Made in China: the legal status of OEM

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. In other words, an OEM manufacturer affixes someone else's mark on the goods he produces. These goods are then –typically- immediately exported and do not enter the national market. In China, often called 'the world's factory', OEM is big business.

China has been the biggest OEM manufacturer for the world. As you will have read in our recent client notes (including: Nokia prevails over OEM in trademark, OEM Jiulide Shenda case, OEM Revisited, The Muji Case) OEM has been a point of focus for the China trademark practice. The issue typically arises in three situations:

(1) Does OEM-use of a trademark constitute trademark infringement in China?

(2) Is mere OEM-use sufficient to establish prior use and certain influence of a trademark to oppose to or file a cancellation against a trademark?; and

(3) Is mere OEM-use sufficient to defend against a non-use cancellation claim?

The Trademark Law does not provide clear-cut answers to these questions, and the judicial and administrative practice on the issue has been -somewhat deliberately- inconsistent. Political, economic, social and public interest factors heavily influence the jurisprudence, as do the specific circumstances of the case. We have therefore analyzed some of the most recent developments.

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