Foreign Trademark Rights and China Exports

Background

The claimant was an Indonesian company engaged in the manufacture and sale of stationery products. It owned three trademarks registered in Indonesia for goods in Class 16 and said that its branded pens had a substantial presence in the Indonesian market.

The trademarks had not been registered or actually used in China. In December 2019, Indonesian customs detained 298 cartons of pens suspected of infringing the claimant's intellectual property rights. Customs documentation described pens bearing marks corresponding to the Indonesian registrations and identified a Yiwu-based Chinese trading company as the supplier.

The claimant later took action against the Indonesian importer and commenced proceedings in China against the Chinese trading company.

The claim against the Chinese exporter

The claimant argued that the Chinese company had exported allegedly infringing products from China into a market where the claimant held valid trademark rights. Its position was that the exporter knew, or should have known, that the products would enter the Indonesian market.

It asked the Chinese court to order the defendant to cease selling, exporting or using identical or similar signs in exports to Indonesia and to pay RMB 700,000 in economic losses and enforcement expenses. The claimant relied in part on Indonesian customs documents and an Indonesian court proceeding concerning the shipment.

The defence

The Chinese trading company denied liability. It argued that the trademarks were not registered in China and that Chinese trademark law protects trademark rights recognised under Chinese law.

The defendant also disputed that it had manufactured, purchased or sold the goods. It said the Indonesian customs document alone was insufficient to establish infringement under Chinese law, noted that the claimant had already pursued the importer in Indonesia, challenged the factual and legal basis for the claimed damages and raised a limitation-period argument.

The central legal question

The central issue was not simply whether similar products had been exported from China. The more fundamental question was whether a foreign trademark owner could rely on trademarks registered only in another country to obtain protection under China's Trademark Law against a China-based exporter.

In the circumstances of this case, the court answered that question in the negative.

Applicable law and the court's reasoning

The court treated the dispute as a foreign-related intellectual property case. Under Article 50 of China's Law on the Application of Laws to Foreign-Related Civil Relations, liability for infringement of intellectual property rights is generally governed by the law of the place for which protection is sought.

The court determined that the place for which protection was sought in these proceedings was China and therefore applied Chinese law. It reasoned that protection under China's Trademark Law concerns rights arising from trademarks approved and registered by the competent Chinese trademark authority.

None of the claimant's three Indonesian trademarks was registered or actually used in China. The court therefore found that the claimant did not hold the Chinese registered trademark rights required to support the claim and that its request for protection in China lacked sufficient factual and legal basis.

Outcome

The court dismissed all of the claimant's claims. The claimant was also ordered to bear the court filing fee of RMB 10,800.

The decision illustrates the territorial nature of trademark rights. Registration in Indonesia, the United States, the European Union, Saudi Arabia, the UAE or another jurisdiction does not by itself create an exclusive trademark right under Chinese law.

Why territorial protection matters

A rights holder may have a strong infringement claim in the destination country while facing a very different legal analysis in China. Foreign businesses sourcing, manufacturing or selling products connected with China should consider Chinese trademark registration before a dispute occurs, even where finished products are primarily intended for export.

Without an enforceable Chinese trademark right, stopping activity at the China end of the supply chain may become substantially more difficult.

Separate each act and each defendant

Cross-border IP disputes often involve legally distinct acts: manufacturing in China, sale or supply, export, import and domestic sale in the destination market. The applicable law and potential defendants may differ at each stage.

A finding that an importer infringed a trademark in Indonesia does not necessarily mean that a Chinese exporter automatically committed trademark infringement under Chinese law. The legal basis for liability must be analysed separately for each defendant.

Evidence still matters

Customs declarations, bills of lading, commercial invoices and supplier records can be powerful evidence. However, a document identifying a Chinese company as a supplier may not by itself establish every element required for civil liability.

It may still be necessary to establish who manufactured and sold the goods, who owned them, who instructed the export, the contractual relationships between the parties and the legal rights relied upon in the jurisdiction where the claim is filed.

The decision is not a licence to export infringing goods

The judgment should not be read to mean that Chinese exporters can freely export goods bearing foreign trademarks. Exporters may still face customs detention in the destination country, foreign litigation, claims against importers and distributors, contractual liability, seizure or destruction of goods, reputational damage and liability under other legal theories depending on the facts.

The safer approach is to conduct trademark and authorisation checks before accepting orders involving branded or imitation-branded goods.

Practical takeaway

International intellectual property disputes cannot be analysed solely by asking whether the mark is protected somewhere. The decisive questions are where the right is registered, where each alleged infringing act occurred, where protection is requested, which country's law applies and which party carried out each relevant act.

Those questions often determine the outcome before the court reaches damages. Here, the court dismissed the claim because the foreign trademarks relied upon had not been registered in China and could not, on the facts, form the basis of protection under China's Trademark Law.