China’s trademark register works on a “first-to-file” basis. This allows trademark hijackers to quickly claim a foreign trademark, in the hope of selling it to the trademark owner later. Some hijackers go a step further and even seize products that are ready for shipping. An exception to this has been developed in case law. If products are only produced in China for export, then this cannot be a trademark infringement (the so-called OEM exception), as the Chinese consumer does not have any interaction with these products. In addition, the trademark holder must have a registration in the importing country. Recently a Chinese Court broke with this in its “HondaKit” ruling.
HONDA is a well-known trademark in China. It has been registered there since 1988. The company objects to the production of HONDAkit branded products, meant for export to Myanmar.
The argument brought in defense, that this only concerns goods for export, doesn’t hold. Court rules that production just for export also implies trademark use.
This is a blow to the trademark pirates. However, for trademark holders it is now all the more important to have a trademark registration in China, even if they only produce there for export purpose.
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