According to the search on the internet, in 2023, the business income of the top 500 Chinese manufacturing enterprises reached 51.06 trillion yuan, a year-on-year increase of 8.38%. Due to the population advantage in China, many foreign companies entrust Chinese factories for production and processing, and then, they affix their trademarks registered abroad and export the products to other countries or regions. We usually call this behavior "OEM (Original Equipment Manufacturer) processing."
In the field of trademarks, will there be an impact on OEM processing? The answer is yes. Let's see how trademarks can affect OEM processing.
Firstly, the function of a trademark is to distinguish the goods of natural persons, legal persons, or other organizations from those of others. Therefore, in production and business operations, almost all brand owners need to apply for trademark registration.
After the trademark is registered successfully, the trademark registrant will have the exclusive right over the trademark. That is to say, in the designatedgoods or services, the trademark owner can use its registered trademark over the designated goods and enjoy legal protection. According to Article 57 of the "Trademark Law," any of the following acts are considered to infringe on the exclusive trademark right to use a registered trademark:
1. Using a trademark that is identical with a registered trademark on the same goods without the consent of the trademark registrant;
2. Using a trademark that is similar to a registered trademark on the same goods, or using a trademark that is identical with or similar to a registered trademark on similar goods, which may be easily confusing, without the consent of the trademark registrant;
3. Selling goods that infringe the exclusive right to use a registered trademark;
4. Counterfeiting or arbitrarily forging others' registered trademark, or selling the counterfeited or arbitrarily forged trademarks;
5. Altering the trademark registrant's registered trademark without authorization of the same and selling goods bearing such altered trademark;
6. Providing convenience for or even help others to infringe the exclusive right to use a registered trademark on purpose;
7. Other conducts causing prejudice to others' exclusive right to use its registered trademark.
It can be seen that the registration of trademarks is very important. So, when a company has trademark rights abroad and only produces and processes the products in Mainland China and exports, but does not sell the products in the Mainland China, is it necessary to register a trademark in Mainland China? The answer is also yes.
Firstly, trademark protection is territorial . The trademark rights of other countries cannot be regarded as having the same trademark rights in China. The first issue that OEM faces is the Customs inspection. In the official system of Customs, there is an "Intellectual Property Rights Recordal." The trademark owner can record its registered trademark on this platform, and the same or similar products bearing the same or similar trademark exported or imported will be reviewed. Once the same or similar trademark is found, and the products and the recorded goods of the registered trademark are the same or similar, Customs will detain the products and notify the trademark owner. If the trademark owner believes that this behavior has infringed on its registered trademark exclusive rights, it will require Customs to detain these products.
Secondly, some people are still copying and imitating well-known trademarks. If you do not register your trademark in time, it is easy to be registered by others in bad faith, which leads to the real trademark owner being unable to register its trademark and thus being unable to protect its trademark rights.
Thirdly, in judicial practice, OEM processing has been identified as infringement of the registered trademark in China. In 2019, the Supreme People's Court issued a second-instance judgment for the trademark infringement case of Honda Motor Co., Ltd. against Chongqing HengshengXintai Trading Co., Ltd. and Chongqing Hengsheng Group Co., Ltd. The second-instance judgment held that the infringing acts of the two Chongqing companies were foreign OEM processing. However, under the background of the development of e-commerce and the internet, even if the infringing goods are exported abroad, they may also flow back to the domestic market, and Chinese consumers who go out for tourism also have the possibility of contact and confusion with "OEM products." Therefore, it is determined that the use status of the two Chongqing companies is the use of trademarks in the sense of the "Trademark Law" and constitutes infringement. It can be seen that even OEM processing behavior, if not registered in time, can easily be sued for infringement by the trademark owner.
Registering a trademark can not only protect one's own rights and interests but also prevent infringement on the trademarks of others. Therefore, the importance of registering a trademark for OEM processing is self-evident.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.