China Trademarks, after New Balance

China lawyers
Does New Balance’s recent trademark victory portend a new China IP balance?

What should we make of the most recent New Balance decision?

As widely covered in the press, a Suzhou court last week awarded the Boston-based athletic equipment company New Balance $1.5 million in damages in a trademark infringement case. Zheng Chaozhong, Xin Ping Heng Sporting Goods Limited Company and Bo Si Da Ke Trading Limited, who sold “New Boom” branded footwear in China, were found liable for infringing New Balance’s stylized “N” trademark and otherwise deceiving consumers as to the source of goods.

The decision has been rightly lauded as a landmark: the damages are the highest amount ever awarded to a foreign company in a trademark infringement case (and tied with the highest amount awarded to any company). Though rare, this sort of case sends a strong message both to those who would infringe on others’ trademarks and those who try to stop them. 

It’s important to keep things in perspective, though. How strong a message does this decision actually send? New Balance has sold shoes in China since 1995, and according to one report has more than 2000 stores there. The “New Boom” brand is only one of many Chinese knockoffs; I can only imagine how many lawsuits New Balance is pursuing in China. As another of the China attorneys in my firm put it, this win by New Balance shows progress but it isn’t groundbreaking.

I remember buying New Balance shoes when I was a graduate student in Shanghai. I went to a branded New Balance store adjoining a relatively high-end mall, but despite the location and the salesman’s almost self-righteous assurance, along with my Chinese classmates’ concurrence, I still wasn’t confident the shoes were authentic. I ended up purchasing a pair, and was happy I did, but you can see the problem. I was a discerning consumer, I wanted to buy genuine goods and I was willing to pay the going price, but because there were so many knockoffs on the market, I almost didn’t buy anything.

So yes, this is a great decision for owners of IP, but until it becomes commonplace it won’t send a strong message to foreign brands. And from what I’ve seen, this case is about as blatant a case of infringement as the Under Armour/Uncle Martian matter. In the United States, the infringing party would have been slapped with a temporary restraining order, soon followed by a permanent injunction, and this case wouldn’t even have made the local news.

This decision is yet another step in the right direction, and as both foreign and domestic companies continue to protect their interests in China through the legal system, I think we’ll see more decisions like this. But let’s not overstate things. This is just a Chinese court enforcing Chinese trademark law in a straightforward case. Foreign companies still need to be vigilant about protecting their IP rights in China, and that means registering their trademarks in China, monitoring the China Trademark Gazette and Chinese social media to try to spot infringers, submitting takedowns to Alibaba and other e-commerce sites, and filing lawsuits.

We must take the Chinese trademark system as it is, not how we want it to be.

This article was written by Matthew Dresden and published on China Law Blog. Original Post: http://www.chinalawblog.com/2017/08/china-trademarks-after-new-balance.html      

View the original article here.

Matthew Dresden

Matthew focuses on international and China law, with a focus on technology and entertainment law and Chinese transactional and IP work. He represents a wide range of companies, from start-ups to NYSE-traded companies. His work has included matters for film studios, cable channels, film and television production companies, video game developers, magazines, restaurants, wineries, international design firms, product manufacturers, outsourcing companies, and computer hardware and software companies.