The decision is part of a case brought by Nike against Cidesport, a company which owns rights to the use of the word 'Nike' in Spain.
As early as 1932, Cidesport registered a trade mark in Spain consisting of the image of a well known sculpture, and a small caption containing the word 'Nike'. The company did not use the mark for decades. In the 1980s, Cidesport became licensee and distributor for Nike in Spain.
In 1990, Nike obtained registration for its well known mark in Spain. In the same year Cidesport, which marketed stockings and socks under the Nike mark, extended its registration to include sportswear. At that point the US giant terminated its licensing agreements with Cidesport and sued Cidesport in the US for trade mark infringement.
Cidesport, on the other hand, filed a counter-suit in Spain, and also applied to have Nike's Spanish trade mark registration cancelled. In retaliation, Nike counter-applied in Spain to have Cidesport's trade mark revoked.
The dispute ended in 1999, when the Spanish Supreme Court asserted Cidesport's right to use the Nike mark in Spain. The ruling, however, allowed the US company to use the Nike name and its swoosh logo to market shoes in Spain, because Cidesport does not manufacture footwear.
The latest dispute arose from the fact that Cidesport manufactured its own Nike branded goods in China, where the US giant has registered its Nike mark.
Following a complaint by Nike, a Chinese court has apparently ruled that not only the selling, but also the manufacturing of Cidesport's goods is breaching the country's trade mark laws, even though the company planned to sell the goods solely in Spain.
Cidesport is reportedly planning to appeal the ruling.
The case has raised interest among western manufacturers wanting to protect their intellectual property in China, where many fake goods illegally bearing their marks are manufactured.