New Balance Unsuccessfully Challenges Trade Mark Infringement Claim in China but Walks Away with a Significantly Reduced Liability

In a recent appeal decision in China, the international sportswear brand New Balance has unsuccessfully challenged a finding of trade mark infringement with respect to a Chinese language equivalent for NEW BALANCE. However, New Balance was able to reduce the amount payable as a result of its infringement by 95%.

In February 2016 (read article here), we reported on the fact that Chinese businessman Zhou Yuelen successfully sued New Balance Shoe Inc and its Chinese subsidiary, Xinbailun Co, (collectively, New Balance) for infringement of his registered Chinese trade mark “新百伦” which is a combination of the Chinese direct translation of the word “New” and the Chinese phonetic transliteration of the word “Balance”. The Court ordered that New Balance stop using the mark and that it pay Zhou half of its profits during the period of infringement. As a result, Zhou was awarded approximately 98 million yuan (AUD20 million) in damages and costs.

New Balance subsequently appealed the first instance decision and although unsuccessful in the substantive appeal, the amount payable by New Balance has been significantly decreased to 5 million yuan (AUD1 million approx.). Although the reduced damages award would have been a welcome relief to New Balance, the fact that it was still found liable is an important lesson to non-Chinese companies about the risks of doing business in China.

By: Jonathan Feder and Simon Casinader