Non-legal factors to be considered in anticipating outcome of “OEM” Trademark Disputes

In addition to what the law says in books, it is necessary to identify the factors beyond the law, especially when a dispute is raised in multiple jurisdictions. 

For example, during the year 2012-2016, various Chinese courts made contradictory decisions over an issue of the so-called “OEM Exception”.  It refers to a situation where a manufacturer affixes trademarks of a third party purely based on the requirement of its client. For example, a manufacturer may affix a brand logo according to its client’s requirement.  However, such a client may have not secured trademark right in China.  Then the issue is: whether the manufacturer should be found infringing trademark rights that are owned by a registrant other than the manufacturer’s client. 

Lawyers may anticipate the outcome of the case through various approaches.  But because this “OEM Exception” issue is very controversial, different courts interpreted the law in different ways. 

I have identified a non-legal factor – which is the reference of the overall export situation in a given period.  Usually, when the local government wishes to boost the export, the local court would unlikely find manufacturers to be liable to the trademark registrant, citing the reason that the products were made purely for the purpose of exporting abroad. Therefore using the trademark on the products would not cause confusion of domestic consumers. 

On the other hand, when the economy is good and the local government wants to reduce its reliance on the OEM industry, the courts would tend to find OEM branding an infringement of trademark rights.