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Signs of progress by the Chinese court system in addressing trademark infringement?

China is notorious for hosting local companies who capitalize upon the goodwill of major brands, copying everything from a company’s trademark to the designs and styles of the company. 

A telling example of this piracy is the Landwind X7 produced by Jiangling Motors which is nearly identical in appearance to the Land Rover Range Rover Evoque.  See example here.  Not only is the trademark “Landwind” very similar to “Land Rover” but the overall design of the vehicle is virtually indistinguishable from the Evoque.  Notably, the Chinese vehicle is priced at about 1/3 of the cost of the Land Rover. Jaguar Land Rover sued Jiangling Motors in China in 2016, claiming copyright and unfair competition and the case is believed to be still pending.

The country has long been criticized for failing to crack down on local companies who engage in this practice of brand piracy.  Historically, Chinese proceedings have been slow, damages low, preliminary injunctions hard to get, and the results inconsistent – doing little to dissuade infringers and presenting problems for foreign companies who hope to take advantage of the enormous Chinese consumer market.  This is painfully obvious in Jaguar Land Rover’s case. 

Fortunately, in May 2014 a new Chinese trademark statute went into effect which brought some improvements, such as expanded coverage for foreign brand names that might not be registered with the Chinese government and a modification of the trademark infringement standard which aligns more closely with the United States’ likelihood-of-confusion analysis.  In addition, statutory damages were increased and punitive damages are now available in certain cases.

In what hopefully is a reflection of this law change, in June of this year Under Armour was awarded $300,000 in damages and an injunction against a company called “Uncle Martian” that used a “UM” design similar to Under Armour’s “UA” logo.  More recently, in August the Chinese court awarded New Balance a sizable damage award in a victory against three Chinese firms, namely, Zheng Chaozhong, Xin Ping Heng Sporting Goods Ltd. Co., and Bo Si Da Ke Trading Ltd., who sold similar products under the name “New Boom” using a similar stylization to New Balance’s logo design.  In that case, New Balance was award approximately $1.47 million.   While these damage awards are less than what you typically may see in the United States, they are significant for China and a positive sign for foreign entities looking to enter the Chinese market.

However, caution is still warranted.  Unlike the United States, in China a trademark is awarded to the first company to file for registration of the trademark regardless of whether it is actually in use and often without requiring any reason for filing.  In comparison to the $1.47 million win by New Balance, just a few years ago and after the new Chinese statute went into effect - in April 2015 - a Chinese court fined New Balance around $16 million after it lost a lawsuit to a man who had registered the trademark for the Chinese name of New Balance. 

DISCLAIMER: The information provided is for general informational purposes only. This post is not updated to account for changes in the law and should not be considered tax or legal advice. This article is not intended to create an attorney-client relationship. You should consult with legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.

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