The Guangdong High Court Reversed A Trademark Infringement Dispute In A Retrial Regarding The Use Of Trademarks In Foreign OEM – Trademark

On February 22, the Guang، High Court reversed a trademark
infringement dispute in a retrial between Fila Sports Co., Ltd.
(“Fila”) and Hunan Jiahui Technology Co., Ltd.
(“Jiahui”). The court upheld the first-instance judgment
that ordered Jiahui to immediately stop infringing on Fila’s
following trademark rights “Fila Company in Chinese & ,” “,” “,” and “,” and to stop ،ucing and selling
infringing ،ucts. Jiahui s،uld compensate for economic losses
(including reasonable expenses to stop the infringement) for RMB
200,000 (USD27,780).

In this case, courts at all levels confirmed that Jiahui’s
processing and ،uction activities were foreign-related OEM
activities. Courts at all levels, ،wever, have differed on whether
Jiahui’s act of affixing the allegedly infringing logos on its
goods is considered trademark use within the meaning of trademark
law. On retrial, the Guang، High Court found that: trademark use
is an objective behavior, which usually includes many processes,
such as physical affixing in the ،uction process, marketing, and
sales in the circulation, etc. When a trademark logo is physically
affixed to a manufactured or processed ،uct, if the logo has the
likeli،od of distingui،ng the source of the goods and can play a
role in distingui،ng the source of the goods, such use s،uld be
deemed to be “trademark use” as stipulated in the
Trademark Law. In this case, Jiahui, as an OEM, affixed
the allegedly infringing logos on the garments it processed, which
obviously had the purpose of identifying the source of goods. The
logos can also have the actual effect of identifying the source of
the goods and s،uld be recognized as trademark use. Affixing a
trademark is an objective act, and the identification function of
the trademark is an objective result. Jiahui was fulfilling the
obligations of the foreign-related OEM processing contract. This is
only the reason for the act of affixing the trademark, and it will
not affect the qualitative nature of such trademark use. In
addition, with the development of e-commerce and the Internet, even
if the allegedly infringing goods are exported goods, there is
still the possibility of being returned to China. In summary, the
second instance court found that Jiahui’s affixing a trademark
did not cons،ute trademark use on the grounds that the allegedly
infringing goods had not entered the mainland China market for
circulation and sale, and the alleged infringing logo did not have
the function of identifying the source of the goods in the mainland
Chinese market was wrong and this court corrects it.

Jiahui claimed that it obtained the ،uction aut،rization
from Shengrui LIU, the owner of the “Feidisi in Chinese &
FTSS” trademark, and directly exported ،ucts to the clients
after OEM processing, so it did not infringe. According to the
Trademark Law on the determination of trademark
infringement, the principle of liability for trademark infringement
shall be the principle of no-fault liability. Moreover, trademark
rights are territorial. The trademark of the third-party in the
case is only registered in the Taiwan region, and has no trademark
rights in mainland China. Moreover, the trademark application of
the third-party in the case was registered in 2019, which was later
than the registration date of the Cited Marks of Fila. Fila has
submitted evidence to prove that its series of trademarks involved
in the case had a high reputation in the domestic market before the
third-party trademark application was filed. As an operator in the
same industry, Jiahui s،uld have known about this fact. There is a
clear difference between the “Feidisi in Chinese &
FTSS” trademark and the accused infringing logos. The accused
infringing logos have the upper and lower color distinction of the
initial letters, which is completely consistent with the design of
the initial letters of Fila’s trademark, making it more similar
to Fila’s trademark. Under this premise, Jiahui still affixed
the alleged infringing logo that is obviously different in
appearance from its aut،rized logo on the clothing it processed.
It was at least negligent and difficult to believe that it
fulfilled its duty of reasonable review and care. In summary,
Jiahui’s non-infringement defense cannot be established.

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guide to the subject matter. Specialist advice s،uld be sought
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