Towards a new balance in trademark infringement damage awards in China?

New Balance Trade (China) Co., Ltd. v Shenzhen New Balance Sporting Goods Co., Ltd.

 

18 August, 2017, the Suzhou Intermediary People’s Court in the first instance decided that three defendants (Zheng Chaozhong, Xin Ping Heng Sporting Goods Ltd Co, Bo Si Da Ke Trading Ltd), who manufactured sporting shoes under the name New Boom infringed the trademark logo N and relied on the “malice of free-riding”, “confused a large number of consumers”, “seized market share from New Balance” and “drastically damaged the business reputation of New Balance”, and that the defendants have to pay RMB 10 million (around US$ 1.5 million) in damages and legal costs, according to the NY Times that said it had received a copy of the court decision, see here.

 

Drawing Michiel Tjoe-Awie

 

The timing, shortly after President Trump ordered an investigation into China’s IP protection and enforcement, might have influenced the court outcome. Then again, in a trademark dispute between a Chinese plaintiff Meichao Group and Chinese defendant Beijing Xiujie Xinxing Building Materials, the Beijing IP Court had already awarded a damage award of RMB 10 million, see here. The reason was that, conform Article 63 Trademark Law, after the plaintiff had made reasonable efforts to prove the amount of the actual damages, the burden shifts to the defendant. In Meichao Group v Beijing Xiujie Xinxing Building Materials, the defendant refused to provide the required evidence.

 

On September 13, 2016, in New Balance Trade (China) Co., Ltd. v Shenzhen New Balance Sporting Goods Co., Ltd., the Suzhou Intermediate People’s Court trial, confirmed that the defendant’s use of the N on both sides of footwear identifying it as New Balance shoes, is a violation of the plaintiff’s well-known trademark logo, and the court provided an injunction to the defendant to immediately production and sales of shoes with on both sides the use of N to identify the brand of the footwear. See Li Disen’s article for China IP here (Chinese).

 

Despite the court’s injunction, the defendants refused to abide by the ban. This has resulted in the relatively generous damage award and compensation of the legal costs.

 

In other words, after a complaint by the plaintiff, process behaviour of the defendants which has an adverse influence on the plaintiff seems particularly relevant for the height of the damage award the court is willing to assign to the plaintiff.

 

In regard to statutory damages, the statistics show at the Beijing IP Court that the average compensation granted has grown from RMB 80,000 before 2014 to RMB 450,000 in 2015, see here.

 

 


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