Bad-Faith Trademark Registrations in China: How Foreign Brands Can Fight Back and Reclaim Their Marks

Understanding Trademark Squatting in China

Trademark squatting — the practice of registering another party’s mark in bad faith, typically before the legitimate brand owner has entered the market — remains one of the most persistent challenges facing foreign companies doing business in China. Despite significant legal reforms in recent years, the first-to-file principle that governs China’s trademark system continues to create opportunities for opportunistic actors.

The scenario is distressingly common: a foreign brand discovers that its name or logo has already been registered at the China National Intellectual Property Administration (CNIPA) by a local entity with no connection to the brand. The squatter may then demand a buyout, use the registered mark to block the legitimate brand’s market entry, or — worse — produce counterfeit goods bearing the registered mark and claim legal protection against the genuine brand owner.

The good news is that China’s legal system now provides multiple avenues to fight back. The 2019 amendment to the Trademark Law introduced explicit provisions targeting bad-faith applications, and subsequent judicial interpretations and CNIPA guidelines have sharpened the tools available to legitimate brand owners. Success is possible — but it requires strategy, evidence, and timely action.

How Trademark Squatters Operate

Understanding the squatter’s playbook is essential to countering it. Typical patterns include:

Pre-emptive Filings. The squatter monitors foreign trademark databases, trade show announcements, and social media to identify brands that are not yet registered in China. They file applications covering the core goods or services the brand would occupy, plus adjacent classes, to maximize leverage.

Translations and Transliterations. A sophisticated squatter will register not only the original Latin-character mark but also its Chinese transliteration — the phonetic rendering that Chinese consumers are most likely to use. Many foreign brands have learned this lesson the hard way after discovering that their Chinese name was registered by a third party years before they attempted to enter China.

Logo and Trade Dress Filings. Squatters may file not just word marks but also device marks that closely resemble the brand’s logo, packaging design, or store layout. This extends the blockade from the name to the visual identity.

Class-Spreading. The squatter files across multiple classes of the Nice Classification, including classes the genuine brand owner has no immediate plans to use. The purpose is to increase the size of the demanded buyout.

China’s Legal Framework Against Bad-Faith Filings

Article 4 of the 2019 Trademark Law states explicitly that “an application for trademark registration that is filed in bad faith and is not intended for use shall be rejected.” This is the foundational provision. Supporting it are:

• Article 7: The principle of good faith in trademark application and use.
• Article 32: Protection of prior rights (including trade name rights, copyright, design rights, and the right to a personal name) against trademark registration by unauthorized parties.
• Article 44.1: Grounds for invalidation, including registration obtained by deception or other improper means.
• Article 49.2: Grounds for cancellation if a registered mark has not been used for three consecutive years without justifiable reason.
• Article 68.4: Penalties for bad-faith applications, including administrative fines and, in cases involving litigation, potential court-imposed penalties.

CNIPA’s Examination Guidelines, most recently updated in 2022, provide detailed criteria for examiners to identify and reject bad-faith applications at the examination stage — before they even reach publication. These criteria include: the number of trademark applications filed by the applicant across multiple classes, the applicant’s business scope relative to the goods and services claimed, whether the applicant has a history of selling marks, and whether the mark is identical or confusingly similar to a well-known brand.

Opposition: Stopping a Squatter Before Registration

If a squatter’s application is published for opposition — a three-month window following preliminary approval by CNIPA — the legitimate brand owner has a critical opportunity to block registration before it vests.

An opposition must be filed with CNIPA within three months of the publication date. The grounds should be as comprehensive as possible, typically combining:

• Bad faith under Article 4 and Article 7 — demonstrating that the applicant has no genuine intent to use the mark and has a pattern of squatting behavior.
• Prior rights under Article 32 — showing that the opposer has earlier trade name rights, copyright in the logo, or unregistered trademark rights through prior use in China.
• Well-known mark status if applicable — marks recognized as well-known in China enjoy cross-class protection, meaning they can be opposed even in classes where the genuine brand owner has no registration.
• Similarity and likelihood of confusion — if the brand owner already has a prior registration in the same or similar class.

The opposition process typically takes 9 to 12 months to a first-instance decision, with an appeal available to the CNIPA review board. It is not the fastest remedy, but it is often the most cost-effective way to prevent a squatter from acquiring a registrable right.

Invalidation: Cancelling a Squatter’s Registered Mark

If the squatter’s mark has already been registered — either because the legitimate brand owner missed the opposition window or because the mark was registered before the brand became aware of it — an invalidation action is the next line of defense.

