Tuesday, 25 September 2012

New Balance wins shoe battle with Bestseller: a lesson in enforcement

Author: Hanne Weywardt (MAQS Law Firm, Copenhagen)

New Balance v Bestseller, Danish Supreme Court, 30 May 2012

Journal of Intellectual Property Law & Practice (2012), doi: 10.1093/jiplp/jps135, first published online: 17 September 2012

The Danish Supreme Court affirmed the ruling of the court of first instance, awarding New Balance DKK 2.5 million in damages and around DKK 500,000 in case costs for unfair competition and trade mark infringement.

Facts

The Bestseller products, ‘JJ Slick’ and ‘JJ Stan’, were found to be close imitations of the New Balance product line under the brand PF FLYERS, these being the models ‘SGrounder Hi’ and ‘Number 5’, each of which came in several styles. Bestseller had sold 7,000 pairs of ‘JJ Slick’ and 12,800 pairs of ‘JJ Stan’, these sales being spread across most of the countries in Europe. One model, ‘JJ Slick’, was purchased by Bestseller from a Chinese supplier, whereas ‘JJ Stan’ was designed by an in-house designer with Bestseller.

Images of the products in question:

NEW BALANCE / PF FLYERS

BESTSELLER JJ SLICK

NEW BALANCE/PF PFLYERS – BESTSELLER JJ STAN

NEW BALANCE/PF PFLYERS – BESTSELLER JJ STAN

Additionally, Bestseller had distributed 290,000 copies of an advertisement magazine in connection with their marketing of its products in which there was a picture of a sticker art wall depicting New Balance's trade mark PF FLYERS. This was found to constitute a trade mark infringement, despite the argument from Bestseller that a picture of a sticker art wall which was not prepared or manipulated by Bestseller was not used in direct correlation with the shoe products in question and did not constitute trade mark use.

Analysis

The Supreme Court decision is of principal importance. If you look back at case law in recent years within this field, it would be difficult to predict the outcome of Supreme Court rulings when it comes to the question of infringement. However, this Supreme Court ruling clearly states that you have to be very careful in not making a business out of other companies' creations and creativity or riding on another's marketing efforts.

Practical significance

The case is a good example of highly effective enforcement in order to stop an infringement. Bestseller's products were put on the market in late September 2006. New Balance took action by filing a request for a combined procedure with the bailiff's court for preservation of evidence and injunctive relief. The goods were off the market by mid-December, still rendering New Balance a substantial amount in compensation. From a Danish perspective, the amount of compensation is historically high. This can be seen as a result of the implementation of the EU Enforcement Directive (2004/48) by which the law in Denmark was changed with effect from 1 January 2006. When calculating the amount of damages to the right holder, the court should now take into consideration among other things the unfair profit of the infringer.

Bestseller had made an unfair profit of DKK 1.7 million and with the recent ruling awarding New Balance a considerably higher amount, the ruling confirms that it is not worthwhile violating the rights of other businesses.

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