·About The Author·
· Author of Intellectual Property, Commercial, Company and Economic Law In A Minute
· Co-Author of Peking University Textbook: Business Ethics
· Graduated from Fudan University Law School
· Interviewed by Bloomberg and Timeout
· Served over 200 foreign clients from over 40 countries
· Honorary Legal Advisor of Esports International Group;
International Financial Technology Academy;
The Asian General Chamber Of New Retail
· Mentor at Bloom Education (Charity)
Wechat: Search edgarchoilaw or scan the QR code below
International Trade Law
Ray is the owner of an electronic car battery factory in China. He takes orders from the European market, and ships batteries overseas.
Recently, Ray got an order from a French company for 1000 batteries, with a final destination of Spain. After shipping, the French company decided to sell those batteries to Italy instead for a higher premium without notifying Ray.
An Italian car company discovered that these batteries had infringed their patent, and sent a lawyer's letter to Ray, demanding that he pay them a huge amount of compensation.
Does Ray need to compensate the Italian company?
Law In A Minute
No. According to the CISG, the seller’s obligation to guarantee intellectual property rights only extends to two places: the buyer’s place of business and the final destination.
As the buyer's place of business is France, and the original destination is Spain, Ray only needs to ensure that the batteries are not in infringement of these two countries' Intellectual Property laws.
As the French company did not notify Ray that the final destination of sales would be changed to Italy instead, Ray is no liable for infringement of patents in Italy. Ray can rip up the lawyer's letter.
United Nations Convention on Contracts for the International Sale of Goods
The seller must deliver goods which are free from any right or claim of a third party, unless the buyer agreed to take the goods subject to that right or claim. However, if such right or claim is based on industrial property or other intellectual property, the seller's obligation is governed by article 42.
(1) The seller must deliver goods which are free from any right or claim of a third party based on industrial property or other intellectual property, of which at the time of the conclusion of the contract the seller knew or could not have been unaware, provided that the right or claim is based on industrial property or other intellectual property:
(a) under the law of the State where the goods will be resold or otherwise used, if it was contemplated by the parties at the time of the conclusion of the contract that the goods would be resold or otherwise used in that State; or
(b) in any other case, under the law of the State where the buyer has his place of business.
(2) The obligation of the seller under the preceding paragraph does not extend to cases where:
(a) at the time of the conclusion of the contract the buyer knew or could not have been unaware of the right or claim; or
(b) the right or claim results from the seller's compliance with technical drawings, designs, formulae or other such specifications furnished by the buyer.
To watch the video, click the image above.