Three Chinese Shoemakers to Pay 1M Yuan Fine for IP Infringement

By Faith Magbanua, August 26, 2017 01:08 AM


An order from the Chinese court has three domestic shoemakers to pay more than 10 million yuan ($1.5 million) to the popular shoe brand, New Balance, for damages because they have infringed the U.S. sportswear company's signature slanting logo.

According to lawyers, the compensation amount, though still considered small by international standards, is one of the highest to be awarded to foreign companies in trademark disputes in China.

A speech by President Xi Jinping last month follows the court ruling where he vowed to punish intellectual property (IP) infringers. U.S. President Donald Trump had recently authorized an inquiry into China's IP practices amid estimates that IP theft by the country could be as high as $600 billion.

Meanwhile, an intermediate court in the coastal industrial town of Suzhou said in its ruling last week that the three defendants - including an individual who registered a company in Colorado as New Bai Lun - should stop infringing the American company's iconic trademark and their dishonest promotion of products.

According New Balance's lawyer Carol Wang from the Lushen Law Firm "Although this sort of decision is still rare, it sends a strong and powerful message that should make it easier for foreign brands to do business here."

The court ruling document first appeared on social media on Tuesday and was later confirmed by the law firm.

Angela Shi, brand protection manager of New Balance, said in a statement. "The winning of this case has given us confidence to continue our proactive brand protection strategy in China."

On the other hand, the three Chinese defendants - Zheng Chaozhong, Xin Ping Heng Sporting Goods Limited Company and Bo Si Da Ke Trading Limited - could not be reached for comment.

New Balance, which entered China in 2003 and has more than 2,000 stores in the country, and has been dragged into a prolonged lawsuit battle in the mainland where hundreds of trademarks in variations identical to its "N" logo are registered.

According to Wang Xiang, a Beijing-based lawyer at Orrick Herrington & Sutcliffe who has no connection to the latest trademark case, said that last year, when a Chinese court ruled against trademark infringements and ordered companies to pay 5 million yuan in compensation to a local company, local courts were hesitant to rule in favor of foreign companies in similar cases.  Hoever, in the past, they still had to take multiple factors into account, including local stability and employment.

"It's about time for the government to enhance intellectual property protection enforcement, as many IPs now will be owned by Chinese companies," he added.

Malpractice of Intellectual Property Rights

A Section 301 investigation into intellectual property malpractice in China championed by US President Donald Trump has formally launched.

President Trump demanded the investigation, signing a memorandum asking the US Trade Representative, Robert Lighthizer, to examine whether the country should be investigated for alleged IP malpractice under Section 301 of the Trade Act of 1974.

He had promised some form of action during his election campaign, heralding that "just enforcing intellectual property rules alone could save millions of American jobs".

On 18 August, only four days after the memorandum was signed, Lighthizer agreed to institute an investigation.


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