Research On Trademark Infringement Issues Of Foreign-related OEMs

With the development of China’s reform and opening up, as well as the acceleratingintegration of global economy, foreign-related OEMs as an important trade form hasgradually established in China, and contributes significantly to the development ofChina’s private enterprises and the prosperity of foreign trade and economy. However，in practice, Chinese OEM supplier frequently encountered trademark infringement disputes.Due to the imperfect infringement theory of trademark law, there are different viewsbetween academia and practical circles in understanding trademark infringement arisingfrom foreign-related OEMs. Such differences also impacted on the relevant judicialpractice and administrative enforcement. Therefore, a correct understanding of trademarkinfringement arising from foreign-related OEMs and improving the relevant infringementlegal system become necessary.Currently the main debate of whether foreign-related OEMs have constituted trademarkinfringement involves a situation that1) an ordering party enjoys the trademark rightin their home country or countries where the products destined to; while in China, athird-party owns the trademark right;2) the products manufactured by the Chinese OEMsupplier bearing the trademark are intended for export;3)the third party who owns thetrademark right in China charges the Chinese OEM supplier of trademark infringement. Thepaper studies the above-mentioned situation in details.Apart from Chapter1the Introduction, the paper has three other Chapters. Chapter 2gives a summary of a number of foreign-related OEM cases (including a small amount offoreign OEM cases from other countries) and a brief analysis, which reveals that in judicialpractice, there are different opinions regarding whether foreign OEM constitutes trademarkinfringement. Sometimes, cases of similar situation resulted in opposite court decisions.Through analysis of the court decisions, the controversial points of determining whetheran OEM supplier should bear liability of trademark infringement are found to be1) whetherits activity violates the principle of territoriality for trademark;2) whether its actof affixing trademark on products can be defined as ‘use’ of trademark;3) whether theconfusion theory is a necessary element for determining trademark infringement.In Chapter3, the author puts forward suggestions of how to perfect the legal systemof trademark infringement involving foreign-related OEMs. From the author’s point ofview, the legal system should be improved from aspects of justice and legislation. Fromjudicial side, practitioners should bear in mind the legislation purpose of trademark lawand the distinguishing function of trademarks, and make ‘causing confusion or likelihoodof confusion’ a key component when determining trademark infringement involvingforeign-related OEMs. In the meantime, the understanding of trademark ‘use’ stipulatedin Article3of Regulations for Implementation of the Trademark Law should be limited onlyfor sales purpose or for public commercial activities. From legislation perspective, whenamending the trademark law, it should make confusion theory a basic criterion and establisha trademark protection system around the confusion theory. Before the amendment oftrademark law, necessary judicial interpretations and administrative regulations shouldbe issued to coordinate work of courts and authorities like customs and administrationfor industry and commerce, with a view to aligning the standards of determining trademarkinfringement involving foreign-related OEMs.