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China’s highest court has finally clarified whether an OEM is guilty of trademark infringement if goods manufactured in China are only offered for sale overseas. Jeff Wang of DLA Piper reports on the practical consequences.
On November 26, 2015 a decision by China’s Supreme People’s Court on a trademark infringement case settled the long-running debate over the nature and legitimacy of trademark use by original equipment manufacturers (OEMs) in China.
The case, Focker v Yahuan, was in relation to the trademark ‘Pretul’, which was used on OEM padlocks exported to Mexico from China; there were no sales in China. The Supreme Court reasoned that in the OEM business structure, ‘Pretul’ only functions to distinguish the origin of goods in the export market of Mexico. In China, attaching ‘Pretul’ on the padlocks for export is just providing the necessary technical and material preparations for the functioning of the trademark in Mexico. The court therefore ruled that attaching a symbol during the manufacturing by an OEM for export does not constitute “use” of a trademark, and therefore cannot be considered as infringement of a registered trademark in China.
For brand owner purchasers, the ruling will bring more freedom for exporting products they have ordered and manufactured in China. However, the brand protection battle will not end there and merely manufacturing in China is still far from enough. The new ruling means that companies now need to seek to better protect themselves in the long run. Whether or not a company’s products are intended for sale in China, securing an early trademark registration at home in China and in the export market is always suggested to prevent marks being hijacked by OEMs or third parties.
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Jeff Wang, DLA Piper, Green Yingkang v Zhenhe, AIC, trademark infringement, OEM, trademark, Focker,