Judicial authorities differ on Trademark Law interpretations

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Regardless of the different opinions on “made in China”, the “OEM plus export” business model has developed rapidly in China. OEM (original equipment manufacturer) is a model where an overseas company engages a Chinese enterprise to do production and affix representations of the client’s trademark for re-export to the originating country for sale. Due to certain commercial advantages, enterprises in China have become the favoured suppliers for overseas brands, while simultaneously giving rise to a series of legal issues including trademark infringements.

薛敏 Nikita Xue
薛敏 Nikita Xue

In the past 10-20 years, China has witnessed quite a few of these types of cases, and from ensuing judgments it can be seen that judicial authorities lack uniform criteria for coming to their findings. In fact, the current Trademark Law, Implementing Regulations for the Trademark Law and related judicial interpretations also do not expressly specify whether infringement is constituted when the trademark used by an OEM is identical or similar to a trademark registered in China by a third party, giving rise to certain judgments that have been diametrically opposed. The focal point lies in whether OEM production constitutes trademark use for the purposes of the Trademark Law. The main legal basis when judicial authorities and administrative authorities hear cases are article 57 of chapter 7, and article 48 of chapter 6 of the Trademark Law, the so-called “gold standards” of the Trademark Law.

The 2001 “NIKE” trademark dispute between Nike and a certain clothing manufacturer in Jiaxing, and the “NOKIA EGYPT” trademark dispute between Nokia and a certain technology company in Wuxi, show that courts in Guangdong and Shanghai hold a positive viewpoint in respect of the finding of OEM infringement. The courts held that the territorial nature of trademark rights causes the trademarks of companies from outside the territory not to be subject to the protection of Chinese laws, and OEM acts constitute trademark use.

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Nikita Xue is a partner at HongFangLaw. She has practical experience in rights securing, brand protection and dispute resolution. She can be contacted at +86 21 6258 1929, or by email at nikita.xue@hongfanglaw.com