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INTA Bulletin

July 1, 2017 Vol. 72 No. 11 Back to Bulletin Main Page

CHINA: Court Imposes Highest Statutory Penalty for Refusal to Abide by Injunction

On August 1, 2016, New Balance brought five defendants to Suzhou Intermediate People’s Court on charges of unfair competition for using New Balance’s unique trade dress—which consists of the letter “N” on both sides of sports shoes—without prior authorization. The five defendants included Shenzhen XIN PING HENG Sports Company, Jinjiang XIN NIU BAI LUN Shoes Factory, Putian BO SI DA KE Trading, Chaozhong ZHENG (an individual),  and Suzhou XIN PING HENG Shoes Shop.

The plaintiff also applied for an injunction to the court, requesting an immediate stop of all ongoing production and distribution activities. Suzhou Court held two injunction hearings—on August 10, 2016, and September 12, 2016—before issuing its decision on the injunction on September 13, 2016. The court ordered the defendants to immediately cease ongoing production and distribution of the disputed NEW BOOM shoes featuring the letter “N,” citing the following reasons: (1) the plaintiff submitted evidence to prove the “N” letter has been recognized as the unique trade dress of a famous brand; (2) the continuous activities by the defendants could incur irremediable damage if timely measures were not taken; (3) the plaintiff provided a financial guarantee; and (4) the implementation of the injunction would not injure public interest.

The full case was heard on April 11, 2017; however, the defendants refused to implement the injunction and continued with their production and distribution activities, despite the injunction verdict issued by the court. Consequently, the court decided to issue the maximum punishment against the defendants, ordering the highest statutory penalty in accordance with the Civil Procedure Law of China, in the total amount of RMB 1.7 million (approximately USD $260,000).

This is the first injunction case involving unique trade dress in an intellectual property matter handled by Suzhou Intermediate People’s Court, and also the first case in which this court ordered an injunction requiring the defendant to cease production and distribution.

New Balance Shoe (from the plaintiff)

 New Boom Shoe (from the defendants)

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