The Determination on Whether the Original Equipment Manufacturer (OEM) Performed the Duty of Due Care in An Export Trade (III)
— Dispute over Trademark Right Infringement between China Ningbo International Cooperation Co., Ltd. and Pinghu Huayang Tourism Products Co., Ltd.
III. The determination on the performance of the duty of due care by the OEM in this case.
The court mainly focused on the following key facts during the trial of this case: 1. the foreign client has legal trademark rights. The Third Party GCI started to use the word mark “GCI OUTDOOR” in 2000 and use the triangular figure mark containing such words in 2008. According to the trademark laws of America, including federal trademark laws and common laws of each state, the trademark right is a property right and may be obtained by using trademarks in business activities. In other words, a company can obtain the trademark rights by using the same. GCI is an American company and mainly carries out business within the America. It has obtained the trademark rights by using the trademark in accordance with relevant laws and regulations of America. On May 24, 2016, the United States Patent and Trademark Office issued the registration certificate of the trademark “GCI Outdoor” to GCI, which would remain valid within 10 years from May 24, 2016. 2. The trademark was owned by another entity in China. On September 28, 2014, the Plaintiff was approved by the State Trademark Bureau to register the trademark “GCI outdoor” numbered 12496478 and the products approved to use the trademark were chairs and armchairs classified under Trademark Class 20. The registration would be valid until September 27, 2024. 3. Upon comparison, it was found that the mark on the involved products was identical to the trademark numbered 12496478 of the Plaintiff, except that the mark had a sign “TM” at the bottom right. 4. All the involved products are exported to America
Based on the above facts, the court thought that, the manufacturer in this case has performed the duty of due care. According to Paragraph I, Article 6 of the Tort Law of China, one who is at fault for infringement upon a civil right or interest of another person shall be subject to the tort liability. The liability for fault specified in the tort law requires one to perform the duty of due care so as to prevent damages being caused to other persons. In case of OEM, it is generally believed that, if the OEM is at fault, the OEM and its client shall jointly bear the tort liability. There are different standards for the performance of the review obligation by the manufacturer. Generally, a domestic manufacturer, entrusted by a foreign client, shall carry out necessary reviews on whether the foreign client has the exclusive right to use the registered trademark or has been legally authorized or licensed. If the manufacturer has performed the review obligation, it shall be recognized that the manufacturer is not at fault; if otherwise, it shall be recognized that the manufacturer is at fault. In this case, the Defendant was authorized by GCI to use the word mark GCI OUTDOOR and the related figure mark to manufacture products and GCI confirmed in the power of attorney that the Defendant started to cooperate with GCI with GCI on an OEM basis from September 14, 2014. Therefore, it could be recognized that the Defendant had performed the duty of due care and was not at fault subjectively and that the behavior of the Defendant was proper. Accordingly, the Defendant shall not bear the tort liability.
Moreover, one of the requirements for the establishment of an infringement is that damages have been actually caused. A trademark infringement is supposed to cause consumers’ confusion about a registered trademark and thus impair the interests of the owner of the registered trademark. Article 57 of the Trademark Law of China specifies that, “any the following constitutes an infringement of the exclusive right to use a registered trademark: … (II) using a trademark that is similar to a registered trademark in connection with the same goods, or that is identical with or similar to a registered trademark in connection with the same or similar goods, without the authorization of the owner of the registered trademark, which may cause public confusion..” Therefore, the possibility of any confusion being caused is a condition for the establishment of a trademark infringement. Based on the identified facts, it could be concluded that the Defendant in this case was legally authorized to carry out the OEM business, use the trademark provided by the foreign trademark owner on the products designated by the owner and export all products to the American client rather than sell them in China. The behavior of the Defendant did not cause any actual damage, so the Defendant shall not bear any liability for trademark infringement.
[Case Reference]
Case No.: (2016) H 0115 MC No. 27091
Members of collegial panel: Du lingyan, Zhang Yi (Chief Judge), Sun Baoxiang
Writers: Zhang Yi, Yuan Tian
