Will You be the Next “New Balance”?

New Balance(“NB”), the famous U.S. sneaker brand was sentenced for 98 million RMB for the infringement of “新百伦” trademark, which demonstrated a giant’s tragedy due to “Reverse Confusion”. In fact, NB is not the only giant, Pepsi (“蓝色风暴” trademark infringement case) and Castel (“卡斯特” trademark right dispute) have also encountered such tragedy in China.

The key reason for the giant’s tragedy is “Reverse Confusion”.

“Reverse Confusion” occurs when a junior user (normally a big scale company with higher reputation) adopts a registered trademark already in use by the senior user (normally a small scale company with lower reputation), which make confusion on both parties’ products to the consumers. In order to prohibit those big scale companies to infringe the small scale companies’ right on those registered trademark, which might reduce the function and value of those registered trademark, the relevant laws have prescribed “Reverse Confusion”.

For those well-known foreign brands which are trying to enter the Chinese market, “Reverse Confusion” is just as important as “anti-counterfeit”, and “anti-free ride”. Otherwise, you might be the next “New Balance”.

Generally speaking, in order to prohibit “Reverse Confusion”, there are several aspects shall be taken into consideration.

Firstly, the company shall investigate the registration status of the relevant trademarks in China beforehand. Before it going to develop the Chinese market, it could conduct an investigation on the registration status of the relevant brands. If the relevant brands have not been registered yet, it shall apply for registration as soon as possible, especially for the Chinese version of those brands. Due to the translation techniques (transliteration, translation, etc.), it would be better to register the joint trademark. If the other party has registered the relevant brands, the company could apply different measures based on the different situations, including:

(1) To avoid using other party’s registered trademark or similar ones;

(2) If the other party has registered a trademark, which constitutes a reproduction, imitation or translation, liable to create confusion, of another’s well-known trademark not registered in China, which is the subject of an application for registration for identical or similar goods shall be refused, and its use shall be prohibited. Then the company (the well-known trademark owner) could make the corresponding claim; or

(3) To purchase the registered trademark with a relevant lower price while such trademark has not been exposed much, if necessary.

Secondly, the company should update its trademark strategy timely. In the development of a brand, the company may have to produce, sell new items. While the company is developing the new items, the relevant trademark shall be registered for the relevant categories in advance.

Last but not least, in order to avoid any disputes by using other companies’ trademark, brand or specified title, the company shall regulate and manage the sales department or distributors by using the relevant brands in the promotion and sale.