Overview #
China’s first-to-file system creates a well-known risk: trademark squatters who register foreign brands before the rightful owner does. Once a squatter registers your mark, they can block your market entry or demand a ransom to “sell” it back. Understanding how to prevent and defeat squatting is critical for any foreign brand.
How Squatting Works #
- A squatter files your brand (or a close variant) in your classes — sometimes in the Chinese-character transliteration too.
- The squatter may file dozens of marks at once, targeting multiple industries.
- After registration, the squatter may sue you for infringement or demand payment to transfer the mark.
Prevention: File Early and Widely #
- File before you enter the market — even before your first sale.
- Register both your Latin mark and its Chinese transliteration, as squatters often target the character version.
- File in adjacent classes to block defensive squatters.
- Monitor the CNIPA gazette and set up watches so you can oppose new filings early.
Defeating a Squatter’s Registration #
- Opposition — if the squatter’s mark is still within the 3-month publication window.
- Invalidation — if you can prove bad faith, you may invalidate the registration. For well-known marks, there is no 5-year time limit.
- Cancellation for non-use — squatters often never genuinely use the mark, making it vulnerable after 3 years.
- Negotiation — in some cases, a transfer (assignment) is the fastest commercial resolution, though it rewards the squatter.
Legal Tools Strengthened by the 2019 Amendment #
The 2019 revision of China’s Trademark Law explicitly targets bad-faith registrations:
- Applications filed in bad faith and not for the purpose of use can be rejected.
- Courts and CNIPA can reject or invalidate bad-faith filings more readily.
- Penalties and liability for malicious squatting were increased.
Key Takeaway #
Prevention is far cheaper than litigation. File early, file in the right classes, register your Chinese transliteration, and monitor continuously. If a squatter strikes anyway, act fast — the sooner you challenge a bad-faith filing, the stronger your position.
Concerned about squatting? Contact us for a free portfolio risk review.