COURT CALL IS GOOD FIT
China ‘parasite’ owes New Balance
New Balance has scored a landmark legal victory against a Chinese “parasite” brand copying its sneakers, winning the largest award ever for a U.S. company in a trademark infringement case in China.
The ruling requires three shoemakers behind the New Boom brand — Zheng Chaozhong, Xin Ping Heng Sporting Goods Ltd. Co. and Bo Si Da Ke Trading Ltd. — to pay nearly $1.5 million in damages for infringing on the Boston athletic company’s signature slanting N logo.
“This is the first time that damages awarded are triple the statutory maximum,” said Daniel McKinnon, New Balance’s senior counsel for intellectual property and global brand protection.
Parasite brands differ from straight-out counterfeiters that take on a legitimate company’s name — they change the “host” company’s name, but copy everything else about their products and even adopt their back stories. They’re the “new plague” on the Chinese market, according to McKinnon.
“The epidemic of the parasite brand is being faced by nearly every famous brand that sells within China,” he said. “This victory has given us a renewed confidence in our aggressive (intellectual property) protection strategy within China.”
But though the victory in Suzhou Intermediate People’s Court represents a shift in Chinese trademark enforcement, McKinnon cautioned that “we’re not all the way home yet.”
“It’s a step in the right direction, but do I believe that the damages award is enough to deter counterfeiters from engaging in these illicit activities? Absolutely not,” he said. “It’s not where it needs to be yet. A lot of these counterfeiters make millions and millions of dollars on counterfeit products.”
New Boom, which had been operating for about two and a half years, has the option to appeal the verdict.
Pursuing straight-out counterfeiters, depending on the volume of counterfeit products they produce, is easier in China, which has two agencies that work fast in confiscating and destroying counterfeit products, according to McKinnon. But those agencies do not handle parasite brands.
“Which is why it’s so tricky to go after them,” McKinnon said. “It’s beyond the scope of their authority to make a judgment call as to whether or not that brand is infringing upon the IP rights of the … authentic brands. You have to go to the courts.”
In April, New Balance won a $500,000 award in its court case against New Bunren, another Chinese parasite brand that is appealing the decision. It also has a case pending against China’s New Barlun brand.