New Balance loses appeal over copyright violation in China but sees damages slashed

Mainland businessman who first registered the Chinese-language name sees compensation drop from 98m yuan to 5m yuan

PUBLISHED : Friday, 24 June, 2016, 1:04pm
UPDATED : Friday, 24 June, 2016, 11:51pm

American sportswear manufacturer New Balance has lost its trademark infringement appeal in a Chinese court, but has been ordered to pay a much lower level of compensation to the plaintiff.

The Guangdong Higher People’s Court upheld the earlier ruling that the company’s Chinese trademark had infringed the rights of a mainland businessman, who had registered it to sell shoes, Xinhua reported on Thursday. But the court lowered the amount of compensation.

Instead of using half of the profit New Balance recorded during the period of infringement, the appeal court said it should be based on the plaintiff’s actual damages. It awarded the businessman 5 million yuan (HK$5.8 million), down from the original figure of 98 million yuan.

The case follows a series of high-profile disputes over the ownership of international brands’ trademarks in the Chinese language during recent years, including retired US basketball star Michael Jordan and Chinese sportswear brand Qiaodan Sports.

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Zhou Lelun, who took New Balance to court in 2013, said he had acquired the “Bailun” trademark from another company in 2004, and then applied to registere another trademark “Xinbailun”, or New Bailun, in the same year and gained final approval in 2008, Xinhua reported.

New Balance, which registered its English trademarks in China in 1983, authorised a new affiliated company, known as “Xinbailun”, to use its English trademarks in China in 2007, and later on to use “Xinbailun” as its Chinese name on its online stores in China, the report said.

This ruling is ... contrary to the rest of the developed world’s understanding of intellectual property
Amy Dow, New Balance spokeswoman

The higher court dismissed the US company’s argument that it was necessary to use “Xinbailun instead of “New Balance”, noting that “Xinbailun” was neither the translation nor transliteration of “New Balance”.

Felix Guo, a media representative of New Balance Trading (China), in Shanghai, said the company respected the court’s decision, but “feels disappointed about how this reflects on intellectual property rights standards and regulation in China”.

New Balance spokeswoman Amy Dow said the company was still considering its next steps. “This ruling is particularly concerning as it is contrary to the rest of the developed world’s understanding of intellectual property,” she told Reuters.