The Trademark laws of China have undergone revision three times,
the most recent one being in 2013. In addition to this, China is
not a common law country therefore; the Doctrine of stare decisis
(precedents) is not followed by the Courts leaving room for
uncertainty on the legal position on various issues. One such issue
is whether the use of a mark for Original Equipment Manufacturer
(OEM), exclusively for export, should be construed as 'use'
in China. The Supreme People's Court of China has provided some
clarity on this issue in its recent decision.
In the case of Focker v Ya Huan, Focker Security
International Ltd (hereinafter, Focker) a Hong-Kong based company
filed a suit against Zhejiang Ya Huan Lockset Co Ltd (hereinafter,
Ya Huan) for infringing its registered trademark 'PRETUL'
and its oval shape. Ya Huan claimed that the mark 'PRETUL'
was being used by them for the OEM pack locks that were processed
for the Mexico based company – Chu Bo and were also meant to
be exclusively exported to Mexico. The Courts of first and second
instance ruled that Ya Huan was infringing Focker's trademarks
and was liable to pay 50,000-80,000 Yuan as compensation to Focker
for economic losses. The Supreme Court however, was of a different
opinion; it held that since the product manufactured by Ya Huan had
never been and was not even intended to be sold in China there
could be no likelihood of confusion between the OEM products and
products of Focker. In light of these observations it was held that
there was no trademark infringement committed by Ya Huan.
China is a manufacturing hub for a large number of companies in
the world and therefore, this decision (though not binding) is in
the interest of such companies that give their orders for
manufacturing to Chinese companies. Therefore, for the companies
that do not intend to enter the Chinese market but only use it as a
center for manufacturing, this decision allows them to continue
their activities without allegations of trademark infringement.
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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