(Publ. 29 AUG 2017) The American shoe manufacturer New Balance has won a highly significant trademark case in China. A court near Shanghai has sentenced three Chinese companies to pay $1.5 million in damages and legal costs after committing trademark infringement in the New Balance’s “N” logo. According to the New York Times, the damages are the highest ever granted to a foreign company in China for trademark infringement.

New Balance is an American shoemaker founded in 1906 and has a large number of trademark registrations globally – including its wordmark and a variety of logos. The company’s “N” logo is possibly the best known.

The infringement case was brought against three Chinese companies that produced and sold shoes under the brands New Boom, New Barlun and New Bunren. The court, the Suzhou Intermediate People’s Court outside Shanghai, ruled that the three prosecuted companies had infringed New Balance’s registered intellectual property rights and engaged in ‘free-riding’. The court also found that three defendants had “taken market shares from New Balance” and “drastically damaged New Balance’s business reputation”. For this, they were ordered to pay a total of $1.5 million in damages and legal costs. The decision can be appealed.

Many people are saying that the court ruling is not just a victory for New Balance, but for all foreign trademark owners in China. Even though the damages cannot be measured against damages in the United States, for instance, it is, according to the New York Times, the largest trademark infringement award granted to a foreign company in China.

The verdict is also in line with the Chinese Government’s stated decision to further combat piracy and respect registered intellectual property rights. The high level of damages is also a result of the new Chinese trademark law from 2014 which drastically increased the potential maximum amounts for damages.

We see a positive development for foreign trademark owners in China. As Chinese companies have begun to produce more advanced products and have gained valuable intellectual property rights of their own, the Chinese government has been working to strengthen its trademark law by increasing the damages awarded to companies in infringement cases and by fining counterfeiters.