Original equipment manufacturing (OEM) is a business model whereby a trademark owner orders its products from a manufacturer, often located abroad, who manufactures and supplies products branded with the purchasers marks instead of his own marks. In China, which is often branded “the factory of the world”, OEM is big business. However, from a trademark law point of view, OEM in China has been a legal grey zone as it isn’t clear whether the mere affixation of a mark by a manufacturer, without any further use, constitutes trademark use in China.
The Trademark Law does not give any clear-cut answers on the issue, and the judicial and administrative practice on the issue have been inconsistent. Political, macro-economic, social and public interest factors have so far heavily influenced the jurisprudence, as have the specific factual circumstances of each case. You can find earlier newsflashes here: Nokia prevails over OEM in trademark infringement lawsuit, Made in China, the legal status of OEM, OEM Jiulide Shenda case , OEM Revisited, The Muji Case and China’s SPC finally takes a stand: pure OEM use in principle does not infringe upon Chinese trademarks.
In short, according to the most recent Supreme People’s Court (SPC) case on this issue, the Pretul-case, a trademark, affixed on OEM products exclusively designated for exportation does not function as a badge of origin of those products in China. In the Court’s opinion, the mark is therefore not used as a trademark in China, and, consequently, cannot infringe upon a Chinese trademark.
This article discusses some of the jurisprudence that followed this case, and that takes a slightly different approach from the SPC’s approach in Pretul.
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