Meaning
A key judicial precedent from the Supreme People’s Court of China concerning trademark infringement in original equipment manufacturing (OEM) established that trademark use does not occur if the goods are solely for export and do not enter domestic commerce. The pretul landmark ruling focused on the lack of domestic commercial exposure as a basis for determining that no consumer confusion could occur within China. This ruling provided a temporary legal shield for domestic manufacturers producing goods under foreign-owned trademarks.
OEM Infringement
The court evaluated whether the physical application of a mark on goods manufactured for a foreign buyer constitutes an infringement of a domestic registration. In this specific case, the court ruled that since all products were shipped directly to Mexico, the mark did not perform the function of indicating product origin to Chinese consumers.
Legal Doctrine
This precedent established the principle that trademark use must involve the possibility of public recognition in the domestic market. Without the likelihood of domestic confusion, there can be no infringement under Chinese trademark law.
Subsequent Practice
This ruling was widely used by Chinese factories to defend against trademark infringement claims brought by domestic squatters who had registered foreign brands in China. However, subsequent cases have limited the scope of this defense, requiring manufacturers to show that the foreign buyer owns the mark in the destination country and has performed due diligence.
