When it comes to China IP protection, one of the greatest mistakes a brand can make is failing to register its trademarks in China. An unregistered trademark is a tempting target for trademark squatters (and other bad-faith actors, such as unscrupulous competitors), who register trademarks in the hopes of a payday from legitimate owners.
Most clients understand this at a conceptual level, but some question whether there is really a risk that a trademark squatter in China will spot their unregistered mark. “It’s not like we’re Starbucks” and “we’re not interested in selling to Chinese consumers” are two common objections.
Yet the reality is that trademark squatters are looking for victims all the time. What’s more, they will take their chances on just about any trademark, regardless of how small the brand, as long as there is a chance their bet will pay off. And given that it’s not very costly to register a mark in China, the chances of success don’t have to be high for the gamble to make economic sense.
When hunting for prey, trademark squatters will look at e-commerce platforms to see who’s doing well. Savvy trademark squatters will quickly have a good idea of whether the products are made in China (which of course is often the case).
For sellers sourcing from China, having their trademark in the wrong hands can be catastrophic. Their products will technically be counterfeits, meaning the trademark squatter could wreak a lot of havoc if its demands (usually cash in exchange for the trademark ownership) aren’t met.
Trademark squatters will also look at other countries’ trademark filings. If you think about it, a trademark filing in, say, the United States, is a clear indication that something is going with the brand in question. In fact, this is particularly true in the United States, where trademarks can only be registered if they are actually used in commerce. If the goods described in the application are of the kind normally imported from China, that gives trademark squatters a great lead.
An indication of the kind of attention that USPTO filings get is the emails I get on a regular basis from service providers in China, asking me if my client wants to register their trademark in China as well. Attorney-of-record contact information is visible on the USPTO database entries, so it’s easy for these providers to reach out once they run across a mark of interest. Here’s a sample I got today (with key information changed):
Dear Frederic Rocafort
I’m Coco from Weizhong Trademark, which is specializing in providing China legal service on trademark for global clients. Our clients can submit various service requirements (e.g., trademark application) online and pay relevant fees online.
Your client “ABC, Inc.” applied for trademark “BEST TOOLS” in The United States. Meanwhile, applying for trademark “BEST TOOLS” in China is suggested due to the following reasons.
- 1. Trademark registration system is applied in China, namely the first applicant can obtain the trademark rights. If you don’t apply for it timely, it will be applied and registered by others in advance.
- 2. Protect trademark rights from infringement and promote brand value;
- 3. Effectively crack down counterfeit and shoddy products;
- 4. Effectively control distribution channels and market prices of the commodity;
Provided that your client’s trademark is not applied in China or maliciously registered by others, your client’s goods shall not be exported from China or imported into China. Others may imitate and sell your client’s goods, even conduct business activities in the name of the brand owner in China.
Applying for trademark through Weizhong Trademark website costs less (only $399 needed), operates faster (less than 10 mins), and makes a big difference. Provided no trademark is registered, it will cost so much (more than $10,000) and also take more time (at least 2 years) to settle the above issues. The effects may not be satisfying.
In order to eliminate later risks and other unknown disadvantages, it’s quite necessary to take actions immediately.Click here! Only 10 mins are needed to complete trademark application so as to better protect your client’s brand!
At first glance, this might seem harmless, or at worse an unwelcome solicitation. But are we to imagine that none of these service providers work with (or moonlight as) trademark squatters? If the U.S. brand is not interested in a China trademark, the provider might as well pass along that information to a squatter, and we have seen many instances where they have. See China Contract Drafting Scams: From Bad to Much Worse where we discuss how Chinese lawyers — unlike American and European lawyers — are not prohibited from representing a Chinese company in conflict with their purported foreign client and how we often see secret dual representations harm foreign companies.
Alternatively, they could work in tandem with a squatter and a different provider. First, an application to register the trademark is filed. A few weeks later, the second provider reaches out to the U.S. brand, informing them that “someone” in China has applied to register their trademark, and offering to file an opposition on their behalf. We get those emails as well.
Notice how there are veiled threats in Coco’s email: “Provided no trademark is registered, it will cost so much (more than $10,000) and also take more time (at least 2 years) to settle the above issues. The effects may not be satisfying.” Sounds ominous, no?
And by the way, where is that $10,000 figure coming from? How is she so confident that “others” will register the mark? Is it because she will go off and register it if our client does not pay?
In addition, think of all the valuable information these service providers might glean from incautious brands. If the U.S. brand indicates that they are interested in a China trademark, that is gold from a trademark squatter’s point of view. Even if the brand does not want to work with this particular service provider, revealing that they are working with a different provider, or that they plan to apply down the line but not just yet, could help a trademark squatter decide that the brand is a good target. You need to be very careful in revealing your brand/trademark information and revealing it to an unknown foreign lawyer (real or fake) can and often does prove dangerous. See China Lawyers: The Fakes and the Quasi-Fakes.
In conclusion, if you or your attorney get a solicitation like this, don’t respond. There may be darn good reasons to register your trademark in China – but not using these outfits. (Source: lexology.com)