The Guangzhou Municipal Intermediate People’s Court in south China’s Guangdong Province awarded a local individual, Zhou YueLun $16 million worth of damages for an act of trademark infringement by a local company Xinbailun Trade (China) Co., the local sales company for the well-known U.S. sports brand New Balance. The Court further ordered the company to stop using the name “XIN BAI LUN (Mandarin equivalent to New Balance)” as means of promoting their products in China and on top of that, apologize to Zhou for all harms caused. The decision was made on 24th April 2015 which heavily impacted the famous sports brand for failing to protect its brand name on time in China as well as a wake-up call for others to register its brand name as soon as possible especially in a strictly first to file country like China.

The decision further emphasizes the importance of trademark registration in China using Chinese characters and early filing regardless of how extensively a trademark is used in China or anywhere else in the world. What happened in this case was a dispute in terms of the rights and use of the characters “新百伦 (xin bai lun)” which was used by the Chinese affiliates of New Balance in China to promote its products. However, the characters “百伦” had since registered in 1996 by Zhou and “新百伦” was also subsequently filed in 2004 in Class 25 bearing specification of goods such as clothes, footwear, and headgear. The disputed mark “新百伦” was also subsequently registered in January 2008 despite being opposed by New Balance as soon as it was published in 2007 where New Balance claimed that they were using the disputed mark since 2003. However, New Balance’s effort had been in vain as the China Trademark Office rejected their opposition which led to the success registration of the disputed mark by Zhou.

Knowing that the use of “新百伦” no longer permitted, New Balance continued to use the disputed mark to promote their brand, which led to Zhou filing the lawsuit and the Court’s significant damages award. During the course of proceeding, Zhou claimed that his customer have been confused into thinking that his shoes are from New Balance due to their unauthorized use of the disputed mark “新百伦”. The alleged unauthorized use included the use of the disputed mark “新百伦” on New Balance’s official China website as well as an imprinted gratification phrase “Thank you for buying Xin Bai Lun products” on all New Balance’s outlet store receipts in China. Zhou further claimed that New Balance’s act had substantially impacted his ability to build and established his own brand“百伦” and “新百伦” in China. 

On the other hand, New Balance forwarded his defence by claiming that the use of the disputed mark “新百伦” has been in good faith as part and parcel of its name which is a direct transliteration of New Balance. Furthermore, the use of the disputed mark “新百伦” predated Zhou’s commercial use of the disputed mark “新百伦” and henceforth would not cause a confusion as well as an infringement as alleged by Zhou.  Unfortunately, New Balance’s claim in terms of the transliteration was rejected by the Court where it held that New Balance should have been translated as “新平衡(xin ping heng)” which is also the name of the New Balance affiliate, Xin Ping Heng Athletic Shoe, Inc. Furthermore, the opposition in 2007 was also brought to the Court’s attention which demonstrated the awareness of in terms of the ownership of “百伦” and “新百伦” mark. Therefore the Court held that New Balance had acted in bad faith for continuing the unauthorized use of the disputed mark having the knowledge and awareness of the existence of the disputed mark. In view of these findings, the Court rejected New Balance’s argument for fair use and first use.

Unlike most countries where trademark rights are based on use, Chinese law does not recognize or protect a trademark unless it is registered with the Chinese Trademark Office (CTO) since the tort of passing off plays no part in China jurisdiction. The decision by the Chinese Court above highlights a major lesson about the use of Chinese character marks and the importance of filing early in China as the authority in China would not care how long you have been using your mark or how well-known your mark is.

Finally, we strongly advise those, regardless of companies or individual, who are seeking to expand your business to China as follows:

• Act quickly in filing your trademark application to secure your position
• Chinese Characters should also be considered as application which can fully reflect your brand
• Prepare a few variation in terms of Chinese character up your sleeves

If you need to know more about the trademark registration process or questions,
Please Contact Us: 03-58914846
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