Newsletter
Beware of malicious trademark squatting—early formulation of trademark strategies in China is needed!
I. Introduction
With the prosperity of international trade, global well-known brands are developing the local markets all over the world. China with a high population has become the most attractive market for the extension of well-known brands. However, since malicious trademark squatting is turning to be a serious issue in China, it should be highly concerned when enterprises are expanding their markets and exploring business strategies.
No matter it is a well-established athletic brand in the United States, a well-known social software, a world-class computer or cell phone, or a well-known daily commodity brand in Japan, brands are huge victims of malicious trademark squatting. Once the trademark is squatted, the brand often fails to invalidate the trademark registration, and even be accused of trademark infringement in China. The foreign brand is not only prohibited from using the trademark which is registered and long-used abroad, but also be ordered to compensate for economic losses and reasonable costs to the trademark squatter. The well-established athletic brand in the United States which has long been suffered by the trademark squatting has recently made a huge success on civil judgement of unfair competition and administrative judgement invalidating one of the registrations. Nevertheless, it still failed to eliminate all the squatted trademarks in China.
The above examples indicate the serious issue of trademark squatting in China. If the enterprises are planning to enter the Chinese market, the formulation of trademark strategies is an urgent priority.
This article will discuss the advantages and disadvantages of trademark registration, and further introduce the different categories of malicious trademark squatting.
II. Overview of the trademark registration and squatting in China
(I) Different types of malicious trademark squatting
There are two main types of malicious trademark squatting in China. The first is the registration of similar trademarks with the well-known brands, which is known as “leaning on famous brands” or “playing edge ball”. The confused consumers may misidentify the squatters as the sources of the well-known brands, or be mistakenly suggested the franchise, chain, or cooperative relationships between the well-known brands and the squatters. The second type is the occupation of registered trademarks, in which the applicants sell the trademarks at high prices to make profits.
(II) Advantages for the early formulation of trademark strategies in China
In view of the above situation, this article suggests the early plan of trademark strategies for the enterprises which aim to develop the Chinese market. First, the large population, huge market, and strong consumption ability make China a market worth deep development. Moreover, China adopts the first-to-file principle which is same as the one in Taiwan, and the enterprise can get full protection in all territories of China with low registration costs. In addition, the registrations help establish the right and legal basis against the infringement. Once a complete trademark strategy is implemented, it would not only benefit the brand image and marketing plan, but also strengthen the legal protection. Therefore, it would avoid the heavily invested brand from being hijacked and infringed.
III. Conclusion and Suggestion
The low trademark registration fees, people’s free-riding mentality, and the emphasis on the protection of intellectual property rights in recent years have led to the increasingly serious malicious trademark squatting. Although the court will make a comprehensive judgment in malicious trademark squatting based on applicants’ behaviors, since the litigation is not in favor of the one who bears the burden of proof, the trademark owners still have the risk of losing the lawsuit. As a result, the early formulation of trademark plans and strategies is suggested to the enterprises which aim to develop the Chinese market.