China – How Should Your Brand Fend Off Copycats?

What should you do when someone registers your trade mark before you?

You’ve invested time and money in building your brand, eventually it’s gained traction in your home market. Everything is looking upwards and now you are eyeing other countries to establish your brand’s presence. To your surprise, someone in another country has registered a trade mark very similar to your brand. In your eyes, they are blatantly selling copycats of your service / products.

How do we solve this?

The case of New Balance vs New Barlun in China provides some answers on how to handle situations like this. The case was particularly difficult because the copycat filed their application in 2004 long before China had taken off as a major market for foreign brands.

Timeline of the case:

• March 2004: New Barlun filed for the  in China in Class 25 for shoes.
• December 2011: the  trade mark was registered.
• March 2016: New Balance filed to invalidate the trade mark on the grounds that New Balance enjoys the prior rights. New Balance claimed that New Barlun violated the principle of good faith.
• December 2016: the Trademark Review and Adjudication Board (“TRAB”) held New Balance had not submitted sufficient evidence to establish its status as well-known mark in China before March 2004.
• October 2017: New Balance appealed to the Beijing Intellectual Property Court. The IP Court upheld the TRAB decision on the basis that the Beijing Higher People’s Court had already held New Balance was not well-known mark in China in 2004.
• September 2018: New Balance appealed to Higher People’s Court of Beijing and submitted further evidence regarding the well-known decoration of its brand and the injury to its copyright.
• September 2019: the Higher People’s Court of Beijing invalidated the trade mark on the basis of the new evidence.
• March 2021: the Supreme People’s Court dismissed an application for leave to appeal by New Barlun, The court held that prior rights enjoyed by well-known marks is of different nature to registered trade markss. Prior to the March 2014, New Balance had not filed an application for its well-known “N” mark, therefore giving New Barlun no grounds to appeal.

As a result of New Barlun registering so far back, it took New Balance over 5 years to invalidate the infringement registered trade mark which was held by New Barlun.

The reasoning of “insufficiency of evidence” reoccurred as an issue for New Balance. It is important to note the disputed trade mark was filed in March 2004, during a period where sportswear brands relied heavily on text-based advertisements in newspapers. Online shopping was not common in China at that time, shopping malls were still the major sales channel.

The evidence submitted by New Balance showed that before March 2004, the market in China was flooded with counterfeit New Balance shoes. New Balance took enforcement actions towards these infringements including customs enforcement and a range civil litigation. All these actions, combined with presenting further evidence (including evidence demonstrating that the well-known mark influenced the infringer), established the well-known status of the “N” mark owned by New Balance.

The rights of a registered trade mark and the prior rights of well-known mark are two independent intellectual property rights. The former is authorized by an administrative body while the latter depends on the reputation in the market in China. These two rights have different scopes of protection, duration and essential requirements for brand protection.

It’s crucial to understand these two nuances in China, as they are key to the protection of your brand in this important market.

What other problems does your brand need to prepare for?

Get insight and professional advice on the common issues and concerns businesses need to understand and may be facing when entering into China:

• Is your brand moving into new markets? Look (and search) before you leap! What obstacles do brands typically face when expanding overseas?
• Copyright Customs recordal – your brand’s saving grace? In the absence of trade mark rights, is Copyright Customs recordal an effective last-minute protection replacement?
• Losing control of your brand? What are the risks of entering the market in China with a local distributor?

For further information, please contact:

Xu Yi, Principal, Rouse
yxu@lushenglawyers.com