A 'New Balance' for Foreign Trade Mark Owners in China?
A recent decision in a case involving the sports brand, New Balance, appears to show that China is now treating trade mark rights more seriously, but is this really the case?
China has a poor track record in relation to the upholding of intellectual property rights such as trade mark registrations and copyright. China is the world's biggest source of counterfeit goods, with the proceeds of IP theft estimated to be around US$600 billion. Chinese courts often dismiss clear-cut cases brought by foreign IP owners where the IP right conflicts with local economic stability and employment.
The New Balance Case
New Balance has successfully stopped three 'enterprising individuals' from producing and selling counterfeit products bearing New Balance's well-known slanted "N" device in China, and has been awarded a record US$1.5 million in damages and legal costs. New Balance's legal representatives in China claim that the win "sends a strong and powerful message that should make it easier for foreign brands doing business here". But does it really?
Although New Balance's win is a positive step, caution should still be exercised when doing business in China. When it comes to trade mark protection, China is a 'first to file' territory - meaning that the first person to register a particular trade mark will own the exclusive right to use that trade mark in China, and to prevent others from doing so. New Balance itself fell foul of this last year when it was ordered to pay roughly US$750,000 to an 'enterprising individual' who registered the Chinese transliteration of New Balance's name in 2004 and then sued New Balance for trade mark infringement.
Even though New Balance (and other foreign trade mark owners such as Facebook, Esso and Fortnum & Mason) have celebrated success in Chinese trade mark cases in recent years, these success stories all involve well-known trade marks - it is unlikely that less well-known trade marks would enjoy the same successes. These successes have also all been the result of expensive and time-consuming legal battles over a number of years - something that the average business could not sustain.
Best Practice
Whilst the outcome of the most recent New Balance case will have little or no impact on the average UK Based SME seeking to do business in China, foreign businesses can make it easier for themselves by protecting their trade marks (including their name, logo and any translations and transliterations of the same) at a very early stage.
This also serves as a useful reminder to any business with international aspirations to consider potential markets at an early stage, and to seek trade mark protection in key territories as early as possible.