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Trademark Squatting in China

Trademark squatting in China can be a big roadblock for international businesses that manufacture products in China or wish to enter the Chinese market. Trademark squatting does not only affect famous brands such as Siemens, Tesla, Facebook or Apple or stars such as Emma Watson or Michael Jordan but also small to medium-sized Australian businesses.

China is Australia’s largest trading partner and Australia is China’s seventh largest trading partner with two-way trade valued at over AUS 155 billion in 2015.

Trademark Squatting

Many Australian businesses get caught out because they fail to register their trademark in China Trademark squatting in China early on. By the time they want to do business in China they may learn that their trade mark has already been granted to a Chinese company.

Similarly, Australian businesses that manufacture goods in China may find that a Chinese trademark squatter has registered their trademark with the intention of selling it back to the Australian company at an inflated price.

Trademark squatters will exert pressure on foreign companies by recording their trademark with China’s customs so that any imported or exported goods bearing the trademark will be detained. If China’s custom authority determines that the goods infringe a Chinese trademark, then it will confiscate the goods and issue a penalty notice.

How to deal with Trademark squatting in China

When a overseas company falls victim to a trademark squatter, it may be unable to use or register its trademark in China trade any goods or services with the brand on it in China. In the end, the business may be forced to to buy back its trademark from the trademark squatter, rebrand its products or services, or to take up the battle through the Chinese legal system.

The best strategy against trademark squatting in China is to apply for your trademark as early as possible. A solid defensive strategy to protect your brand in China is equally important i.e you will need to think about other intellectual property rights as well.

The Chinese trademark system operates on a first-file first-serve basis; only in very limited circumstances does the prior use of the trademark give rights to the mark.

A recent reform of the Chinese trademark law has put more emphasis on prior use and preventing registration of trademarks in bad faith. However, under Chinese trademark law, the interpretation of bad faith is very narrow and does not necessarily stop trademark squatters from stock-piling foreign trademarks.

What to do when you have become the victim of a trademark squatter:

Come up with a solid strategy (and stick to it!)
Opposition to trademark registration
Invalidation proceedings based on bad faith proceedings
Cancellation of trademark based on non-use
Defensive filing strategy by taking a multi-layered IP approach

Exhibitor: LawDownUnder Limited

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