Chinese court awards New Balance $1.5 million in trademark case

BEIJING (Reuters) - A Chinese court has ordered three domestic shoemakers to pay more than 10 million yuan ($1.5 million) to New Balance in damages for infringing the U.S. sportswear company’s signature slanting logo.

FILE PHOTO: People walk past a New Balance store in Wuhan, Hubei province, China April 12, 2014. Picture taken April 12, 2104. REUTERS/Stringer

The amount of compensation, though small by international standards, is according to lawyers one of the highest to be awarded to foreign companies in trademark disputes in China.

The ruling follows a speech by President Xi Jinping last month in which he vowed to punish intellectual property (IP) infringers. U.S. President Donald Trump recently authorized an inquiry into China’s IP practices amid estimates that IP theft by the country could be as high as $600 billion.

An intermediate court in coastal industrial town Suzhou said in its ruling last week that three defendants - including an individual who registered a company in Colorado as New Bai Lun -should stop infringing the American company’s iconic trademark and their deceiving promotion of products.

“Although this sort of decision is still rare, it sends a strong and powerful message that should make it easier for foreign brands doing business here,” said Carol Wang, a lawyer at Lusheng Law Firm, which represented New Balance.

The court ruling document first appeared on social media on Tuesday and was later confirmed by the law firm to Reuters.

“The winning of this case has given us confidence to continue our proactive brand protection strategy in China,” Angela Shi, brand protection manager of New Balance, said in a statement to Reuters.

The three Chinese defendants - Zheng Chaozhong, Xin Ping Heng Sporting Goods Limited Company and Bo Si Da Ke Trading Limited - could not be reached for comment.

New Balance, which entered China in 2003 and has more than 2,000 stores in the country, has been dragged into protracted litigation battle in the mainland where hundreds of trademarks in variations identical to its “N” logo are registered.

Last year, it was dealt a blow when a Chinese court ruled against it for trademark infringements and ordered it to pay 5 million yuan in compensation to a local company.

In the past, local courts were hesitant to rule in favor of foreign companies in similar cases as they had to take multiple factors into account, including local stability and employment, said Wang Xiang, a Beijing-based lawyer at Orrick Herrington & Sutcliffe, who has no connection to the latest trademark case.

“It’s about time for the government to enhance intellectual property protection enforcement, as many IPs now will be owned by Chinese companies,” he said.

Reporting by Pei Li; Editing by Himani Sarkar