The recent decision issued by the Chinese Supreme People’s Court may offer OEMs manufacturing soley for export some comfort as it would seem that the Chinese Courts are finally getting a step closer to clarifying the answer to the following question:

“Does manufacturing and affixing a trade mark in China to goods intended solely for export purposes constitute use of a trade mark and consequently trade mark infringement?”

This has been a grey area for many years in China with a number of conflicting decisions being issued by the Chinese Courts, customs authorities and government.

However, a recent decision issued by the Chinese Supreme People’s Court has held that the act of affixing a trade mark to goods in China solely for export purposes does not constitute use and thus cannot not be held to be trade mark infringement of a third party’s registered trade mark.

Although case decisions in China are non-binding on future decisions, judgements from the Supreme People’s Court are a strong indication of the trends that will be adopted going forward. This decision should therefore be viewed as a positive outcome for those clients that do have OEM agreements in place in China.

Of course, the above decision does not mean that clients should stop taking steps to register their trade marks in China as trade mark squatting is still rife in China. As China is not a case law led country, you never know whether the position on OEM might change again in the future. Your business plans might also change and if you did at any point want to start trading in China, you do not want to find yourself blocked from doing so because a trade mark squatter has already secured registered rights in your mark.

Checklist for Chinese trade mark protection:

  1. Conduct an initial clearance search in China to check whether any third parties have already applied to register the identical or a confusingly similar mark in respect of the same or similar goods/services of interest to you.
  2. If the search looks clear, file an application to register your mark in your core classes of interest. To secure the broadest protection possible ensure that you cover at least one item from each sub-class within your class(es) of interest. If you have filed in another country and a priority period is available, also utilise the priority period to secure an earlier filing date.
  3. Consider how your mark will be referred to in Chinese and consider protection of the Chinese version in addition to the English version. If no official Chinese version is provided and promoted by you, the local Chinese market will create its own version which you may not like; things can also get lost in translation and the Chinese version may not necessarily have the desired connotations or image.
  4. Trade marks in China are vulnerable to challenge by third parties on the grounds of non-use following a period of 3 years from registration. Make sure your marks are therefore being used as registered in respect of the goods/services covered. If use has not been made but China is still a potentially important territory, then consider refiling after three years to ensure that no gaps/vulnerabilities open up in your trade mark protection.