Solicitors have claimed that a ‘record’ trade mark victory for sports brand New Balance in China will have a positive outcome for foreign companies seeking to protect intellectual property in the country.

The Suzhou Intermediate Court awarded the Boston, Masschusetts-headquartered firm RMB 10 million (£1.2m) after three local companies were found to have infringed its trademarked slanting ‘N’ logo.

Mark Owen, partner in the IP and media team at the London office of international firm Taylor Wessing, told the Gazette it was the highest award for a foreign company in a trade mark dispute in China.

’The court fully considered the time, online and offline scales of the infringement of the Chinese shoemakers. Both according to the actual loss suffered by the right holder, or the profits gained by the infringer, the damage compensation was considered to be above 10 million yuan,’ he said.

Carol Wang, a lawyer at Lusheng Law Firm, which represented New Balance, told Reuters that the decision ‘sends a strong and powerful message that should make it easier for foreign brands doing business here’.

Owen said the judgment is an example of an ’increasingly firm approach’ being taken by Chinese courts and that recent legislative reforms and court practice have significantly boosted brand protection and the ability of foreign companies to enforce their trade mark rights in China.

Efforts made by China to dispel its reputation for not respecting IP laws and for being a haven for obtaining counterfeit goods have included introducing specialised IP courts and re-drafting its trademark laws to be more favourable to brand owners.

Jill Ge, managing Associate in Allen & Overy’s Beijing office, said it was the second time a Chinese court has awarded damages of RMB 10 million in a trade mark infringement case but that the first was between two Chinese companies.

'Notably, the New Balance court also awarded attorneys' fees of RMB 800,000 (£94,000),' Ge said.

She added: 'We have recently seen a few brand owners, including Moncler, Hugo Boss and BMW, winning significant damages awards in China. The trend seems clear – if the evidence warrants, Chinese courts are increasingly willing to punish willful infringers and to compensate rights owners properly. The evidence in the New Balance case showed egregious, large-scale infringement, even after the entry of an interim injunction by the court.'

But foreign companies can still face problems operating in China.

Earlier this year the Gazette reported that law firms including Osborne Clarke, Norton Rose Fulbright and Squire Patton Boggs had been targeted by a local trade mark ‘squatter’. Squatters anticipate a mark or brand’s popularity and register a trade mark before the rightful owner is able to. They are prolific in China because the country adopts a first-to-file trade mark system. Under Chinese rules, the first person to file for a particular mark generally becomes its owner if their application is successful irrespective of whether they have used the mark in the past.

Former basketball star Michael Jordan was also targeted by a sportswear company which used the Chinese characters which read as ‘Qiaodan’. China’s top court, the People’s Supreme Court, eventually ruled in favour of Jordan last year after a lengthy battle.