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New balance sets new record in China

Although I haven’t been setting any records, I have been able to compete a couple of half-marathons (Gold Coast and Brisbane) in the last few months. During those races and in many of the training runs leading up to them, my footwear of choice has included various models of New Balance shoes.

On that basis, it was with interest I noted that New Balance had a win last week in relation to the infringement/copying of its trade marks in China. The Chinese court ordered a payment of $1 million be made by three infringers to New Balance which, although quite small by international standards, is particularly significant in China.

You may recall in February we reported that New Balance, who have been involved in trademark enforcement proceedings in China for quite some time, were ordered by a court to pay $16 million (reduced to $1 million on appeal) for selling products under their own brand in infringement of the Chinese equivalent of their mark (Xin Bai Lun – Xin meaning New, and Bai Lun meaning Balance). As the owner of that mark had registered before New Balance and as China applies a first to register system, New Balance lost the ability to protect its own name/mark.

The latest decision follows on the recent success of Penfolds, which was able to secure the Chinese translation of its mark and the comments made by President Xi Jinping last month in which he vowed to punish infringers so that foreign companies in particular should garner more confidence that their brands may be protected in China. Some commentators have suggested that President Xi Jinping’s comments have been prompted by statements from Donald Trump that he intended to authorise an inquiry into China’s IP practices, given recent estimates that IP infringement within the country could be as high as $600 billion per annum.

The manner in which infringement claims are now being dealt with are particularly relevant to:

  • Businesses having goods manufactured (with their brand applied) in China.
  • Businesses which may not have a traditional presence in China but whose goods are susceptible to copying in China.
  • Exporters or licensees who grant rights to others to use their IP offshore.

It is also important to remember that China has different rules to many other countries (including Australia) in relation to the registration of trademarks and uses a “first to apply” registration system. Accordingly, even if you have other rights which would be recognised in Australia (and elsewhere) the ability to remove or overturn a mark which has been registered, can be extremely difficult.

Some key take home points are:

  1. Apply for trademarks well before appointing a manufacturer or selling product into China.
  2. Consider whether your means of online sales (if any) has reached China and whether your brand has gained any presence there.
  3. Copyright can be registered in China (unlike in Australia) and that may provide some added benefit in relation to brands/logos.
  4. Consider language issues such as the use of Chinese characters or the Chinese equivalent name (eg. Xin Bai Lun = New Balance) and whether those alternatives should be protected.

Of course, much like choosing the correct footwear, there is no one-size-fits-all type strategy but it is important to consider a protection strategy before it is too late. Otherwise the temporary pain of a long run will pale into insignificance in comparison with the permanent potential loss of rights.

"The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication."