balance earned during its time of infringement. In accordance to the Trademark Law in China, the amount of compensation shall be the profit that infringer earned during the period of infringement. Since New Balance only used “Xin Bailun” trademark in advertising rather than on products, the court held that half of the profits would be appropriate.

After the first instance, New Balance appealed to the Guangdong High Court but lost again. The Guangdong High Court published the judgement at June 26, 2016, in which New Balance still need to pay compensation but the amount of damages was reduced from 98 million RMB to 5 million RMB.

One reason the Guangdong High Court held in deciding to reduce the damages is that New Balance had never used “Xin Bailun” on their packages. In addition, New Balance submitted a brand evaluation report suggesting that the contribution of “Xin Bailun” to its profits from China market was 0.76%. This means that this Chinese character trademark contributed RMB 1,487,907.97 to New Balance’s overall profits from the China market in years 2011 to 2013 and RMB 1,458,149.81 to New Balance’s profits from shoes in China for the same period. Taking subjective factor, size of infringement, actual economic damages and other factors into consideration, Guangdong High Court decided to reduce the compensation to 5 million RMB.

Piracy Case
Outcome: Won

Action to combat IPR infringement will not stop for New Balance. In April, 2017, A court has ordered five shoe manufacturers and sellers to pay the state $250,000 for using the American shoemaker’s signature slanting “N” logo.

In a preliminary decision, the Suzhou Intermediate People’s Court fined the five companies for breaching an injunction prohibiting them from selling shoes with the logo, according to a report in China Intellectual Property Magazine. The $250,000 in fines will go to the state. The court will issue its final judgment at the end of May, at which time New Balance could get damages.

New Balance sued under China’s Anti-Unfair Competition Law because the country’s trademark laws, because currently provide slight loopholes for these brands to exist. The case offers a high-profile example of how doing business in China can feel like a Wild West shootout.

For years, foreign brands have been battling low-quality manufacturers that churn out cheap copies of everything from iPhones to Louis Vuitton bags. But piracy in China, the world’s second-largest economy, has a new twist: Manufacturers copy everything about a product but with a slight modification of the brand name. For New Balance, that meant consumers ran into New Boom, New Barlun, and New Bunren — brands that are protected under China’s trademark law.

In China, trademarks are generally awarded to those who first file paperwork with the government. That has given rise to a crush of people registering the names of well-known brands, a practice known as “trademark squatting.”Unlike in the United States, people who file for the trademarks do not have to give a reason for their application. Many Western companies, like Apple and Starbucks, and celebrities, including President Trump, have been caught up in long legal battles over the right to use their names in China.

 

Declaration: All the resources come from China Daily and The New York Times, if you think this article infriging your right, please contact with us.