Docket No.: 3893, second instance (终), civil case (民) , (2017) Hangzhou Intermediate People’s Court (浙01)

Lower Court Docket No.: 296, first instance (初), civil case (民), (2016) Hangzhou Railway Transport Court (浙8601)

SUMMARY OF THE ARGUMENT

Conventionally, the right to exclusive use of a trademark and the right to exclude others’ use of it are conferred at the same time. However, the effective date of the right to exclude others’ use through opposition proceedings is the date when the registration of the trademark is accepted, so the trademark owner can’t claim the right to exclude others’ use from the date when its right to exclusive use of a trademark becomes effective.

Trademark rights and well-known product-specific decoration rights (decorations with certain influence) belong to different types of intellectual property rights. The well-known product-specific decoration rights that have been formed before trademark registration and have continued for many years are extended after trademark registration is approved. Right holders can also enjoy the unique decoration rights and trademark rights of well-known products that have been formed in advance.

The determination of the amount of statutory compensation depends on the comprehensive consideration of the subject of rights, the object of rights, the subject of infringement. In the case where the above factors are all at a very high level, the statutory maximum compensation amount can be selected to provide the right holder with sufficient judicial relief.

STATEMENT OF THE CASE AND FACTS

NEW BALANCE TRADING (CHINA) CO., LTD.,

Plaintiff-Appellee

v.

QIERTE CORPORATION LTD.,

NEW BUNREN (CHINA) SPORTING GOODS CO., LTD.,

HAN MANYI,

Defendants-Appellants

New Balance Trading (China) Co., Ltd. (“New Balance China”) was an authorized representative agent of USE-based company New Balance Athletic Shoe, Inc. (“New Balance”) (later known as New Balance Athletics, Inc.) in China. On March 14, 2007, New Balance filed an application to register the "" trademark under Class 25. On November 1, 2007, New Balance China was authorized to use "" and other related logos. On August 6, 2010, the “” trademark was published for opposition purposes. After the pre-grant opposition proceeding, administrative litigation, and other procedures, the Beijing High People's Court ruled on August 17, 2016 that the “” trademark could be registered.

The sneakers sold by Han Manyi bore an "N” logo similar to the "" trademark. The manufacturer of the sneakers was Qierte Corporation Ltd. (“Qierte”) and the distributor was New Bunren (China) Sporting Goods Co., Ltd. (“New Bunren”). New Balance China claimed its right to exclusive use of the registered trademark and decoration rights. New Balance China filed a lawsuit with the Hangzhou Railway Transport Court against the three above-mentioned defendants for infringing on its "" mark, calling for 4.9 million yuan in damages.

The court held that the "" logo born on the New balance sneakers was a well-known product decoration. The alleged infringement mark was different from the registered trademark "" of Qierte and similar to "" of New Balance China, which constituted unfair competition. When the right to exclusive use of a trademark is conferred through an opposition proceeding, the effective date of the trademark right is the end of the three-month proceeding. The infringement New Balance China accused the three defendants of before August 17, 2016 was of its decoration rights. This claim was justified. After August 17, 2016, things were different. Firstly, decoration rights and trademark rights were separate types of intellectual property rights. And the object of the rights may involve multiple intellectual property rights at the same time. Secondly, trademark rights and decoration rights constitute the requirements, formation time, right object, scope and duration of protection, intensity of judicial protection, etc. are all inconsistent. Again, granting the same logo with prior decoration rights and subsequent trademark rights does not aggravate the infringer’s infringement liability, but is also conducive to maintenance the mark identifies the brand value that has been acquired and the legitimate rights and interests of the right holders to protect the interests of relevant consumers. Generally, it is no longer appropriate to apply a the general law to determine the behavior that can be regulated by a special law. Therefore, New Balance China can’t claim trademark infringement and unfair competition infringement for the alleged infringements committed by the three defendants since August 17, 2016.

With all the facts taken into account, the court ordered the three defendants to immediately stop the infringement and the two defendants Qiert and New Bunren to pay  plaintiff New Balance China 3 million yuan for its economic losses and other contingent costs and the third defendant Han Manyi to pay the plaintiff 5,000 yuan for its economic losses.

New Balance China, Qierte, and New Bunren refused to accept the decision and appealed to the Hangzhou Intermediate People's Court. The court dismissed the appeal and upheld the original decision.

ANALYSIS

This case involves more complicated conflicts of rights and laws. It is the first case that the court actively explores the application of prior well-known commodity-specific decoration rights (decorations with certain influence) and trademark rights. At the same time, this case is also the first effective intellectual property case of New Balance obtain the statutory maximum compensation in China. The court vigorously maintains the brand value of the "" logo through top compensation, purifies the business environment in the market, and fully demonstrates the judicial concept of intensifying intellectual property protection and equal protection of the legitimate rights and interests of Chinese and foreign parties.

For the first time, the case dives deep into whether the decoration rights a well-known product was entitled to still exist after the registration of its trademark is accepted. And the connotation and extension of the decoration rights and the trademark rights has been actively explored. The prior decoration rights of "" and the subsequent trademark rights of "" are consistent with existing laws and relevant judicial precedents. Therefore, the case has positive reference significance for the handling of similar cases in the future.