China Trademarks Matter
In the world of international business, registering your trademark in China is crucial. Despite ongoing advocacy for trademark protection, we are frequently contacted by companies discovering that their trademarks have already been registered by others. These third-party registrants, often referred to as “trademark squatters,” fall into distinct categories, each requiring tailored strategies for response and resolution.
China Trademark Squatter Categories
Category One – The Opportunistic Registrar
This category consists of individuals who register trademarks with no intention of using them, often to exploit foreign brands. These registrants hold trademarks for ransom, demanding hefty sums—around $10,000 or more—to transfer ownership back to the rightful brand owner. While one might think these cases would be easy to invalidate, navigating the legal system can take years and may cost thousands without guaranteed success. Many foreign brands opt to pay these opportunists, viewing it as a nuisance expense.
Category Two – The Product Counterfeiter
Counterfeiters represent a more insidious threat. These squatters register trademarks not for ransom but to produce and sell counterfeit goods. They capitalize on the legal ownership of the trademark in China, allowing them to operate without repercussions. Brand owners find these cases particularly frustrating, as proving bad faith can be challenging, especially if the squatter actively uses the trademark. This situation highlights the critical need for foreign companies to secure trademark registrations in China before entering the market.
Category Three – The Sabotaging Competitor
This category includes competitors who register trademarks to block foreign brands from entering the Chinese market. These squatters often register names associated with companies in their industry and then leverage that ownership to demand exorbitant prices for trademark transfer. Their tactics may include threatening to halt production or distribution, thereby jeopardizing the foreign brand’s global operations. Unfortunately, the prospects for recovering these trademarks are slim, as proving that these registrations were made in bad faith is rarely successful.
Category Four – The “Well-Meaning” Supplier
Sometimes, trademarks are registered by suppliers or distributors who claim they did so to protect the brand owner. While this may be true, it raises questions about why the brand owner was not consulted. If the relationship remains positive, the process of assigning the trademark back to the brand owner is relatively straightforward. However, if the partnership has soured, proving bad faith becomes essential and can be supported by documentation of the business relationship. This is the simplest scenario to address, provided you have the right agreements in place.
Category Five – The Unintentional Copycat
The final category is the least problematic: the unintentional copycat. In rare cases, individuals in China may independently register a trademark that resembles a foreign brand. While this situation is unfortunate, the registrant has complied with China’s “first-to-file” trademark law. The only recourse may be negotiating a purchase, which is often not fruitful.
Conclusion
If you discover that your trademark has been registered by a squatter in China, identifying the category they fall into is essential for formulating your response. Ultimately, the best strategy is to preemptively register your trademark in China to avoid potential conflicts altogether. Being proactive in securing your intellectual property can save you time, money, and legal headaches down the road. Don’t wait until it’s too late—register your trademark today.