Trademark Disputes

There is no doubt that the trademarks issue is very important and popular in the press. More and more cases connected to trademark infringements are discussed in print and online publications. Trademarks have considerable effect on the effectiveness of business activity and profitability. That is why governments and companies are trying to ensure the maximum level of protection for brands to prevent them from being copied. In addition, Chinese companies pose a high level of risk for famous brands, because they often produce fake copies of goods and sell them for lower prices. The New Balance Company had to face such a situation on the Chinese Market. A New York Times article called “New Balance Wins $1.5 Million in Landmark China Trademark Case” provides a description of the case and its resolution. Thus, an analysis of trademark disputes in general and the New Balance vs. Chinese manufactures dispute in particular, based on the article “New Balance Wins $1.5 Million in Landmark China Trademark Case,” shows that proper trademark registration and trust in juridical procedures benefit intellectual property owners and the international business environment.

New Balance vs. China Case Analysis

There is no doubt that some companies try to infringe upon the trademark rights of famous and successful brands. Considering the fact that New Balance is a successful American sportswear company that has been on the international market for more than 100 years, the brand is very strong, reliable, and popular among its intended target audience (New Balance, 2017). Consequently, more and more companies strive to get the benefits of the New Balance, Inc. trademark. The article called “New Balance Wins $1.5 Million in Landmark China Trademark Case” provides a description of the situation that took place in China. Three Chinese manufactures of sport shoes, namely New Boom, New Barlun, and New Bunren, have produced low quality shoes using the same N logo as New Balance (Wee, 2017). The case demonstrates the differences in the legislation of the United States of America and China.

First of all, it is important to stress the fact that there is a considerable body of legislation regarding trademarks in both of the countries. The World Intellectual Property Organization describes a trademark as “a sign capable of distinguishing the goods or services of one enterprise from those of other enterprises” (World Intellectual Property Organization, n.d.). The organization stresses that trademarks all over the world are protected by the intellectual property rights. According to the United States Patents and Trademarks Office (2016), the definition of trademark is the following: “A trademark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others.” Thus, both the original country of the New Balance Company and international legislation protect the rights of trademark owners.

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The relationships that are discussed in the article are regulated by international and national organizations. The main regulation body of intellectual property in general and trademarks in particular is the World Intellectual Property Organization. It aims to regulate, protect and motivate the development of intellectual property in order to ensure innovation and creativity in different spheres of human life, including economic, technological, social and cultural development. As for the other economic and geographic regions, the United States Patents and Trademarks Office is the main official body connected to trademark laws in the USA, while the European Union Intellectual Property Office is regulating the sphere of intellectual property on the territory of the EU (European Union Intellectual Property Office, 2017). The main regulatory documents in the sphere of trademarks are the following: “Paris Convention, Madrid Agreement, Madrid Protocol, Nice Agreement, Vienna Agreement, Singapore Treaty, Trademark Law Treaty and Nairobi Treaty” (World Intellectual Property Organization, n.d.). Thus, the legislative protection and regulation of trademarks is quite fundamental and well-developed with different organizations and documents, both domestically and internationally, protecting the rights of New Balance.

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The events that took place in China conform to the Chinese and international legislation. On the one hand, Chinese legislation considers the registered trademarks of all three manufactures to be legal. However, at the same time, there is a strong similarity between the logos of the Chinese companies and that of New Balance Company, which is well-known all over the world. Considering the fact that the case is confusing from the legislative point of view, it was taken to court. As a result of the juridical procedures, the New Balance trademark rights were protected by the court’s decision. In addition, the company was remunerated $ 1.5 million for the losses  caused by New Balance trademark infringement.

As for the actual process of trademark protection, the company or the brand can protect their trademark rights after registering their intellectual property on the national or local level in the office that is engaged with such types of activity, just as the New Balance Company had done prior to the proceedings. Additionally, a set amount of money needs to be paid for trademark registration (World Intellectual Property Organization, n.d.). Trademark registration gives one an exclusive opportunity and right to use the trademark. In addition, there is an option to giving the right to do so to other business entities so they can use the registered trademark for a fee. There are different times for trademark registration and usage. Usually, a company can register a trademark for up to ten years. However, considering the fact that there were no legal business relationships between New Balance and the copycat Chinese companies, the American company managed to win the juridical case. 

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Analyzing the situation that took place regarding the trademark dispute, the conclusion can be made that the court’s decision is correct and very significant for future trademark infringement prevention. First of all, the New Balance trademark is a registered one. In addition, there is a motive for New Boom, New Barlun, and New Bunren to copy the trademark of New Balance Inc.; the company has high customer loyalty, a lathe global industry market share, and strong brand name. In addition, there are negative consequences connected to capturing the market share of the New Balance Company by infringing on its trademark. Chinese companies often produce fake, low-quality copies of well-known brands. Thus, due to the fact that New Balance has a registered trademark and a high level of goodwill, it managed to succeed in the juridical case and get the financial remuneration of $1.5 million, which is a considerable compensation

Effect of the Case on Future Cases

There are many cases similar to the one that transpired between the New Balance and its competitors in China. Any case of trademark right infringement has considerable negative consequences for the trademark owner. Due to the fact that the copies are usually of very poor quality, it worsens the customers’ brand perception of the trademark. In addition, such illegal copies may capture the market share of the trademark owner and, consequently, decrease its profitability level. Moreover, the juridical procedures against copycat companies require considerable time and financial resources that have to be withdrawn from the operational process. However, based on the analyzed case of the New Balance Company in China, in case one’s intellectual property rights are infringed, the company should go to court and protect its trademark.  

There is no doubt that the positive results of the case discussed in the article “New Balance Wins $1.5 Million in Landmark China Trademark Case”, namely the $ 1.5 million paid to the New Balance Company, are very beneficial for the company that experienced trademark rights infringement. The company managed to reduce the negative effect of trademark rights infringement and get a financial remuneration. However, it is also important to stress that the case will be a basis for prevention of similar cases in the future. The fact is supported by New Balance being a large and well-known company. Thus, the case has become known all over the world. There is a high probability that other companies will not dare to infringe upon intellectual property rights in the future. As a result, the international business environment will undergo certain improvements.

Conclusion

The issues of trademarks and protection of intellectual property rights are critically important in the modern business environment. It has a well-developed system of legislative and organizational regulations. The main method of protecting the trademarks of a company is to follow the procedure of trademark registration in national or international organizations. The trademark infringement case that took place in China recently and involved New Balance has become the precedent in intellectual property regulation. The company won $1.5 million because Chinese foot wear manufactures used an “N” logo similar to that of the American company. At the same time, the situation that took place has become well-known all over the world. It is possible that it will decrease the number of trademark disputes between other companies in the future. As a result, the general business environment will be improved.

 

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