Knock Off Products.

The United States and China are big trading partners, but underneath it all there is a simmering tension between the two nations, especially when it comes to intellectual property. China has been accused, quite often, of not respecting IP and of manufacturing “knock offs” of American consumer goods.
Recently, a Chinese company sued an American company for trademark infringement. The company on the receiving end of the lawsuit was none other than shoe giant, New Balance. The company, headquartered in Boston, manufactures roughly 70% of their shoes in China.

Footware Manufacturer.

Chinese businessman Zhou Lelun from Guangdong Province filed a trademark infringement suit against the Chinese sales company that distributes New Balance shoes. The lawsuit contended that New Balance was using the same name, in translation, as his company (Xinbailun or 新百伦), for which he received a trademark for in 2008. The company is itself a footware manufacturer.
When Zhou Lelun was awarded his trademark in 2008, New Balance appealed the trademark ruling to the People’s Court in Guangdong. The appeals court ruled in favor of Zhou Lelun even though New Balance was using the trademark long before he applied for it.

New Balance Ruling.

Although the court upheld the ruling against New Balance, they did decrease the original damages given to Zhou Lelun from $98 million RMB (Ren Min Bi) to $5 million RMB, the equivalent of $750,000 U.S. dollars for damages he suffered. The court scolded New Balance for using the trademarked name knowing that it was registered to Zhou Lelun since 2008. In the end, New Balance could do little but accept the People’s Court verdict.
Amy Dow, a spokeswoman for New Balance issued a statement which read as follows: “This ruling is particularly concerning as it is contrary to the rest of the developed world’s understanding of Intellectual Property.”
There’s no doubt that doing business in China can be a confusing and challenging task for foreign companies, but access to the Chinese market makes these challenges simply the cost of doing business.
What are your thoughts?
Until next time, I’m Attorney Francine Ward helping you protect what’s yours. Join my conversation on Facebook, Twitter, or in one of my LinkedIn groupsGoogle+ Circles.

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