Despite being labeled as the Counterfeit Capital of the World, China resents trademark infringement. As it turns out, footwear company New Balance lost at a copyright battle in the country, prompting it to pay $5 million RMB, or over $750,000, in damages.
The trademark at stake is “Xin Bai Lun,” which means “new” (Xin) in Chinese and “balance” (Bai Lun) in phonetic translation. The case was filed by businessman Zhou Lelun in 2015, who applied to register the trademark back in 2004.
Zhou owns the rights to “Bai Lun” and “Xin Bai Lun” for merchandise that includes footwear, clothing and headgear. He is legally allowed to establish a brand of men’s shoes under these labels, Wilson Elser reported.
In his argument, Zhou alleged New Balance’s use of “Xin Bai Lun” without authorization, leading consumers to think that all products marked so are sold by the company. He maintained that this damaged the progress of his own brand, which goes by the same moniker.
On the other hand, New Balance countered Zhou’s claims and argued that their use of the label did not confuse customers. They also positioned that “Xin Bai Lun” is a direct English transliteration of “New Balance.”
Yet an earlier ruling by the Guangzhou Municipal Intermediate People’s Court voted in favor of Zhou, which asked New Balance to pay him 98 million RMB. The Boston-founded company made an appeal at the Guangdong Higher People’s Court but was dismissed last week.
However, New Balance will now only pay $5 million RMB, or about $752,275, Reuters noted. According to the outlet, the company is “disappointed” over the ruling and plans to appeal further. Spokeswoman Amy Dow said, “This ruling is particularly concerning as it is contrary to the rest of the developed world’s understanding of Intellectual Property.”
The previous compensation requirement marks half of New Balance’s profits made during the period of infringement. As per South China Morning Post, the reduced amount is based on Zhou’s actual damages.
New Balance media representative Felix Guo also expressed disappointment at the court’s decision. Though he maintains the company’s respect, it “feels disappointed about how this reflects on intellectual property rights standards and regulation in China”.
The company previously argued that they have been using the trademark prior to Zhou’s complaint, but this did not win the courts. Now, as part of the verdict, the company is ordered to stop using “Xin Bai Lun,” Xinhua wrote.