Trademark squatting is becoming big business in China. Foreign trademark owners who have yet to file in China are exposed to the risk of finding that their trademark is already taken.
The reason for the danger of trademark squatting in China is simple: like many countries, China follows a ‘first to file’ system for trademark registration, which means that the person who first files the trademark application obtains the registration.
Some Chinese companies and individuals understand the system well and, after careful review of valuable foreign trademarks, take the initiative to file the mark in their own name. All they have to do is wait until the foreign company, unable to register and exploit its trademark in China, approaches them with a view to negotiating a possible purchase.
Depending on the reputation of the foreign trademark, a few thousand RMB in investment (for registering the trademark) can generate a big profit (several millions) at sale. Trademark squatting has become a big business in China.
Trademark squatters, China Trademark Law, TRAB, Lacoste, L'Oreal