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Sale of Trademarked Goods after OEM Termination Constitute Trademark Infringement
I. Overview
It is legitimate for OEMs to use licensed trademarks during the OEM period. However, after the expiration or termination of the OEM period, whether the sale of the trademarked goods which are produced during the OEM period constitutes trademark infringement is a very important issue in practice.
The Intellectual Property and Commercial Court's Judgment 112-Min-Shang-Su-Zi No. 19 held that such a situation should constitute trademark infringement.
II. Facts of the Case
The Plaintiff Company already obtained trademark registrations of the disputed trademarks covering designated goods of edible oil in Class 29. The Plaintiff Company previously reached a partnership of an OEM with the Defendant Company and licensed the Defendant Company to print the disputed trademark on the bottom of the glass bottles. The glass bottle, which the Defendant Company produced, can be jointly used by the Plaintiff Company and the Defendant Company.
After the termination of the OEM partnership, the Plaintiff Company discovered that the Defendant Company was selling the glass bottles with the disputed trademark printed on the bottom, and that such glass bottles were filled with goods produced by the Defendant Company, including "synthetic vinegar essence," "chili-flavored oil," "cold-pressed sesame oil," and "black sesame oil", which were displayed and sold in offline stores and on the Shoppe online shopping platform.
III. Judgment of the case
The Intellectual Property and Commercial Court's Judgment 112-Min-Shang-Su-Zi No. 19 dated October 30, 2024, held the following with respect to the issues of trademark infringement in this case:
1. The manner in which the disputed trademark was labeled constituted trademark use and indeed infringed Plaintiff Company's trademark rights.
The Defendant Company produced glass bottles with the disputed trademark being labeled clearly at the center of the bottles' bottom, accounting for more than half of the bottom area of the bottles. This was sufficient for the relevant consumers to recognize it as a trademark and thus should constitute trademark use. Although the body of the disputed glass bottles were affixed with stickers specifying the Defendant Company's registered trademark, the addresses of the company and factories, as well as contact details, the disputed trademark on the bottom of the disputed glass bottles was not concealed. As a result, the determination of using the disputed trademark was not affected.
2. The Defendant Company did not purposefully or negligently infringe the right of the disputed trademark. The Plaintiff Company is not entitled to claim damages against Defendant Company.
The disputed glass bottles were produced during the OEM partnership period. After the termination of the OEM partnership, the Defendant Company still had some unused disputed glass bottles, and it once emailed the Plaintiff Company for instruction on how to handle these bottles. After replying that it would communicate and negotiate with the new OEM partner, the Plaintiff Company did not send a follow-up response. In addition, the Defendant Company also sought professional opinion from a patent and trademark office. Thus, the court held that the Defendant Company aimed to clear the remaining disputed glass bottles, which is not contrary to the common sense. Accordingly, it did not constitute intentional or negligent infringement of the disputed trademark.
3. The Plaintiff Company's requests the Defendant Company for prohibited use, removal and destruction of the disputed glass bottles are justified.
As mentioned above, due to trademark infringement of the Defendant Company, the court held that Plaintiff Company is justified in requesting the prohibited use and destruction of the disputed glass.
IV. Conclusion
As mentioned above, the court determined that the sale of licensed goods which were produced during the OEM partnership period constitutes trademark infringement if such goods are sold after the termination of the OEM partnership. However, this judgment held that the Defendants did not subjectively commit intentional or negligent acts and were not liable for damages to the Plaintiff due to the facts that Trademark Owner failed to instruct former OEM partner on how to handle the remaining disputed trademarked goods and the Defendants already consulted a law firm. This case is at the appeal stage in the Intellectual Property and Commercial Court now, and it is worth noting to pay attention to the court's legal opinion and the progress of the case.