China's SPC finally takes a stand: pure OEM use in principle does not infringe upon Chinese trademarks


After years of controversy surrounding the legal status of original equipment manufacturing ("OEM")1, China's Supreme People's Court has finally handed down what may become a landmark judgment in the Focker v Ya Huan2 case.


The controversy regarding the status of OEM infringement initially arose because the Trademark Law does not give any clear-cut answers on the issue, and the judicial and administrative practice on the issue have been - somewhat deliberately - 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. 

In short, in this case, the SPC ruled that a trademark, affixed on OEM products exclusively designated for exportation, where the person who ordered the goods has a valid trademark, 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. Whilst the decision is intended to be fact specific, the concern is it will become widely applied.

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[1] OEM (short for 'Original Equipment Manufacturing') is a process whereby a manufacturer produces another company's product under that latter company's own name and branding.

[2] Focker Security Products International Limited (莱斯防盗产品国际有限公司, "Focker") v Pujiang Ya Huan Locks Co., Ltd.(浦江亚环锁业有限公司, "Ya Huan")

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