Nowadays, with the development of global economic integration, the cooperation between commodity production is becoming a more and more popular trading form worldwide expect for the trading relationship among countries. 

 

OEM prevails in foreign processing trading in the large trading nation, China.

What’s OEM?

OEM refers to Original Equipment Manufacture. In China, foreign OEM indicates the business activity of domestic entrusted party (processing party) using the special trademarks or processing commodities for entrusting party (customized party) as agreed based on trademarks (generally refer to registered trademarks ® ) provided by foreign entrusting party and entrusting entrusting party with all products to sale abroad(there is nothe trademark right of the registered trademark within China), and entrusting party pay processing party related fee according to the contract. 

The principal characters of foreign OEM include: 

• The subject of cooperated trading is international; 

• The trademark right of processing products is unique for entrusting party; 

• The control of sales direction of OEM products is strict from entrusting party.

 

Due to the closed relationship between OEM cooperation and trademark right problems, it is very important for businessmen to benefit from OEM cooperation and have a good knowledge of the “infringement” of OEM trademarks during OEM cooperation. 

 

The unified standard of infringement of OEM trademarks is still deficient in international trading activities; however, approval departments may consider the following questions: 

• If it will cause confusion or misunderstanding in terms of same or similar trademarks at home since all OEM products are managed by overseas entrusting party; 

• If OEM production will cause losses or damages to domestic trademark owners with registered trademarks;

• If it is an act of using trademarks stated on the Trademark Laws in China mainland to label trademark logos on OEM processing commodities.

 

Avoid the risk of infringement

In consideration of the above points, entrusted party should avoid the risk of infringement:  

• Entrusted party should check the trademarks provided by entrusting party to avoid domestic same or similar trademarks; 

• Entrusted party is responsible for the production and the quality of products, such as the quality, specification and quantity based on the contract; 

• Entrusted party should deliver all products after finishing production and is only responsible for the work of delivery and inspection and acceptance by entrusting party in accordance to the address and date stated on the contact but marketing; entrusted party should be vigilant if the responsibilities exceed the several points above. 

• Accordingly, the rights and obligations of both parties should be specified, which would be the clear evidences to distinguish responsibilities if there is any disputes by both parties or third party during the performance of contract.

 

Trademark protection is a must!

In a long run, OEM enterprises should use this international cooperation trading mode to seize the opportunities and expand markets, learning new products and techniques, getting familiar with international market environment and demands, mastering the rule of international trading markets, improving creativity and the ability of building independent brands, enhancing the operation of brands, registering their own trademarks, improving the research and development of products and applying for patents so as to realize the transformation from export of processing trademarks to export of independent brand. 

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