Here is one of the most frequently asked questions by my clients:
Should I file trademark in China for OEM brand or does OEM use of a trademark constitute infringement in China? I did not sell the product in China but only manufacture there and export directly.
Here is my Answer:
In China, it is controversial for OEM use of a brand to be identified as a kind of trademark use. As China is not a case law country, different Court has different judgments if trademark infringement involved. From the year 2016 to 2018, more and more Beijing Courts tend to hold the view that OEM use of a brand does not constitute a kind of trademark use in China and would not constitute infringement over third trademarks. However, from the year 2010 to the year 2015, the conclusion is in reverse. And it is still unclear for Courts out of Beijing.
In case that you did not or was unable to register your own trademarks in China, and encounter an infringement claim in Beijing by holders of similar prior trademarks, most Courts will hold that your OEM use of your brands do not constitute infringement of the prior trademarks. From this prospective, the usage of your OEM brands in China does not have substantial risks. This situation only limited to Beijing and the conclusion is based on the latest practice. Please consider that the practice of law in China change frequently and risk still exit out of Beijing in other cities of China.
For safety reason, we generally suggest our clients to file the brands in China for OEM brand for the following reason:
1) China is a first to file country. It is quite common that a third party (sometimes your manufacturer) will file your trademarks in bad faith and then claim infringement over your unregistered brands. It is very time consuming and costly for responding to infringement claim though the result would most likely to be safe if under the jurisdiction of Beijing Court. Sometimes, the results would be the bad faith party assigned the trademark to the true owners with some compensation.
2) As OEM use of a brand is still controversial to be regarded as a trademark use, we can not say for sure that the legal practice will not change. In addition, the Courts out of Beijing will likely to have different opinions.
3) If you have your own registered trademark in China, there is no chance for any third parties to claim trademark infringement over your brands. In this case, trademark application in China is the most cost-effective way for the protection of your brand in China.
4) As Chinese market is opening more and more, especially with the fast development of e-commerce, Chinese consumers have more chance and various ways to know foreign brands and buy foreign products. Maybe your products are selling to China beyond your expectation one day.
In conclusion, it is not necessary but strongly recommended to file the trademarks in China though it is only for OEM use for the time being.