Recently, China's Supreme People's Court (SPC) issued a
final decision in a retrial trade mark infringement case,
overturning both first and second instance judgments, and affirming
that there is no issue of trade mark infringement for original
equipment manufacturer (OEM) products.
In Focker Security International v Zhejiang Yahuan
Lockset, the plaintiff was the owner of a Chinese registration
for the "PRETUL in oval" trade mark. The defendant, based
on a contract with its consignee, produced products bearing the
"PRETUL" logo for export to Mexico, where the consignee
possessed its own registration for the trade mark
The SPC held that it was not possible for OEM products being
consigned to Mexico and never entering the China domestic market,
to give rise to confusion among Chinese consumers as to the source
of those OEM products and those of the plaintiff. In other words,
the Defendant's use of PRETUL trade mark for export only did
not distinguish the source of goods.
In recent years, many foreign companies have seen trade mark
squatters in China preemptively registering their trade marks. In
some cases the local company has also recorded the trade mark with
Customs, which has resulted in the foreign company's OEM
products being seized at the border and/or with the overseas
company's Chinese partner being sued for infringement. China is
not a common law country and so the SPC judgment in this particular
case may not be relied on directly in all other similar legal
cases, but it does provide some guidance and direction for courts
around the country when deciding on similar cases. The SPC's
decision can of course be used by foreign companies as supportive
evidence when arguing for the release by China ports of OEM
products destined for overseas markets.
Soon after the SPC made its decision in the Focker
Security case, in another OEM case the Jiangsu Provincial High
Court ruled against the defendant and held that the OEM producer
had committed an act of trade mark infringement. In that case, the
plaintiff's trade mark was found to be well-known in China, and
the consignee's local registration in the export market was
only obtained after a lengthy legal battle with the plaintiff. In
the meantime, the defendant (the Chinese OEM producer) had been
involved in disputes with the plaintiff in China regarding use of
the mark on OEM products and had undertaken not to initiate such
use again. Based on these particular facts, the Court took the view
that the OEM producer had committed trade mark infringement as it
did not fulfill the reasonable attention obligation.
This later-decided High Court case had a different factual basis
to the SPC case, so it may not be regarded as relevant to OEM cases
beyond these particular facts and may not carry the same degree of
general probative value as the SPC Decision on the usual OEM
situations encountered by overseas rights holders. However,
attention should be paid to the fact that the use and fame of the
local trade mark, as well as the obligation of due diligence, may
also play a decisive role in the Courts' deliberations in
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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