An invalidation petition is filed with CNIPA and may be based on any of the grounds listed in Articles 44 and 45 of the Trademark Law. For marks registered more than five years ago, invalidation is only available on limited grounds — including bad faith and well-known mark status — so timing is critical.

The invalidation process is adversarial: the squatter has an opportunity to respond, and both parties submit evidence and arguments. CNIPA’s decision may be appealed to the Beijing IP Court, and from there to the Beijing Higher People’s Court. A fully contested invalidation — through all levels of review — can take three to five years, but a successful outcome restores the brand owner’s freedom to register and use the mark in China.

Non-Use Cancellation: A Strategic Weapon

One of the most underutilized remedies is the non-use cancellation action under Article 49.2. If a registered trademark has not been put to genuine commercial use in China for a continuous period of three years, any interested party may petition CNIPA to cancel the registration.

Many squatters register marks purely to extract buyout payments and never actually use them in commerce. For these cases, a non-use cancellation action can be remarkably effective — and relatively fast, often taking 6 to 12 months. The burden of proof rests on the registrant to demonstrate genuine use. If the squatter cannot produce credible evidence of use — sales invoices, advertising materials, product packaging bearing the mark — the registration will be cancelled.

Non-use cancellation is particularly valuable as a parallel strategy to opposition or invalidation. Even while an invalidation case proceeds through its multi-year trajectory, a non-use cancellation can deliver a faster result if the squatter has failed to use the mark.

Civil Litigation and Administrative Enforcement

Beyond CNIPA proceedings, brand owners may pursue civil litigation against squatters in Chinese courts. Available claims include:

• Trademark infringement if the squatter is using the registered mark in a manner that creates consumer confusion.
• Unfair competition under the Anti-Unfair Competition Law, particularly if the squatter is using the mark in conjunction with trade dress, packaging, or marketing that mimics the genuine brand.
• Copyright infringement if the squatter’s device mark reproduces a logo or design in which the brand owner holds copyright — a particularly powerful claim because copyright arises automatically upon creation and does not require registration in China (though a Chinese copyright registration certificate significantly strengthens the evidentiary position).

Administrative enforcement through local Administration for Market Regulation (AMR) offices is also available. AMR has the authority to raid premises, seize counterfeit goods, and impose fines. For brands facing active counterfeiting operations backed by a squatter’s registration, administrative enforcement can provide the fastest operational relief.

Building an Effective Evidence File

Success in any of these proceedings depends heavily on the quality of the evidence. A strong evidence file should include:

• Proof of prior creation and adoption: Early design files, branding guidelines, and internal communications establishing when the mark was created.
• Proof of international use and reputation: Sales figures, marketing expenditure, media coverage, social media presence, and awards — particularly any evidence that the brand’s reputation extended to China before the squatter’s filing date.
• Proof of the squatter’s bad faith: Evidence that the squatter has filed multiple marks belonging to other foreign brands, has a history of offering marks for sale, or has demanded a buyout from the legitimate brand owner. CNIPA’s own database is searchable by applicant name, making it possible to identify patterns of squatting behavior.
• Proof of prior rights in China: Business licenses, lease agreements, sales to Chinese customers, attendance at Chinese trade shows, and any WeChat or Weibo activity predating the squatter’s filing.
• Copyright certificates: A Chinese copyright registration for the logo or artwork, obtained as early as possible — ideally before the dispute arises.

Prevention: Registering Before Entering China

The most effective defense against trademark squatting is to register first. Foreign brands should file Chinese trademark applications before — or at the very latest, simultaneously with — any public announcement of China market entry plans. This includes:

• The core brand name in both Latin characters and its Chinese transliteration.
• The logo as a device mark.
• Key product names and taglines that the brand intends to use.
• Registration across the core class and adjacent classes that the brand might plausibly expand into.

China’s trademark registration process is class-based and generally takes 8 to 12 months for a smooth application. Filing should be through a qualified Chinese trademark agent or law firm, as foreign applicants must act through a CNIPA-registered Chinese agent.

Conclusion

Trademark squatting in China is a real and persistent threat, but it is not an unstoppable one. The legal tools exist — opposition, invalidation, non-use cancellation, civil litigation, and administrative enforcement — and the legislative and regulatory trend is clearly in favor of stronger protections for legitimate brand owners.

The critical variable is not the availability of remedies but the speed and quality of the brand owner’s response. A squatter’s bargaining position deteriorates rapidly when confronted with a comprehensive evidence file and a multi-pronged legal strategy. The brands that recover their marks are those that act early, act decisively, and engage experienced Chinese trademark counsel — such as the team at Dan Young Business Consultancy — to navigate the procedural landscape.