The Guangzhou Municipal Intermediate People’s Court hit the local sales company for New Balance with a close to $16 million verdict for violating the trademark rights of a Chinese man named Zhou Yuelun.
The verdict represented half of the profits that the sales company had earned during the period of infringement.
The product name used by the New Balance affiliate is pronounced “Xin Bai Lun.” “Xin” means new, and “Bai Lan” is a phonetic version of “Balance.”
However, Zhou had registered the Chinese trademarks for “Bai Lun” and “Xin Bai Lun” in 1996 and 2011 for merchandise including footwear. He sells men’s shoes in China under these brand names.
New Balance unsuccessfully sought to block Zhou’s 2011 trademark registration. The Chinese court found that the company’s continued use of the mark after that date was “malicious” because it knew of Zhou’s previous use of the mark.
New Balance has a history of IP headaches in China.
As reported by the Wall Street Journal,
The rush to manufacture in China is backfiring on many U.S. brands in an insidious new way: Sometimes their own suppliers flood the market with their goods, stealing sales and damaging the brands’ cachet.
When counterfeit New Balance shoes began appearing in stores for as little as $20, New Balance sent an investigator posing as a shoe buyer to do a sting operation.
However, after three years of litigation, including an arbitration in Massachusetts and a lawsuit in a Chinese court, the rogue supplier was still in business.
As this case shows, it is important for US companies doing business in China to:
- do their homework and find out whether any similar trademarks are already in use
- if a mark is already in use, not try to use it for a US product
- register trademarks in China as early as possible
In China, unlike in the US, priority is based on registration rather than actual use.
Leech Tishman’s Danton Mak is a partner in the Intellectual Property Practice Group who was born in Hong Kong and is fluent in both Mandarin and Cantonese. His insight, knowledge, experience, and contacts throughout the Far East have proven invaluable to clients with legal issues involving China.
The firm’s Intellectual Property Group is based in Pasadena, California with a team of highly-regarded legal professionals with prosecution and litigation expertise in the fields of patent, trademark, copyright, and trade secrets.
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Photo Attribution: “New Balance Mascot Newbie” by Whoisjohngalt and licensed under CC BY-SA 3.0 via Wikipedia .