By Yiu F. Au
On April 24, 2015, the Guangzhou Municipal Intermediate People’s Court in China has ordered the affiliate of New Balance Athletic Shoe Inc. in China to pay the equivalent of $15.8 million, or half of its profits during a period of trademark infringement to a mark registered by Zhou Yuelun, a local businessman. This award is widely acknowledged as the highest award for trademark infringement in China to date.
The Court has provided a lesson about the dutiful filing of trademarks. New Balance has used both紐巴倫(Niu Ba Lun) and新百倫(Xin Bai Lun), but has never registered either as trademark in China. Zhou, however, is the registrant of the 新百倫(Xin Bai Lun) trademark in 2004 after New Balance was unsuccessful in opposing such registration in 2003. As such, New Balance’s use of the trademark is an infringing use despite (and because) of the recognition of the新百倫(Xin Bai Lun)mark in China to New Balance’s shoes instead of Zhou’s (e.g., New Balance’s shoes turn up first in search results for新百倫(Xin Bai Lun)).
The Court has provided a further lesson about the translation (and transliteration) of names to the local language. 新百倫 (Xin Bai Lun) represents a combination of新(Xin), a translation of “New” and百倫(Bai Lun), a transliteration of “Balance”. This was compared with紐巴倫(Niu Ba Lun), a complete transliteration of “New Balance” or新平衡(Xin Pin Heng), a complete translation of “New Balance.” As such, the specific use of the combinations of Chinese characters here contributed to the finding of infringement.
The lessons here are clear. Trademark owners should be aware when entering into a foreign market, that they could be unknowingly infringing on a locally registered trademark, given that many jurisdictions are “first-to-file” regarding trademark registration and often do not have an actual use requirement. In addition, proper care regarding the local language should be taken when filing for trademarks in the foreign country, with specific consideration being given when filing various combinations of the representation of the brand in the local language.