New Balance wins major unfair competition lawsuit in China

Ruling sets legal precedent following 16-year battle with prolific infringer

New Balance has won a major unfair competition lawsuit in China, ending a 16-year battle against one of the country’s most prolific copycat brands.

In a decision handed down on 16 April 2020, the Shanghai Pudong People’s Court found New Barlun (China) Co Ltd guilty of unfairly using an “N” symbol closely resembling the internationally recognised logo of US footwear producer, New Balance.

The Court ruled that New Barlun’s use of the letter ‘N’ would mislead consumers and ordered the company to pay damages of RMB 10.8 million (USD$1.54 million / GBP£1.24 million).

The ruling signals another milestone in China’s ongoing development of a reliable and robust IP rights regime, comparable to established systems in developed countries.

New Barlun has been one of the most consistent and successful copycat brands operating in China for nearly two decades, generating significant revenue from imitating New Balance footwear and its stylized letter “N”.

The case highlights the constantly evolving tactics used in China by infringers seeking to circumvent the claims and protections of legitimate rights holders, moving from straightforward copying to defending themselves by registering their own trademarks. Whereas infringers had historically sought to imitate the ‘N’ logo of New Balance by minimising the distinctive features of their registered trademarks, New Barlun had been using its trademarks almost precisely in their registered form. To overcome New Barlun’s defence, New Balance argued their own ‘N’ symbol enjoyed certain popularity prior to New Barlun’s marks being applied for trademark registration.

This is an area of law that is unsettled in civil law systems and set a new precedent in China. In finding in New Balance’s favour, the Court has now established the boundary line between prior decoration right and registered trademarks.

New Balance had previously brought several civil proceedings against New Barlun and two predecessor companies, Jinjiang Qiuzhi Dongya Shoes and Apparels Industry Co. Ltd and Quanzhou Niu Banlun Sporting Goods Co. Ltd. However, these companies refused to comply with previous court judgments and instead sought to avoid liability by transferring infringing trademarks to other companies.

New Balance’s litigation counsel was Chinese law firm Lusheng, part of the Rouse network. Rouse is the leading international IP firm specialized in China, the ASEAN region and emerging markets globally.

Angela Shi, Senior Brand Protection Manager, New Balance, commented:

“Despite the sophisticated tactics of the infringer, the Court has fairly enforced the legitimate rights of New Balance and in doing so, protected consumers’ interests.”

Dan McKinnon, Senior Counsel, IP & Global Brand Protection, New Balance, commented:

“This judgement has furthered our confidence in the evolution of China’s judicial regime. As always, New Balance will not hesitate to take action to protect our IP rights and consumers’ rights in China and across the world.”

Douglas Clark, Global Head of Dispute Resolution at Rouse, commented:

“Copycats have been the bane of international brands in China for years. The court has now made it clear free-riding will no longer be tolerated. This ruling brings confidence to every international IP rights holder seeking to operate in China. The outcome is the right one for both New Balance and for the protecting of IP rights in China more widely”.