Long road in China

Success for New Balance and $1.5 million. The N logo is synonymous with New Balance running shoes and is pretty much instantly recognised by consumers around the world and has mass appeal across generations.

New Balance Athletics applied to register the NB logo in the US in the 1970’s and filed in China in 2003 and obtained Chinese registered protection in 2005. It has though taken New Balance Athletics, Inc 15 years to convince the Beijing High Court that the N logo should be classed as a famous product decoration in China. As readers will know, this isn’t unusual for China given the various rounds of appeals and time it takes for cases to be decided.

This long running saga between New Balance and New Barlun (China) Co Ltd has been ongoing since 2004, when the original Chinese application was filed by New Barlun; this is only one of a handful of fights which New Balance has had with Chinese footwear companies. This case underwent opposition but was ultimately registered in 2011. New Balance then filed an invalidation action in 2014 to have the registration cancelled and this underwent two trials with the Beijing IP and High Court. The claims issued by New Balance included attacking the Chinese company for being a counterfeiter and hijacking the N logo and thus engaging in unfair competition which has substantially damaged the goodwill of the New Balance brand and its offering as a high-quality footwear provider.

The interesting point of this case is not the prolonged timeline but how New Balance finally succeeded and why retailers must not give up in China. The verdict set out three conditions which must be fulfilled when determining that a trade mark conflicts with a prior “product decoration” registered in China, these are:

1. The product has obtained certain reputation prior to the filing of the later trade mark application;
2. The product decoration is distinctive, to function as a source identifier of the goods; and
3. The product decoration is identical with or similar to the later trade mark.

The court held that the N logo does serve as an identifier of origin and they defeated the defence of New Barlun whom relied upon having a Chinese registration in place. It was held that the New Barlun “N” logo falls foul of the principle of “good faith” and infringes upon an already existing registration which causes confusion between the two marks.

With respect to the unfair competition assertion run by New Balance, the court went through the evidence of use made by New Balance and found that it had a repeated penetration of the Chinese market and that the public would associate the N with the company New Balance. This led the court to the decision that the N logo had achieved a higher status as set out above and thus they could take advantage of protection under the Chinese Unfair Competition Law.

This judgement shows that it is worth taking court action in China, especially if you can show persistent use in China for your brand and that it has recognition with the consumer. The case also shows that the Chinese court has some teeth (although not sharpened as yet) as they awarded New Balance with $1.5 million in damages to also cover legal costs and the court also made New Barlun issue a public clarification over the marks. New Balance had been seeking upwards of $4million and no doubt the case cost more to run over the years than they were awarded but taking a stand is crucial and have a repetitive history of actions. This does leave one wondering that this lengthy battle could have been avoided if the opposition had been found correctly in the first place though and given the number of sales New Barlun made in China.

But as ever, the take away for retailers is the importance of registering brands in China early, including Copyright if suitable, and keeping excellent records of sales and data. HGF has recently been successful before the Chinese courts. Alongside having a registration in place, you need to prove brand recognition and penetration of the Chinese market. Without these two things, actions are unlikely to succeed, and one must also have patience and be willing to run various claims at the same time.

By Rebecca Field – Rebecca is a Trade Mark Director in HGF’s specialist Trade Mark group. She joined HGF in September 2009 and qualified by examination in November 2010.