In a decision dated September 26, 2023, China’s Supreme People’s Court (SPC) affirmed a decision for trademark infringement and unfair competition against Jiangxi New Balance Leading Sporting Goods Co., Ltd. (与上诉人江西新百伦领跑体育用品有限公司) and Guangzhou New Balance Leading Shoes Co., Ltd. (广州新百伦领跑鞋业有限公司).  The SPC calculated damages as 29.04 million RMB and 1 million RMB for attorney and related fees.

Per the SPC, several notarized pieces of evidence showed that the defendants’ executives admitted that they have 5,000 or more than 6,000 stores and in 2018 and that annual sales exceeded 1 billion RMB. In 2019, output value was more than 3 billion RMB.  In 2020, total sales was 2.8 billion RMB, of which 2.2 billion RMB was branded product. Accordingly, the SPC calculated annual sales of branded product in the relevant timeframe as 1 billion RMB × 2.2 billion/ 2.8 billion = 785.7 million RMB.  Neither defendant provided counter evidence.

According to New Balance’s audit report, New Balance’s average operating profit margin was 9.24% and the SPC used that as the defendants’ operating profit margin. The SPC did not have an accurate measure of the percentage of sales accused of infringing and used 20%.  Accordingly, damages were calculated as: 785.7 million RMB × profit margin of 9.24% × infringement period of 2 years × 20% of products infringing = 29.04 million RMB.

For reasonable expenses, New Balance claimed 2,049,323 RMB in claims between the trial and appeal and SPC determined about half of that was reasonable.

The Case No. is (2022) 最高法民终146 号 and the decision, courtesy of 知产部, is available here (Chinese only).