1.
Trademark Squatting:
Is This Relevant To Your Business's
International Growth

2.
Introduction
Trademark squatting, or bad faith
Trademark filing, is essentially when a
third-party files and apply for a
Trademark merely to sell it for a profit
later to someone who actually needs it
and/or wants to use it. The original
applicant then faces enormous challenges
in registering in that country since the
squatting party controls the intellectual
property (IP) rights to that Trademark.

3.
Trademark squatting is a serious issue in markets like China, as a result of the
differences in Trademark laws in different countries. As opposed to Australia,
China has a first-to-file Trademark system, which means that the first party to
apply and file for a Trademark obtains the rights to that Trademark indisputably.
The squatting third-party can even go one step further in enforcing their rights to
the Trademark and potentially sue the original applicant in the foreign
jurisdiction for infringement.

4.
How Can Business Owners Prevent This?
The best way to prevent any of the abovementioned squatting issues is to file in all
relevant and potential business growth jurisdictions as soon as possible, particular in first-
to-file countries. The first point of call would be to file your Trademark in your own home
country, i.e. in Australia all Trademark registrations are managed and enforced by the
government body: IP Australia. Then, you would apply for Trademark registration in your
key countries of international business growth and future business expansion.

5.
Given that third-party Trademark squatters
are notoriously adaptable, foreign business
and brand owners should stay proactive and
vigilant in their efforts when it comes to
opposing, invalidating and/or cancelling
Trademarks based on non-use. It is suggested
to conduct in-depth clearance and
background searches to investigate whether
the cited Trademark owner is in fact a third-
party squatter or a genuine Trademark
owner.

6.
The Chinese Government’s Response
The latest amendment, Article 4 of the Chinese Trademark Law (2019) saw that bad faith
Trademark applications that are not filed for the purpose or intention of use should be
refused. This empowers the original applicant to succeed in opposition or invalidation
cases before the China National Intellectual Property Administration (CNIPA) or the
people’s courts, based on the following:
● The existence of business relations with the Trademark applicant (Article 15);
● Prior copyright, name right or trade name; or
● Prior use of an unregistered Trademark with a certain influence (Article 32).
The amendment is part of a dedicated effort by the CNIPA to function as watchdogs for
Trademark squatting activities, rather than just relying on foreign business and brand
owners to initiate actions. This allows the two groups to work together to combat third-
party bad faith Trademark filings.

7.
Cases of Recent Trademark Squatting
The highly publicised legal battle between the famed American athlete, Michael
Jordan, and the Chinese sportswear company, Qiaodan Sports Co Ltd, saw that the
latter was using a Chinese transliteration of Michael Jordan’s name, “chee-ow
dahn”, and a logo of Nike’s well-known Air Jordan symbol as registered
Trademarks. The case also saw the establishment of a critical three (3)-step rule
for relying on personal name rights:
● The name has acquired a high level of reputation in China;
● The relevant public refers to that natural person by the name; and
● There is a ‘stable correspondence relationship’ between the name and the
natural person.

8.
To summarise, business and brand owners relying on this right will have to
demonstrate not only their well-known status (or a certain degree of fame), but
also compelling evidence such as awards, rankings, market surveys and national
library search reports to establish that the public does associate that name to the
natural person. It is worth noting that the personal name right of an English
name does not necessarily encompass to its Chinese counterpart or its Pinyin,
and vice versa.
Therefore, foreign business and brand owners are encouraged to file both its
English and Chinese equivalent mark to ensure the broadest scope of protection,
as third-party squatters often take advantage of multiple linguistic
representations of a given brand name in their bad faith activities.

9.
The key rule applies – if China may be relevant to your business or your future
business growth, register your Trademark there as soon as possible. This is also
the recommendation of the Counsellor (Intellectual Property), David Bennett at
the Australian embassy in Beijing. If a third-party has already registered ‘your’
Trademark(s) or Trademark(s) that are similar to your Trademark(s), different
options exist to try to remove or invalidate those registrations. However, time
limits apply so you need to act fast!
Key Takeaway for Business and Brand Owners

10.
If your organisation produces products with those types of distinctive names, you
should consider apply for a trademark for them. A registered trademark for your
items provides further protection against imitators and counterfeiters, as well as
ensures that your product name is only linked with your company. Here are a few
more things to think about while registering trademarks for product names.

11.
Apply the same level of vigilance to your product's
trademark as you do to your business's
Infringement of product trademarks is equally as common as an infringement of
corporate trademarks. Also keep in mind that possible infringers may use your
product's name as their company's name, and vice versa. This is still trademark
infringement, as is any situation in which a consumer can be mistaken about the
source of goods or services. There are no distinctions between product-level
trademarks and company-level trademarks; they are all concerned with eliminating
customer confusion and safeguarding legitimate trademark owners.

12.
Trademark law is the best area of IP law that offers protection, strategy, and leverage.
Here at IP Partnership trademarking lawyers,our team of solicitors are experts
in Trademark registrations in both Australia and internationally, and we also assist
clients with Trademark oppositions and the removal of Trademarks. Please see
contact us to discuss further.
Final Words…