As more businesses expand into China, many overlook a major risk: trademark squatting. This occurs when someone registers a trademark, not to use it, but to sell it back to the rightful brand owner. China’s first-to-file trademark system allows squatters to gain exclusive rights to a brand simply by registering it first. This creates a gold rush of bad-faith filings, where squatters hold trademarks hostage for ransom. Major corporations like Apple, Tesla, and Starbucks have been forced into costly legal battles to reclaim their brands. But large businesses are not the only targets—small businesses are equally vulnerable.
Some brand owners mistakenly believe that a U.S. trademark registration provides protection in China. It doesn’t. Seeking trademark registration in China is the only way to protect your brand there. Even if your business activities in China are limited, such as sourcing products, it’s important to file for trademark protection. Timing is crucial. Waiting too long may result in a squatter filing first, putting you in a costly legal battle or forcing you to rebrand.
As China’s trademark laws continue to evolve, so must your strategy. To stay ahead, companies must be proactive about trademark protection and adapt their strategies to the evolving legal landscape. In the world of global business, protecting your brand in each jurisdiction in which you operate is essential to avoid costly disputes and loss of market access. Parsons Behle & Latimer’s trademark attorneys are highly experienced in protecting brands in China and most other countries around the globe.
