Whether foreign-related OEM constitutes trademark infringement is quite controversial in the IP field. Recently, Shanghai Intellectual Property Court has made the final judgment on the trademark infringement case with Fujian Quanzhou Peak Sportswear Co., Ltd. (hereinafter referred to as PEAK Company) suing Isaac Morris Ltd. (hereinafter referred to as Isaac Morris), Wuxi Zhen Yu International Trading Co., Ltd. (hereinafter referred to as Zhen Yu Company) that trademark infringement was constituted and the two defendants should immediately stop infringement and compensate PEAK Company for the damages. 

On February 7, 1994, Quanzhou Fengdeng Shoe Making Co., Ltd. registered the trademark "PEAK & device" () on the designated goods of "footwear, clothing" in Class 25. On August 7, 2007, PEAK Company obtained the trademark right by assignment. On September 28, 2009, PEAK Company registered the trademark "PEAK" () on designated goods of "clothing, footwear", etc. in Class 25.

In August 2014, PEAK Company received a Notice on Confirmation of IP Infringement Status from the Shanghai Customs, informing PEAK Company that the Customs seized over 8,000 pieces of knitted men’s T-shirt exported by Zhen Yu Company to the U.S. with the logo PEAKSEASON, which were allegedly infringing the intellectual property rights of PEAK company as recorded in the General Administration of Customs. 

The "PEAKSEASON" trademark () was approved for registration by the United States Patent and Trademark Office on November 2, 2010 in the name of Isaac Morris and designated for use on knitwear, T-Shirts, uniforms and other goods in Class 25. In June 2014, Isaac Morris sent order to Zhen Yu Company and the label and tag in the order was "PEAKSEASON".

In November 2014, PEAK Company sued Zhen Yu Company and Isaac Morris with Shanghai Pudong New Area People's Court (hereinafter referred to as Pudong Court), claiming to have the two defendants immediately stop infringement and compensate RMB 200,000 for the damages, etc. In addition, PEAK Company also pleaded for the litigation preservation as well as seizure of the export goods manufactured by Zhen Yu Company.

Pudong Court held after trial that the trademark at issue "PEAKSEASON" was similar to the registered trademark "PEAK" of PEAK Company and that it was necessary to determine whether the infringement was constituted based on the likelihood of confusion among the relevant public. Zhen Yu Company’s act of exporting garments was held to be responsible for OEM for Isaac Morris where all the manufactured garments were sold to the United States. Although the garments seized by the Customs used the "PEAKSEASON" logo, they were not put into distribution on the Chinese domestic market and the relevant public of the domestic market would have no access to the garments; therefore the logo could not play the function of identifying the origin of goods on the domestic market and such use was not per se the use in the sense of the Trademark Law. Accordingly, the court held that Isaac Morris and Zhen Yu Company did not infringe the exclusive right of Peak Company to the registered trademark, and dismissed the claim of Peak Company. In addition, PEAK Company should compensate Isaac Morris 130,000 RMB for economic losses.

Not satisfied with the first-instance judgment, PEAK Company lodged an appeal to Shanghai Intellectual Property Court. The second-instance court held after trial that the logo affixed to the garments at issue used "PEAK" in an obvious way() so that "PEAK" became the main identification part of the trademark "PEAKSEASON", which made it similar to the registered trademark of PEAK Company and most likely to cause confusion among the relevant public by the visual effect. In addition, considering the fame of the trademark "PEAK", Zhen Yu Company, the OEM supplier, did not fulfill the duty of cautious care and investigation on the trademark abroad as well as the form of use upon entrustment, which made the garments at issue affixed with the similar logo to the "PEAK" trademark of PEAK Company. Furthermore, due to the possibility of purchasing the exported goods into China through the Internet, confusion and misidentification among domestic relevant public may be caused and therefore the act of Isaac Morris to use similar trademark on the same goods constituted infringement on the exclusive right of PEAK Company for the trademark at issue, thus ordering the two defendants to immediately stop infringement, Isaac Morris to compensate PEAK company 20,000 RMB for the damages with Zhen Yu Company bearing the joint liability.

(Adapted from China IP News)

(Remarks: This present case was handled by SPTL Attorney-at-Law Mr. Shenjun Chen.)

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