How to Protect Your Business From Trademark Squatters in China
Introduction
Trademark squatting is a persistent problem for international businesses entering or operating in the Chinese market. Despite improvements in China’s legal framework, the system can still be gamed by squatters who profit from the ‘first to file’ method. This contrasts sharply with the ‘first to use’ approach used in countries like the United States. Trademark squatters often identify targets at trade shows or online, registering trademarks of brands not yet in China to later resell them at high prices.
An Improving But Still Imperfect System
China has made significant strides in addressing trademark squatting through legislative amendments. The 2019 amendments to the China Trademark Law introduced new grounds for opposing and invalidating trademarks based on bad faith filings, along with increased penalties for such actions. Articles 4 and 44 allow challenges to trademarks lacking a bona fide intention to use, while Articles 63 and 68 impose administrative penalties and higher damages for bad faith filings.
Moreover, the enforcement landscape has improved with the e-Commerce Law, which empowers platforms to take substantial actions against squatters. These actions include removing infringing links and banning accounts, providing a more efficient route than direct legal confrontation.
How to Protect Your Brand in China
Early Registration
Given China’s ‘first to file’ system, securing your trademark early is crucial. Businesses planning to expand into China should file for trademark registration as soon as possible, as the process can take over a year.
Multiple Registrations
Trademark squatters can exploit businesses by registering trademarks in various categories and subcategories. To prevent this, companies should register their trademarks in as many relevant categories as possible. Continuous monitoring for potential squatting or infringement is essential even after initial registration.
Protect Yourself by Translating the Trademarks
In China, it’s important to register not just the English version of your brand but also its Chinese transliteration. Western companies often use Chinese transliterations to localize their products. For instance, the Chinese version of Jordan is Qiaodan. Registering both the English and Chinese versions ensures comprehensive protection. Engaging multilingual professionals for this task is highly recommended.
Keep Accurate Records
Maintaining detailed records of all trademark-related documentation is critical. This includes paperwork from international operations, facilitating renewals, cancellations, and amendments. Accurate records also strengthen your position in disputes with trademark squatters.
Expect a Fight
Pursuing legal action against trademark squatters can be lengthy and expensive. Companies should be prepared for a protracted struggle, although recent legal changes have improved the success rates for non-use and invalidation actions.
Settlement and Negotiation
Given the cost and uncertainty of legal battles, negotiating with squatters for an out-of-court settlement may be more practical. This approach, while potentially frustrating, can save time and resources in the long run.
Conclusion
Trademark squatting remains a challenge in China, but businesses can mitigate risks by staying proactive. Early and multiple registrations, translating trademarks, maintaining accurate records, and considering settlements can help protect your brand. While Chinese law has improved, continuous vigilance is necessary to safeguard your interests.
At ChinaLegalSolutions.com, we offer comprehensive legal services to help you navigate these challenges. Our expertise in international trading disputes, intellectual property, and pre-investigation services ensures you make informed decisions when dealing with Chinese suppliers. Protect your business with our tailored legal solutions. Contact us today to learn more about how we can support your trademark protection efforts in China.