19th February 2020

Chinese manufacturing – a trade mark U-turn

‘Made in China’

For many years China has been viewed by many as the factory of the world. Companies have had their products manufactured in China, often solely for export to markets outside China. This model is known as Original Equipment Manufacturing (‘OEM’).

OEM raises a unique trade mark question. If there is a trade mark on the product but another party owns that trade mark in the territory of manufacture, is the manufacturer liable for trade mark infringement?

Trade mark infringement requires a mark to have been ‘used’ and, unless it is identical to the claimant’s mark, it must be likely to confuse the public. So does OEM qualify as trade mark ‘use’ and does it result in confusion in the territory of manufacture?

The Honda Case

The Supreme People’s Court in China has now addressed this area three times and in its most recent judgment has dramatically changed its mind. In the first two cases in 2015 and 2017, the Court determined OEM manufacturers were not infringing Chinese trade mark rights. In this most recent decision the Court decided OEM manufacturers were liable for trade mark infringement.

The recent decision concerned the manufacture of Honda motorbike parts solely for export to Myanmar. The parts carried the mark HONDAKit, which Honda claimed was an infringement of its Chinese trade mark rights.

The Court concluded the OEM manufacture of the products was a trade mark use and there was a likelihood of confusion among the relevant public. The relevant public, it held, included the people involved in the manufacture and distribution of the products, people who might buy the products online and Chinese people who travelled to Myanmar.

The logic is questionable, but the clear practical implication of the judgment is businesses looking to have products manufactured in China must also register their trade marks in China, even if they have no intention of marketing the products there.

For more information about trade marks and how to protect your brands please contact our expert Brand Management team.

Chinese manufacturing – a trade mark U-turn

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