Balance tips in favour of foreign brands in Chinese IP

The recent decision of a Chinese court to award US sportswear company New Balance over £1m in damages for trade mark infringement is a reassuring sign for international companies looking to protect their brands in China.

This is the first award of this level for a foreign company and demonstrates the Chinese court's readiness to compensate foreign rights owners for infringement by Chinese infringers.

This approach is not entirely surprising given China's legislative reforms and the introduction of specialist IP courts to attempt to allay fears of bias and disrespect for IP laws amongst foreign businesses.

Trade mark 'squatting' is however still a real issue in China, as this is encouraged by China's 'first to file' system whereby the first person to file a mark will become the owner regardless of use. This decision indicates that the Chinese courts do impartially consider evidence of infringement and it is clearly hoped that this will extend to applications for invalidation against trade mark squatters.

Whilst this is the most notable award of damages to date for a foreign company, other brand owners have already been successful in China and have received significant awards. It therefore appears that brand protection is being taken more seriously in China and brands looking to do business there should be encouraged by this trend.