The term "trademark squatters" is used in China to describe individuals who attempt to register others' trademarks solely for financial gain or to make things more difficult. It can range from a competitor seeking to diminish your profit margin in China to those who register thousands of trademarks for the purpose of selling them later on. Regrettably, some exporters are required to pay the fee, which can be as high as USD 250,000, to regain ownership of their trademarks through bad-faith registrations. Big brands, as well as smaller and medium-sized brands are also victims of trademark squatters.
In certain instances, one may come across scenarios where a Chinese distributor illicitly appropriates the trademark of a foreign company, subsequently registering it under their own name without obtaining any form of consent. SMEs are expanding their presence in China by introducing their products to the market. While they have been manufacturing their products in China for a considerable period, they now aim to sell their products within the country as well. Regrettably, many of these foreign companies frequently overlook the importance of formalizing their partnerships with Chinese distributors. They neglect to create suitable contracts, apply for essential trademarks, or establish crucial licensing agreements to safeguard their intellectual property.
What does this mean? To put it bluntly they are held hostage and have to pay the ransom, without it companies fail to make sales meaning no money. Unfortunately companies big or small pay heaps of money to buy back the brand name.
It is crucial to adopt a strategic approach when registering your trademarks in China, rather than simply going through the motions. In addition to your company name and logo, it is advisable to register your product names, slogans, and even product shapes and packaging designs. This comprehensive strategy offers multiple layers of protection against trademark infringement, ultimately enhancing your safeguards from potential disputes with your own distributor. It is always more cost-effective and less time-consuming to prevent a dispute rather than engage in a legal battle.
How can you prevent this happening to you? Simple, think ahead by trademark as soon as possible before you set foot in China or make any contact with anyone in China. That way you are way ahead of any thieves out there waiting to fleece you by beating you to it. Remember there are people in China waiting for whiff of anything new to trademark so they see it as an investment because they know foreign companies or individuals will have to pay to sell back the rights to the rightfully original owner.
