IP legal problems with OEM product exports from China

IP legal problems with OEM product exports from China, OEM product exports from China, Original Equipment Manufacturing - OEM, IP legal problems with OEM product exports from China

IP legal problems with OEM product exports from China

China has been increasing its efforts on the inspection of OEM products as there have been many IP legal problems with OEM product exports from China. Accordingly, individuals/organizations conducting businesses in China should take extra caution in recent times. 

Original Equipment Manufacturing – OEM

Although these terms are not very well known in public, however, both the terms OEM and ODM are very familiar in the industrial manufacturing industry. OEM stands for Original Equipment Manufacturing, and ODM stands for Original Design Manufacturing. The two concepts are quite similar, so sometimes listeners get confused about their nature.

OEM is often used to refer to companies and factories that do the manufacturing work according to the design, preset specifications, and sell the product to another company (responsible for distribution). In an easier-to-comprehend way, the OEM company will produce “for” another company. The product is marketed under the brand name of the company that orders the product made.

An example of this form of OEM is the relationship between Apple and Foxconn in the production of iPhone phones. In which Apple plays the role of customer, in charge of technology research and product distribution. And Foxconn is an OEM company, producing actual products from the first blocks of aluminum.

So that is basically OEM. So, what does OEM play in the role of IP legal battles?

IP legal problems with OEM product exports from China

As common knowledge, China is the largest exporting country worldwide. 

China has a very cheap labor force. This means that the organizations using the labor here in China will have great revenue.

However, realizing this fact and hoping to get China from the mark of a cheap exporting country and turning it into the country that produces intellectual property assets, the China government has imposed many new regulations on OEM products. 

Accordingly, to continue to gain profits utilizing China’s labor force, 

companies and corporations worldwide need to ensure and further strengthen their position with China Customs and the Courts in regard to OEM exports.

The criteria that is considered by China Customs and the Courts, along with other relevant organization when determining OEM or not is: 

  • A notarized and legalized copy of the trademark registration of the products to prove that the overseas buyer owns the registration of the mark being used at the destination.
  • The goods being inspected have the same mark on the description and the layer as the buyer’s mark.
  • Both the production and the exportation are authorized by the overseas trademark owner. As the above trademark registration certificate, the authorization documents, purchase orders /contracts are also needed to be provided to be in line with shipping documents.
  • None of the goods should be distributed in the China market.
  • The production/exportation is performed in good faith with reasonable diligence. There should be no harm made to the lawful interests of the trademark owner in China.

The above criteria should be taken into account as there have been many cases in recent times that the Customs rejected OEM claims due to conflicts or incorrect information provided by a party. 

On the other hand, if a case is brought to court, businesses should keep in mind that the following factors will be taken into consideration by the court to declare a ruling an infringement is likely: 

  • The mark on the OEM products is identical to the overseas registration.
  • The OEM goods fall within the protection scope of overseas registration according to the China subclass system.
  • The documents are in good order or not.
  • The risk of consumer confusion, caused by the exporting of OEM products.
  • Details on when the overseas trademark was filed, the status of trademark use, and promotion at the destination.
  • The status of trademark use and its promotion in China when the China trademark was filed.

 ***Other Articles***

– You could see How To Register Trademark in China here.

– You could visit here to see Procedure of Trademark in China.

– You could visit here to check Required documents of filing trademark in China.

Contact AAA IPRIGHT: Email: info@aaaipright.com

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