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What is the OEM doctrine and why is important for avoiding a trademark infringement in China?
Why having your trademark registered in China is essential even if your company does not commercialize its product in the Chinese market?
For many foreign companies China keeps playing a crucial role on the production chain of their products.
Usually, these companies have their goods manufactured in this country by an Original Equipment Manufacturer (“OEM”) and then have them exported for its commercialization overseas only.
In this scenario, some of those companies may be tempted to think: why should I spend money protecting my brand or technology in China if the Chinese market is not relevant for my products?
To answer that question, we will evaluate the scenario in light of the past and the most recent decisions from the Supreme People’s Court (“SPC”) regarding OEM activities and trademark infringement.
Indeed, when goods are manufactured in China by an OEM with the only intention to have those goods exported overseas, the foreign buyer is not always the owner in China of the trademark affixed to the goods.
In fact, usually that trademark or a very similar one is registered in China by a third party and such third party may be willing to sue the factory for trademark infringement and stop the exportation of the goods.
This is a long-debated question to which the courts have demonstrated different understandings in last years.