Our Commercial Disputes Associate, Guto Llewelyn, looks at the court's decision in a Chinese trademark dispute ruling involving New Balance.

Last week, the Suzhou Intermediate People’s Court hit the headlines when it ordered that a record-breaking amount of compensation be paid to New Balance (a foreign company) in a Chinese trade mark dispute.

The court ordered three domestic shoemakers, Zheng Chaozhong, Xin Ping Heng Sporting Goods Limited Company and Bo Si Da Ke Trading Limited (trading as New Boom), to pay more than 10 million yuan (£1.2 million or $1.5 million) to Boston-based sportswear company New Balance, for infringement of its signature slanted -N logo. 

In its decision, the court ruled that New Boom had ‘seized market share from New Balance’ and, through confusing a large number of consumers, ‘drastically damaged’ its business reputation.

Legal reform

Chinese trade mark law is laid out in the Trademark Law of the People’s Republic of China, which came into force on 1 March 1983. It was revised when China joined the World Trade Organisation in 2001 and again in 2013 when the maximum damages that could be awarded in an infringement case was increased. These legal changes reflect the aim of China’s government to tackle the country’s reputation for fake and pirated products.

The ruling follows hot on the heels of the recent inquiry authorised by Donald Trump into China’s alleged theft of intellectual property. Officials in his administration have estimated that the theft could be as worth as much as $600 billion.

As Chinese companies continue to develop valuable intellectual property of their own, trade mark law is increasingly valuable.

An additional benefit of this move to crack down on intellectual property infringement is that international companies are likely to feel more secure doing business in China.

For more information, please contact Nick de Figueiredo

To read the rest of this month's newsbytes, please clickhere.