Yet another foreign company has lost at court in China on a high-profile copyright case — and this time they are the ones being prosecuted as the copycat.
The suit was filed last year by Chinese businessman Zhou Lelun against the Chinese sales company of the American footwear giant New Balance for using the trademark “Xinbailun” (新百伦). In Chinese, “Xin” means “new,” while “Bailun” is a phonetic translation of “balance.” Zhou applied for a trademark on the name back in 2004. It was issued to him in 2008 and he has been selling his own footwear products under that trademark ever since.
New Balance, founded in Boston in 1906, tried to fight Zhou’s trademark claim at the time, arguing that it was a clear infringement of their intellectual property rights and that they had been using the trademark even before Zhou filed. China’s Trademark Office was not won over by New Balance’s arguments, and neither were the courts in Guangdong.
Last year, the Guangzhou Municipal Intermediate People’s Court ruled in favor of Zhou, requiring that New Balance pay him 98 million RMB in damages, equal to half of the profits that New Balance earned during its time of infringement, SCMP reports.
New Balance tried to appeal the decision to the Guangdong Higher People’s Court; however, the court dismissed the appeal last Thursday. But, it did decide to reduce the amount of compensation to be paid to just 5 million RMB, which the court said was more representative of Zhou’s actual damages.
In the end, the court actually used New Balance’s appeal to the Trademark Office against the company, arguing that New Balance had known that Zhou owned the rights to the “Xinbailun” trademark and had still used it in bad faith.
“This ruling is particularly concerning as it is contrary to the rest of the developed world’s understanding of Intellectual Property,” Reuters quotes New Balance spokeswoman Amy Dow as saying.
But when in Rome, do as the Romans do. As Apple has also found out, unlike in the US, China’s copyright laws seem to focus on protecting registered trademarks and does not recognize unregistered trademarks in use. Let this be yet another lesson for foreign companies looking to do business here. You win some, you lose some.
By Amy Yang