Trademark Squatting in China: Defensive Filing Before You Launch

A UK client tells you they have "soft launched" in China through a Tmall Global storefront and a WeChat account, and now discovers a local individual has registered their brand name in Chinese characters across three classes. This scenario lands on UK IP desks with painful regularity, and the options available under PRC law depend almost entirely on what was — or was not — done before the client's first commercial contact with China.

The first-to-file reality

PRC trademark rights are, with very narrow exceptions, allocated on a first-to-file basis under the Trademark Law. Use in the UK, EU or US confers no right in China. Nor does use in China itself, unless the mark has genuinely become "well-known" within the meaning of the statute — a high evidentiary threshold that most foreign brands, particularly pre-launch or B2B brands, cannot meet.

The practical consequence for UK brand owners is straightforward and unforgiving: whoever files first at the China National Intellectual Property Administration (CNIPA) obtains the registration, and that registration is prima facie enforceable against the "true" brand owner. Squatters know this. Professional squatters monitor UK and US trade press, Kickstarter campaigns, fashion week coverage and industry awards, and file within days of any signal that a foreign brand may be heading east.

The Madrid Protocol route via WIPO is available, but designating China through Madrid is not a substitute for a properly considered China filing strategy: the classification, subclass coverage and Chinese-character elements need local input that WIPO designations do not, on their own, provide.

What "bad-faith" filing means under the Trademark Law

The Trademark Law, particularly following the 2019 amendments, contains express provisions aimed at bad-faith filings. Article 4 prohibits applications filed in bad faith without an intent to use, and Article 44 allows invalidation of registrations obtained by "deceptive or other improper means". Article 32 prohibits pre-emptive registration of a mark already in use by another party with certain influence, where the applicant knew of that prior use.

In practice, CNIPA and the courts will consider factors such as:

• The applicant's filing pattern (hoarding of dozens or hundreds of marks across unrelated classes is a strong indicator).
• Whether the applicant has any genuine business in the goods or services covered.
• Prior dealings between the parties — distributors, agents, manufacturers and former employees who file "their own" version of the principal's mark are treated with particular scepticism.
• Reputation of the foreign mark, including reputation acquired outside China where the Chinese public would plausibly be aware of it.

The bad-faith route is real, but it is evidence-heavy and slow. A well-timed defensive filing programme is always cheaper and faster than an invalidation campaign after the fact.

Opposition, invalidation and non-use cancellation

Three principal administrative mechanisms exist to attack a squatter's mark:

1. Opposition — filed within three months of publication of the application. This is the cheapest and fastest option, but the window is short and requires active watching of the CNIPA gazette.
2. Invalidation — filed after registration. Absolute grounds (bad faith, deception) have no time limit; relative grounds (prior rights, prior use with influence) must generally be raised within five years of registration, with the five-year cap not applying to well-known marks against bad-faith registrants.
3. Non-use cancellation — available where a registered mark has not been used in commerce for three consecutive years. This is a powerful and often underused tool against squatters who hoard but do not exploit.

A China trademark opposition or invalidation typically takes 12 to 18 months at first instance before CNIPA, with further judicial review available before the Beijing IP Court and, on appeal, the Beijing High People's Court. UK counsel should budget accordingly and manage client expectations on timing.

The defensive filing strategy every UK brand should complete

To protect brand in China effectively, the pre-launch checklist should include the following, ideally six to twelve months before any public China-facing activity — including trade fair attendance, Tmall Global listings, or Chinese-language marketing:

• File the Latin-character mark in all commercially relevant Nice classes, paying close attention to the CNIPA subclass system (each class is subdivided, and coverage of one subclass does not extend to others).
• Adopt and file a Chinese-character mark. If you do not choose one, the Chinese market and, worse, a squatter will choose one for you. The Chinese mark should be developed with linguistic, phonetic and cultural review, and searched for prior conflicts.
• Consider a pinyin transliteration as a separate filing where the Latin mark is unlikely to be pronounceable by Chinese consumers.
• File defensively in adjacent classes — particularly classes 35 (retail services), 9 (apps and software), 25 (apparel), 41 (entertainment/education) and any class touching the client's likely brand extensions.
• Register the ".cn" and ".com.cn" domains and secure Weibo, WeChat, Douyin and Xiaohongshu handles matched to the brand.
• Impose contractual IP covenants on Chinese distributors, agents, OEM manufacturers and joint venture partners expressly prohibiting them from filing marks that are identical or similar to the principal's marks, and requiring assignment of any such filings at cost.
• Instruct a watching service at CNIPA to catch third-party filings within the opposition window.

For UK solicitors advising on M&A or licensing into China, this checklist is also a due diligence template: ask the target for its full CNIPA portfolio, subclass coverage, and any pending oppositions or invalidations, and reconcile that against the trading names actually used in market.

Practical guidance for instructing UK solicitors

When you instruct China counsel on a squatting problem, the following materials materially shorten timelines and reduce cost:

• Evidence of first use of the mark globally, with dated documentary proof (invoices, press coverage, product launches, filings elsewhere).
• Evidence of any reputation in China — media coverage in Chinese, social media follower data, sales via cross-border e-commerce, attendance at Chinese trade fairs.
• Any prior contact between the client and the squatter (former distributor, ex-employee, factory, agent) — this transforms a difficult "influence" argument into a strong bad-faith case.
• The squatter's own CNIPA filing history, which we will pull and analyse.
• A clear commercial objective: do you want the mark back, do you want the squatter's mark dead, or do you want to negotiate a coexistence or assignment?

The last point matters. Buying the mark back is sometimes the quickest commercial solution, but doing so without legal structuring can encourage repeat behaviour and can create tax and foreign exchange complications on the Chinese side.

FAQ

Can a UK company rely on its UK or EU trademark registration to stop a Chinese squatter? No. PRC trademark rights are territorial and first-to-file. A UK or EUIPO registration is evidence of prior use and reputation but confers no direct rights in China and, on its own, will not defeat a Chinese registration.

How long does a China trademark opposition take, and what does it cost? A CNIPA opposition typically resolves in around 12 months at first instance. Costs vary with complexity and evidence volume, but oppositions are materially cheaper and faster than post-registration invalidation, which is why calendaring the three-month publication window is critical.

Is it worth registering a Chinese-character version of the brand if we do not use Chinese marketing? Yes. Chinese consumers, distributors and media will refer to the brand in Chinese whether the company chooses the characters or not. If the company does not file, a squatter or an "enthusiastic" distributor almost certainly will, and reclaiming that mark later is expensive.

Does the 2019 bad-faith prohibition actually work in practice? It has meaningfully improved outcomes for foreign brand owners, particularly where the squatter is a serial filer or has a prior relationship with the brand owner. It is not, however, a substitute for defensive filing: bad-faith arguments take one to two years to run and require solid documentary evidence.

How Eugen Law Firm assists

Eugen Law Firm acts as China counsel to UK IP practices and their clients on the full lifecycle of Chinese trademark protection — from pre-launch clearance, Chinese-character brand development and multi-class defensive filing at CNIPA, through to opposition, invalidation, non-use cancellation and civil enforcement against infringers and squatters. We work directly with instructing UK solicitors in English, deliver in UK working hours where needed, and integrate our advice with your global brand strategy.

To discuss a China trademark portfolio, a suspected squatting matter, or a pre-launch IP audit, please contact us at [email protected].