Trademark in China: Squatting, First-to-File, and How to Protect Your Brand

The System That Punishes Waiting

In the United States, trademark rights are built on use. The first person to use a mark in commerce generally has priority over later users, even without registration. This "first-to-use" principle reflects an intuition that the person who builds a brand should own it.

China's system is built on the opposite principle. In China, the first person to file owns the mark — regardless of who created the brand, who has been using it globally, or how well-known it is internationally. Prior use outside China confers essentially no rights inside China. If you haven't filed in China, you don't own your mark in China. Someone who files the day before you does.

This isn't a loophole or an oversight in Chinese trademark law. It's the design. China adopted a first-to-file system deliberately, and it applies strictly. For foreign brands, the practical consequence is clear: file in China early, before you have a visible presence there, before Chinese consumers are aware of your brand, and before squatters notice you.

Trademark Squatting: How It Works and How Bad It Is

Trademark squatting in China is an industry. Professional squatters — sometimes called "trademark pirates" — monitor foreign trademark databases, business news, and product launches. When a foreign brand gains any visibility, squatters race to file identical or confusingly similar marks with China's National Intellectual Property Administration (CNIPA) before the brand owner does.

The squatter then owns the mark legally under Chinese law. Their leverage over the brand owner is real: they can prevent the foreign company from using its own name in China, seek customs enforcement to block imports of the brand's goods, and demand a buyout payment that can run into the millions.

The Chinese Characters Problem

Foreign brand owners frequently make one critical error: they register only their Latin alphabet mark in China and ignore the Chinese language version. This is a mistake with serious consequences.

Chinese consumers rarely use Latin alphabet names in daily speech or searches. They use Chinese-language versions — either official transliterations developed by the brand (Starbucks chose 星巴克, Xīng Bā Kè; Nike chose 耐克, Nài Kè; McDonald's chose 麦当劳, Mài Dāng Láo) or informal Chinese names that emerge organically from consumer usage.

Both the official transliteration and any informal Chinese names that consumers associate with your brand can be squatted independently of your Latin mark registration. If you register "Apple" in China but don't register 苹果 (Píng Guǒ — the Chinese word for apple, which is what Chinese consumers call the brand), a squatter can register 苹果 for a competing product category.

Best practice: register both your Latin mark and your official Chinese name as separate trademark applications simultaneously. If you haven't developed an official Chinese name, develop one proactively and file before someone else chooses one for you.

Sub-Classes: China's Additional Layer of Complexity

China uses the same 45 Nice Classification classes as the international system, but CNIPA further divides each class into sub-groups. A registration in Class 25 (clothing) in the U.S. or EU covers the entire class. In China, a registration in Class 25 may only cover the sub-groups you specifically listed — leaving other sub-groups unprotected.

A squatter can register in the sub-groups you left unprotected within the same class. For broad protection in China, you often need to file across more sub-groups than you would in other jurisdictions. Working with a Chinese trademark attorney who understands the sub-group structure is essentially mandatory for anything beyond the simplest filings.

What To Do If You've Been Squatted

If someone has already registered your mark in China, your options are limited but not zero:

• Opposition: If the squatter's application is still pending (published but not yet registered), file an opposition with CNIPA within the 3-month publication window.
• Invalidation: If the mark has already registered, file an invalidation action asserting bad faith. China's Trademark Law was amended in 2019 to strengthen bad faith filing provisions (Article 4). Proving bad faith requires evidence that the squatter knew of your mark and filed with the intent to sell or coerce — which courts have been increasingly willing to find in clear squatting scenarios.
• Famous mark claim: If your mark is genuinely well-known in China, you can invoke the famous mark (驰名商标) provisions. This is a high threshold and most foreign brands don't meet it unless they have significant Chinese market presence.
• Buy it back: Sometimes the most practical option. Squatters know the value of what they hold. Negotiated buybacks happen regularly — though paying squatters rewards the behavior and sets a precedent.

The Filing Strategy That Works

The only reliable strategy against squatting is to file before you need the protection. For most brands:

• File in China at the same time you file in your home country — not after you've established the brand
• File both your Latin mark and your Chinese character mark
• Cover all relevant sub-classes, not just the primary class
• Monitor CNIPA filings for similar marks through a watching service
• Use a qualified Chinese trademark attorney — the complexity of sub-classes and the importance of the Chinese language filing makes professional representation essential