CABILLY & CO. BLOG

Importance of Having a Chinese Trademark Registration (a Tale of Chinese Trademark Squatters)

Importance-of-Having-a-Chinese-Trademark-Registration1-1.jpg
Importance-of-Having-a-Chinese-Trademark-Registration1-1.jpg

As an Amazon seller in the US marketplace, you may already have a US trademark due to its immense benefits.

But if you manufacture in China, it is recommended that you register your mark there as well.

Owning a China trademark – Why is this important?

Owning a China trademark for your brand can prevent interruptions to your manufacturing and export. For example, if a third party owns a trademark for your brand in China they can apply for detainment with customs, which would stop your outgoing shipment. Owning a China trademark will also increase the value of your business when it’s time to exit. Conversely, lacking a China mark may deter potential business buyers if you manufacture there.

If a third party were to register your brand in China they could try to interrupt your business

If a third party were to register your brand in China they could try to interrupt your business and offer to sell you the mark (your brand!). This unfortunate practice is commonly referred to as “trademark squatting”.

Here’s how it works

A Chinese third-party notices your brand is selling well in the US but the mark is not registered in China.

The squatter then applies to registering your brand with the China Trademark Office. At this point you may be contacted by a Chinese “law firm” associated with the squatter, asking for a ransom payment in exchange for assigning the trademark to you. The asking price is usually outrageous – usually thousands of dollars.

Options for dealing with China’s trademark office:

  1. A legal challenge — filing to cancel or oppose the mark with the China Trademark Office. Such a proceeding can take over a year to be adjudicated. Your chances of success will increase if the squatter is a serial offender, who filed to register other brands in bad faith; OR
  2. Purchasing the mark — negotiate with the squatter and purchase the registration. Though this option may be unappealing and costly, it can save valuable time and may be the clincher for your exit.

Either of these options should involve a law firm for consultation.
Taking no action to challenge or obtain the trademark should be avoided as it can damage your business.

China is a first-to-file country

Importantly, China is a first-to-file country. This means that if you file to register your brand in China after the squatter, your mark may be refused due to the squatter’s prior trademark filing. So, it is recommended to avoid delays in applying to register your brand in China, and it’s important to conduct an availability search before filing. As mentioned, if your brand was already applied-for in bad faith it may be possible to invalidate the mark through a legal proceeding, rather than negotiate with the squatter. Once the squatter’s trademark is invalidated that should clear the way for your trademark to register in China.

Legal Disclaimer: The articles published on our platform are for informational purposes only and do not constitute legal advice in any form. They are not intended to be a substitute for professional legal counsel. For any legal matters, it is essential to consult with us or a qualified attorney who can provide advice tailored to your specific situation. Reliance on any information provided in these articles is solely at your own risk.
Contact us

Table of Contents