Original equipment manufacturers (OEM) processing in China's trademark infringement cases has always been a source controversy and confusion. Since the Honda case in 2019, it is understood that OEM products in China solely for overseas export does not automatically stand as a defence against trademark infringement claims brought by Chinese trademark holders. This was not a welcoming development for foreign brand owners who have difficulty in obtaining their own Chinese trademarks because of the existence of squatters and bad faith pre-filings in China. That said, we have observed in recent cases that the bona fide principle has started to play a more significant role in determining the outcome in trademark infringement cases involving OEM processing, which is helpful to legitimate foreign brand owners to defend against squatters’ “infringement” claims in OEM, and we shall take you into a deep dive into these cases in this newsletter.
WHAT IS OEM AND OEM INFRINGEMENT?
Foreign brand owners instruct OEM to label foreign trademarks on the goods manufactured in China for sales in foreign markets. However, since the products are not sold in China, the foreign brand owners may not have registered trademarks in China. When the foreign brand owners may then wish to register Chinese trademarks, they may turn out to discover that the trademarks have already been preregistered by squatters, and they may also face infringement cases filed by the bad faith squatters premised on the Chinese registrations.
