After a number of New Balance’s fights against a few native Chinese companies, one recently resulted in New Balance winning $1.5 m in damages against Fujian-based New Barlun, an athletic apparel and shoe manufacturer known for using a slanted N logo on their products.

Two decades ago, Chinese companies began offering sneakers highly similar to already popular, New Balance trainers. Their silhouettes mirrored popular “dad” shoes, with a letter “N” on the sides. Moreover, besides the product’s similarity, the companies’ names sounded alike. Also, when written down using Chinese characters the names were identical: “New Boom”, “New Barlun”, “New Bunren”. The case described in this article is not an alienated example of New Balance’s success, it is the basis of the court’s decision is what is worth considering, as the concept is foreign to the European legal framework.

Source: https://itsallgonehongkong.wordpress.com/2015/10/07/china-i-guangzhou/

On April 16, 2020, the Shanghai Pudong New District People’s Court for New Balance Trading (China) Co. Ltd. (a Chinese Subsidiary of the U.S. Massachusetts-based New Balance Athletics, Inc.) against Niu Ba Lun (China) Co., Ltd. (referred to as: New Barlun), awarding New Balance about 1.3 million USD for unfair competition.

New balance argued the continued use of the New Barlun's logo was unfair competition, leading to New Balance’s loss of reputation and goodwill.

New Barlun argued that its logo is protected under a trademark and hence they were free to use it. (Interestingly, the current status of the New Balance’s trademark in the Chinese registry is marked as “announcement of an invalid pending”).[1]

The Shanghai Court held that through a long-term publicly repeated use, the relevant public has sufficiently associated the products decorated with “N” letters on both sides of the New Balance’s sneakers, and the logo has become a source of identification.

The distinctive feature on the shoe, according to the court, has achieved a status of “commodity decoration with certain influence” (famous product decoration). According to the “relevant publicity reports”, judicial judgements etc., the logo was recognised as having a “certain impact” status before the date of the New Barlun’s trademark no. 4236766 application date. Summing up, the court held that as a result of New Balance’s repeated and consistent use of its “N” logo, it has achieved a certain status, thereby entitling the company to protection of that distinctive feature by way of China’s Unfair Competition law.

The exclusive right to use a registered trademark is obtained through an administrative authorisation process at the Chinese Trademark Office. “Commodity decoration with certain influence as the “N” logo was defined, 

is a civil right protected by the Unfair Competition law by acknowledging its de facto existence. The above two are separate types of intellectual property rights, with different scopes and durations. Therefore, the current action (which could have been caused by both: trademark infringement and unfair competition), and New Balance chose to pursue a legal action based on the commodity decoration with certain influence, to which he held rights.

Moreover, the Court admitted that when dealing with conflicts based on trademarks, decoration and other signs, involved parties should follow the principle of good faith, not only to protect prior rights and interests, but also to prevent market confusion. The infringing logo is similar to the New Balance’s one, causing confusion. Even if New Barlun holds rights in a trademark, it still violates the principle of good faith due to its infringement on the previous rights and interests. Even if it seems obvious, it has to be stressed that both entities are competitors in the same industry, so the similarity of a logo placed on the same position on similar goods undoubtedly causes market (and therefore consumers’) confusion. That leads to misidentification of the source of the goods, which violates the principles of good faith and recognised business ethics hence constitutes unfair competition.

As a result of the above inference, the Court issued an injunction to stop further unfair competition by ceasing to use the infringing “N” logo, awarded New Balance $1.5 million in damages (New Balance had been seeking upwards of $4 million in damages) and rights enforcement and required New Barlun to issue a “public clarification” about its use of the confusingly similar logo. As verified on July 7th, New Barlun continue to use the logo on its website (http://www.nbl-china.com).

This is not a first New Balance’s spectacular win in China, as it came 3 years after its “landmark” victory against Chinese companies which infringed the “NB” logo.