EFFECTS ON USE OF A TRADEMARK AS OEM IN CHINA

It has been disputed whether using a trademark as OEM with no selling/circulation of the products in the Chinese marketplace would constitute trademark infringement in China

China’s opening up policy has attracted many international brand owners to manufacture their products in China, called Original Equipment Manufacturers (“OEMs”). We will examine whether OEM amounts to trademark infringement or valid use to defend a non-use cancelation below.

OEM ≠ Infringement

It has been disputed whether using a trademark as OEM with no selling/circulation of the products in the Chinese marketplace would constitute trademark infringement in China.

We find some practical guidance by reference to some precedents, in particular the landmark PRETUL case (Supreme People’s Court - No. 2014 – 38). The Supreme People’s Court (“SPC”) re-tried the case, and ruled that use of PRETUL trademark as OEM does not constitute trademark infringement, on the grounds that the act of affixing the trademark to the manufactured goods is not deemed as valid use of a trademark because such act does not function as an identifier distinguishing the source of goods under PRC Trademark Law (Article 48).

Further, in the PRIME GUARD case (Ningbo Intermediate People’s Court - No. 2017- 02 – 4182), Ningbo Intermediate People’s Court also ruled that use of the trademark as OEM does not constitute trademark infringement, which mainly follows the reasoning in the landmark PRETUL case.

Moreover, in one of our client’s cases, our client’s OEM manufacturer was sued for trademark infringement by a local company which registered a trademark similar to our client’s trademark in respect of the same/similar goods in China. We have submitted the following evidence with Ningbo Beilun District Court in the first instance to support our case:

1. Registration Certificate of trademark (“Local Reg.”) in the country to which the Exported Goods were shipped;