The ruling is a welcome boost for international IP rights holders in China
American sportswear brand New Balance has won a major legal battle against one of China’s most prolific and aggressive copycat brands, New Barlun, in its 1st instance trial. The compensation amounts to one of the largest sums awarded to an IP owner in the sports sector in the history of Chinese IP lawsuits.
The decision, handed down by the Shanghai Huangpu District Court on 5 January 2021, ordered New Barlun (China) Co Ltd and Shanghai Shiyi Trade Co Ltd (the Defendants) to pay New Balance damages of RMB 25 million (USD $3.85 million / GBP £2.83 million).
The Court ruled that New Barlun and Shiyi’s manufacturing and distribution of shoes marked with the ‘N’ symbol constituted an infringement against New Balance’s trademark rights, as the logo was incredibly similar to the renowned original, both visually and conceptually.
The infringing products that generated large volumes of sales for the Defendants were found to have benefited from New Balance ‘N’ logo’s reputation and fame in China. They were also found to have acted in bad faith as the Defendants failed to cease infringement even after the Court had issued an interim injunction order. Additionally, the Court found that the distributor Shanghai Lusha should be held jointly liable for RMB 100,000 (USD $15,000 / GBD £11,300).
The judgment has not yet taken effect and therefore the defendants have the right to appeal.
New Barlun is one of the largest copycat brands in China. A judgment handed down by Shanghai Pudong District Court last year found that New Barlun’s use of the ‘N’ logo on the sides of its sport shoes constituted unfair competition. The court subsequently ordered the company to pay damages to New Balance of RMB 10.8 million (USD $1.54 million / GBP £1.24 million).
New Balance’s litigation counsel was Chinese law firm Lusheng, part of the Rouse network, which has acted for the company throughout its civil claim against New Barlun. Rouse is the leading international IP firm specialized in China, the ASEAN region and emerging markets globally.
Carol Wang, Principal and Head of Shanghai Litigation Group at Lusheng Law Firm, commented:
“The Defendant of this case represented the most typical sophisticated copycat infringer, not only in terms of the infringement length and scale, but also the bad faith trademark registration tricks they have played with the purpose of escaping liabilities. They have been pursued by New Balance for a long time in different lawsuits. Over these years, the China Trademark Law has been amended for a couple of times, and in the 2019’s New Trademark Law, the bad faith trademark registration has been further addressed and the statutory damages has been increased up to RMB 5 million (roughly USD770,000).
In this context of judicial development, regardless of how sophisticated the infringers are, the court of Huangpu has well applied the law and taken the infringers’ online and offline infringing sales value, New Balance’s strong reputation, as well as the infringer’s bad faith, etc., into consideration, and supported the damages of RMB 25 million which has far exceeded the upper end of the statutory damages (RMB5 million).
This is not only a win for New Balance but for a wide range of international brands operating in China, as they continue to face the increasing threat of copycats on their business.
The judgment further demonstrates China’s commitment to establishing a sophisticated and robust IP system that matches other leading countries and will be crucial in attracting international investment.”
Dan Mckinnon, senior counsel, intellectual property and global brand protection, at New Balance, commented:
“It is very encouraging that the Court has once again recognized the legitimacy of New Balance’s IP rights which will help ensure that our brand is safeguarded and protect our consumers’ interests.”