China has long been an attractive location for companies to
manufacture goods for distribution elsewhere (original equipment
manufacturing or OEM). However, many businesses struggle with the
uncertainty of whether applying a mark to goods destined only for
export constitutes trade mark use in infringement or non-use
cancellation proceedings in China.
In this article, we summarise the key developments in this area,
which culminate in a 2019 decision of the Supreme People's
Court (SPC).
Background
Since 2015, the "PRETUL" case1 had been widely
regarded as the leading decision in China on the issue of trade
mark infringement by OEM companies. In this case, the SPC concluded
that an OEM company's application of a mark to goods did not
infringe the registered owner's rights in China, as the marks
are not exposed to the public in China and, as a result, confusion
could not arise.
