After rounds of hearing on petition for injunctive relief in the recent unfair competition lawsuit, New Balance Athletics, Inc. (New Balance) v. New Barlun (China) Co., Ltd (New Barlun) and Shanghai Shiyi trade Co., Ltd (Shanghai Shiyi), Shanghai Huangpu People’s Court (Court) issued an order of behavior preservation, demanding New Barlun and Shanghai Shiyi to immediately stop producing and selling sports shoes using similar decorations to those of used by New Balance on both sides of sports shoes. Following the previous victory in a lawsuit against Shenzhen XinPingHeng Sports Products Co., Ltd (Shenzhen XinPingHeng) in which New Balance won over ten million RMB in damages awarded by the Suzhou Intermediate People's Court, this is the second time that New Balance obtained an interim injunction against its infringers regarding “N” decorations on both sides of the sport shoes.

The Chinese civil procedure law provides that interim injunction can only be granted when the plaintiff has relatively stable rights and it will suffer irreparable harm if defendant’s infringement is not immediately sanctioned. The two consecutive awards of injunctive relief along with the favourable judgment where New Balance’s claim for damages and legal costs of RMB 10 million was fully supported by the  Suzhou Intermediate People's Court has brought New Balance’s saga in defending its IP rights back into the limelight. It also reflects the trend of Chinese courts’ receptiveness in granting interlocutory relief, such as injunction relief, and awarding high compensation in providing adequate remedy to the right holders.

New Balance claims that they entered Chinese market in the late 1980s, after extensive  advertising campaign and diligent management, the “N” decoration has built close connection with New Balance sports shoes, and become the principal symbol of distinguishing the source of products. The “N” decoration is considered as the unique decoration being protected by unfair competition law, and has been affirmed by several effective judgements and administrative decisions. The trademarks registered afterwards should avoid this unique decoration of well-known products.

 

New Balance states that the infringement committed by New Barlun and Shanghai Shiyi closely resembles those considered in (2004) Hang Min San Chu Zi No. 393, (2012) Hu Er Zhong Min Wu (Zhi) Zhong No. 26,  in both cases such acts were determined as clear infringement on New Balance’s rights. By registering and acting under the guise of different companies, New Barlun and its affiliates have engaged in unfair competition acts for an extended period of more than 10 years, such recidivist acts are clearly malicious in nature.

New Balance claims that the infringing products by the two defendants have caused massive market confusion. If such behavior is not immediately prohibited, New Balance will suffer irreparable harm including economic loss, market share decrease and reputation damage.

 

In responding to New Balance’s petition for preservation, New Barlun claims that they are the lawful proprietor of the  registered trademarks “" (trademark No. 997335), “" (trademark No. 4236766), and “" (trademark No. 3954764).  As a result, licensing third parties to produce and sell footwear bearing the mentioned trademark is a legitimate exercise of its legal rights as a trademark owner. New Barlun also claims that the order of preservation is unnecessary given that they are not involved in the actual manufacture and sale of the sports shoes, neither did they gain any profits thereof.

In its defence, Shanghai Shiyi claims that its use of the registered trademark "" (trademark No. 3954764) is based on the license agreement it entered with the trademark owner and payment of license fee have been made. Shiyi also contends that its use other registered trademarks on the products has served the purpose of identifying the source of their products as from New Barlun 

 

Upon deliberation, the Court took the position that New Balance’s petition for injunction conforms to relevant laws. With the guarantee provided by New Balance, the Court ordered New Barlun and Shanghai Shiyi to immediately cease the manufacture and sale of sports shoes bearing similar ”" decoration on both sides of the shoes.

As shown in media reports, Shanghai Pudong People's Court is currently hearing another unfair competition case against New Barlun with an object amount of RMB 30 million (about USD 4.5million). We will closely follow the development of these two cases.