OEM Export and Trademark Rights in Korea: Who Is the User?

Korean OEM exports — K-beauty, K-food, electronics — have surged, and with them a recurring IP question: who actually "uses" the trademark? When a foreign brand commissions a Korean OEM factory to make goods and ship them out, the answer determines infringement, cancellation outcomes, and contractual liability. The Korean Supreme Court has long treated export-only manufacturing as infringement, while China's Supreme Court took the opposite path — same OEM operation can be infringing in Korea and not in China.

Korean Trademark Act — "use" includes export

Article 2(1)(6) defines trademark "use" as: (a) displaying the mark on goods or packaging, (b) transferring or delivering goods or packaging that bear the mark, or displaying / exporting / importing them for that purpose, and (c) displaying the mark in advertisements, price tags, transaction documents, signs, or labels. Item (b) explicitly lists export — domestic affixation of the mark followed by export is itself trademark use under Korean law. That's the foundation of every Korean OEM dispute.

Korean Supreme Court — export-only is infringement

Since the 1990s the Korean Supreme Court has held: "if a mark identical or similar to another's registered mark is affixed to goods identical or similar to the designated goods within Korea, even if those goods are made only for export to Japan or another jurisdiction where the Korean trademark right has no effect, the act constitutes infringement." The defense "we only export, we never sell in Korea" does not work in Korea.

Cancellation — the orderer is the user

Conversely, in non-use cancellation trials, the OEM orderer is treated as the user. The Korean Supreme Court has held that "in OEM-style exports, where quality control and substantive supervision rest with the orderer, where the manufacturer's production depends solely on the orderer's order, and where the entire output is delivered to the orderer, the orderer (the trademark owner or licensee) should generally be deemed to have used the mark" for purposes of Article 119(1)(3).

So when a foreign brand holds a Korean registration and a Korean OEM produces and exports under its instructions, the foreign brand's Korean registration is treated as in use and cancellation is avoided. The peculiarity of Korean OEM doctrine: the "user" is identified differently depending on whether you're looking at infringement or cancellation.

Korea vs. China — opposite outcomes

China's Supreme Court ruled in the 2015 PRETUL case that export-only OEM is not trademark infringement (the goods don't reach the Chinese market, so there's no "trademark use"). Subsequent rulings have nuanced this, but the general direction in China remains no infringement for export-only OEM. Korean factories operating across both jurisdictions face infringement in Korea, no infringement in China on identical facts.

Allocating rights — orderer and contract manufacturer

Most OEM IP disputes trace back to unclear contracts. Spell out — in the OEM agreement — who owns the Korean registrations, who licenses the use, and where infringement risk lands when a third party sues.

1. Ownership clause: "All Korean and international trademark rights for the marks subject to this agreement are owned solely by [Orderer / Manufacturer]"
2. Use license: explicit non-exclusive license or written authorization for the manufacturer to affix and produce in Korea under the orderer's marks
3. Indemnity: who bears defense costs and damages if a third party sues for infringement
4. Confidentiality: bind the manufacturer not to leak the orderer's unpublished designs or know-how
5. End-of-term handling: return / destruction protocol for residual stock, molds, and labels at termination

Re-form and upcycling — trademark angle

Korean IP courts have recently held that upcycling — taking authentic luxury goods apart and reassembling them into new products that still bear the original mark — can constitute trademark infringement when the goods are sold commercially. Even when the input is genuine, manufacturing a new product that retains the original mark is treated as new manufacture plus mark affixation. OEM factories that take "re-form / upcycling" commissions need to assess this risk separately from regular OEM.

OEM IP checklist

1. Confirm Korean registration: the orderer should hold a Korean registration in its name to claim infringement in Korea
2. Manufacturer-side FTO: pre-clear conflicts with other Korean registrations before accepting the order
3. Indemnity and warranty: the orderer warrants the marks are valid in Korea and indemnifies the OEM if challenged
4. Customs check on export: Korean Customs can inspect for trademark issues — verify in advance
5. Separate re-form / upcycling risk review: different doctrine, deserves its own contract clause

Frequently asked questions

I took an OEM order from a foreign brand whose mark isn't registered in Korea. What's my risk?

The OEM factory bears the risk. If a different company has registered that mark in Korea, the factory's manufacture, labeling, and export from Korea is itself infringing. Run a Korean trademark clearance search before accepting the order, and demand a contractual warranty from the foreign brand that its Korean rights are clear.

We only sell abroad. Do we still need to register in Korea?

Yes. Manufacturing and labeling in Korea is itself trademark use, so foreign-only sales don't immunize the operation. Foreign brands that produce in Korea benefit from holding a Korean registration in their own name — better risk allocation between the brand and the OEM factory.

Our orderer hasn't sold the brand in Korea for years. Cancellation risk?

OEM-style exports are recognized as Korean use, so cancellation risk drops materially: the OEM factory's manufacturing, labeling, and exporting are deemed use by the orderer. Documentation is the key — manufacturing contracts, OEM invoices, and shipping records identifying which goods, which OEM, since when.