On April 24, 2015, Guangzhou Municipal Intermediate People’s Court in south China’s Guangdong Province stunned Xinbailun Trade (China) Co., the local sales company for the well-known U.S. sports brand New Balance, with a $16 million verdict for violating the trademark rights of a Chinese individual, Zhou Yuelun (Zhou or plaintiff). In addition to the $16 million verdict, to avoid further consumer confusion, the Court ordered the Chinese affiliate of New Balance to stop using the “Xin Bai Lun” term to market its product in China and required them to publicly apologize for the harm caused to Zhou.
How and why did this happen? The source of the issue may emanate from China’s first-to-file system and the cultural and linguistic inconsistencies between the English and Mandarin languages. The Chinese Court’s decision highlights a significant lesson about use of Chinese character marks and the importance of filing early in China, irrespective of the marks’ use in China.