There is a specific word describing this “trademark squatting” in China. Trademark squatters register international brands in China anticipating their entry China. Once they enter China, the squatters try to sell the trademarks back to the brand owners to earn profits. Some trademark squatters even use the reputation of the international brand to establish their own companies and make a profit on the original brand’s value.
If you lost the advantage of prior filing, there would be not only risk of trademark infringement, but also lengthy battle against the squatting, which may last for many years. The battle against the squatting is not only time consuming, but also costly, and the result is not always satisfying. Even at last, you need to pay high cost to buy your trademark back.
If trademark sputtering happens, we usually suggest:
- filing your own trademark as soon as possible;
Though your application will be inevitably rejected and you should deal with a refusal appeal due to the prior trademark of the squatters, you must do it so as to 1) avoid any further third marks involved. 2) when the squatter’s mark is successfully taken down, your trademark will be approved that time.
- filing opposition/invalidation announcement/non-use cancellation against the rush-applied trademark at the same time;
Here below is the estimated time for the procedures against the squatting:
- 12-14 months for refusal appeal for your own mark
- 12~18 months for opposition against the bad faith mark, or 9~12 months for cancellation based on non-use for consecutive three years, or 12~18 months for invalidation
Generally, there are 3 possibilities of the result:
Possibility 1: If the bad faith trademark be successfully canceled before the examination of the refusal appeal case, your trademark will be approved after refusal appeal. This is the best result.
Possibility 2: If the bad faith trademark is still pending in examination when examining the refusal appeal case, the your trademark will be rejected because the bad faith trademark is still “effective trademark”. In this case, you may have to file a law suit to the IP Court to extend the time waiting to the result of the procedure. Whether your trademark will be approved or not depends on the result of the action against the bad faith trademark.
Possibility 3: if the bad faith trademark be maintained, your trademark will be rejected because the bad faith trademark is effective.
- Purchasing the trademark back from squatters.
You may need to leave certain budget for the negotiation and purchasing. The price is unknown and hard to estimate. It is suggested to ask a local Chinese agency to do the negotiation. Technically, to purchase the trademark from squatters, we usually try to hide the true client but only negotiate under a Chinese shell company. This is an effective way to keep the price not too high.
It is frustrating to deal with squatters to recapture your trademark. Previously, the chance of success is not good as the China Trademark Office (CTMO) is quite conservative to cancel a squatter’s trademark even with obvious bad faith. Fortunately, from the year 2018, CTMO changes the attitude, it launched some express provisions to say no and take down bad faith trademark applications. It is a good news specifically for foreign companies, considering that squatters mostly focus on foreign brands.
Therefore, if squatters rush-registered your brand name in China, don’t be afraid, just go through the procedure and you can get your trademark back.