New Balance was a major sport footwear manufacturer, known primarily for its high quality and high-performance sneakers with the iconic 'N' logo. In 1983 New Balance registered the following trademark in Class 25 in China:
Figure 1: New Balance logo 1
In 2014 New Balance registered another representation of the logo (Figure 2), also in Class 25:
Figure 2: New Balance logo 2
In 2010 Hainan Qierte Investment LLC filed applications for the following two trademarks in Class 25:
Figure 3: disputed marks
In 2012 Hainan Qierte Investment LLC obtained the registration of these marks. In 2013 both marks were assigned to another company, Qierte Co Ltd.
On 7 January 2014 New Balance brought an invalidation action against the disputed marks before the Trademark Review and Adjudication Board (TRAB), citing the following articles of the Trademark Law 2001:
- Article 28 (similar marks on similar goods);
- Article 31 (causing harm to another party's prior right); and
- Article 13 (well-known trademark).
New Balance also referred to the Anti-unfair Competition Law.
On 31 March 2015 the TRAB ruled against New Balance, finding that:
- the disputed marks were not similar to New Balance's marks;
- the 'N' logo did not constitute the unique decoration of well-known goods (known as 'trade dress'); and
- the evidence that New Balance had adduced was insufficient to prove that its marks had become well known prior to the disputed marks' application date.
New Balance appealed before the Beijing IP Court.
On 10 May 2016 the Beijing IP Court ruled in favour of New Balance, finding that:
- the use of the disputed marks was likely to cause confusion, considering the similarity between the signs and the reputation of New Balance's marks;
- the evidence that Qierte had produced failed to prove that the disputed marks had become distinguishable from the cited marks through use; and
- since the court had found that the registration of the disputed marks violated Article 28 of the Trademark Law, there was no need to examine the plaintiff's argument on trade dress.
Qierte and the TRAB filed an appeal with the Beijing High Court.
On 25 October 2016 the Beijing High Court quashed the first-instance judgment based on the facts that:
- a significant difference existed between the disputed marks and New Balance's marks in terms of their overall visual effect, composition and design style; and
- the evidence on file was insufficient to prove that, prior to the disputed marks' filing date, New Balance's 'N' logo had constituted the particular trade dress of well-known goods.
On 21 April 2017 New Balance applied to the Supreme People's Court (SPC) for retrial.
In the retrial application, New Balance:
- cited the prior court judgment's finding that the 'N' logo used by New Balance on its sneakers constituted a "unique decoration of well-known goods" and claimed that the Beijing High Court had contradicted such established findings and, therefore, had erred in the application of the law, which was adverse to the creation of a stable jurisprudence;
- showcased the customary practice of how commercial signs were used on sports shoes;
- emphasised Qierte's bad faith in its copy of New Balance and argued that, when assessing the likelihood of confusion between two marks, the courts should look at the big picture and consider all of the facts of the case, including the bad faith of the disputed trademark's registrant; and
- produced evidence of actual confusion in the market.
In September 2017 the SPC formally accepted New Balance's application for retrial on the ground of possible improper application of the law.
In March 2020 the SPC rendered a retrial decision in favour of New Balance, in which it affirmed that:
- the most prominent part of New Balance's trademark was the letter 'N';
- the registrant's bad faith had to be considered; and
- the distinctiveness of a trademark is dynamic – a single-letter mark can become distinctive and famous in the market through long-term use and promotion.
The SPC rulings may serve as precedents for similar cases in which bad faith regarding the way in which a registered trademark is used may affect the determination of its similarity.