Resources
Oct 07,2019
Light at the end of the tunnel - China’s SPC accepts a retrial application filed by New Balance in an invalidation action against copycats of its registered “N” logo.
Case Brief
New Balance, founded in 1906, is an American corporation based in Boston and
one of the world’s major sport footwear manufacturers, known mostly for its
high quality and high-performance sneakers with iconic “N” logo.
In 1983, New Balance registered with the China Trademark Office the trademark" “in
class 25. Another representation of the logo,"
"was registered in 2014, also in class 25
(hereinafter referred to as Cited Marks 1 and 2).
In the years following its first registration, New Balance began to encounter
many imitators, using the N letter on the side of their sneakers. The
defendants challenged the similarity between the use of the letter on their
shoes and New Balance’s trademark registered in 1983. New Balance replied by
citing article 5 of the Anti-Unfair Competition Law (1993 version), which
protects “trade dress” (unique decoration of a well-known product). The
Hangzhou Intermediate Court, the Court of Huangpu District, Shanghai and the
Second Intermediate Court of Shanghai recognized that the “N” logo used on both
sides of the New Balance sneakers constitutes “the peculiar trade dress” of
“well-known goods”, and ruled in favor of New Balance in judgments dated April
13, 2006, April 23, 2012 and December 28, 2012.
In 2010, Hainan Qierte Investment LLC filed applications for the registration
of two trademarks “ ” (Disputed Mark 1) and “
” (Disputed Mark 2) in class 25
and obtained their registration in 2012. Both marks were later assigned to
another company, Qierte Co., Ltd. in 2013.
On January 7, 2014, New Balance brought before the Trademark Review and
Adjudication Board (TRAB) an invalidation action against the two Disputed
Marks, citing Article 28 (similar marks on similar goods), Article 31 (causing
harm to other’s prior right) and Article 13 (well-known trademark) of the 2001
Trademark Law. New Balance also referred to the Anti-Unfair Competition Law.
On March 31, 2015, the TRAB ruled against New Balance, finding that:
● The Disputed Marks are not similar to the Cited Marks;
●The “N” logo does not constitute the unique decoration of well-known goods (“trade dress”) and
● The evidence adduced by New Balance
does not suffice to prove that the Cited Marks have become well-known prior to
the application date of the Disputed Marks.
New Balance appealed against the decision before the Beijing Intellectual
Property Court, who, on May 10, 2016, ruled in favor of New Balance, finding
that:
● The use of the Disputed Marks is
likely to cause confusion, taking into account the similarity between the signs
and the reputation of the Cited Marks;
● The evidence produced by Qierte
failed to prove that the Disputed Marks, through use, have become
distinguishable from the Cited Marks;
● Since the court has found that the
registration of the Disputed Marks is in violation of Article 28 of the
Trademark Law, there is no need to examine the plaintiff’s argument on trade
dress.
Qierte and the TRAB filed an appeal with the Beijing High Court.
On October 25, 2016, the Beijing High Court quashed the first instance
judgment, based on:
● There is a major difference between
the Disputed Marks and the Cited Marks in terms of overall visual effect, composition
and design style and
● The evidence on file is insufficient
to prove that, prior to the filing date of the Disputed Marks, New Balance’s
“N” logo constituted the peculiar trade dress of well-known goods.
On April 21, 2017, New Balance applied to the Supreme People’s Court (SPC) for
retrial.
In the retrial application, New Balance:
● cited the prior court judgments
finding that the “N” used by New Balance on its sneakers constituted a “unique
decoration of well-known goods” and claimed that the Beijing High Court was in
contradiction with such established findings and, therefore, had erred in the
application of the law, which is adverse to the creation of a stable
jurisprudence;
● showcased the customary practice how
commercial signs are used on sports shoes;
● emphasized the bad faith of Qierte
in its slavish copy of New Balance and argued that, when assessing the
likelihood of confusion between two marks, the courts should look at the “big
picture” and should take into account all facts of the case, including the bad
faith of disputed trademark registrant; and
● produced evidence of actual
confusion in the market.
In September 2017, the SPC formally accepted the application for retrial of New
Balance on the ground of possible improper application of the law. The
case is now pending for retrial.
Comments:
The SPC did not say more than “improper application of law”. It is therefore difficult to speculate on what exactly the judges had in mind.
Maybe the SPC wishes to use this case as a good opportunity to apply the new
direction taken in its Interpretation of the revised Trademark Law, issued in
2017, regarding how courts should assess the likelihood of confusion. The prior
practice of the Court was to compare trademarks, regardless of the context, and
determine whether they were similar and hence, whether there was a likelihood
of confusion. The new method, which the SPC clearly wishes to be applied in all
types of cases, is to “look at the big picture”, and take into account the
degree of similarity, the level of reputation acquired by the prior trademark,
the good or bad faith of the junior trademark applicant or user etc.
Another possible explanation could be that the SPC considered that the TRAB and the Beijing High Court erred when they ignored the prior judgements affirming the protection of the trade dress.
Contributors: Ms. Ming Xingnan & Ms. Ding Jinling