For foreign brand owners, it is undoubtedly a very depressing thing to find that their brands have been taken by others when they enter China market. However, things are often far from that simple. If you look carefully, those stolen trademarks may have been already registered by others far before the foreign brand owners think about entering China market.
It is undeniable that there are indeed some companies or individuals who take trademark squatting as their business. After they register those trademarks, they just wait for the real brand owners to come and buy at high price in order to make profits. The Chinese government has been accused of poor protection on intellectual property rights for a long time. The rampant trademark squatting phenomenon is one of the important reasons which gave foreign investors bad experience and impression.
However, now this situation is changing.
Germany-based Nobilia Werke J. Stickling GmbH & Co.kg, a world-renowned fitted kitchen, began to sell its products under Nobilia brand in China in 1997. In 2017, it brought a case against a person Mr. Duan over a nobilia trademark registered by Mr. Duan. On August 10, 2020, Beijing High People's Court made a final judgment on the dispute, ruling in favor of the high-end kitchen maker. Beijing High People’s Court held that Mr. Duan, in addition to the registered trademark “nobilia”, has registered 24 trademarks and his JOHS Company 27, and all of those trademarks are same or similar to other famous trademarks. Mr. Duan could not give reasonable explanations over his acts, making it hard to believe he was in good faith when registering the trademark in dispute. His acts of registering a number of trademarks are beyond the normal business need, disturbing the normal trademark registration and management order. Therefore, the registration of the trademark in dispute “is obtained by fraudulent means and other illicit means.”
In our opinion, in case of trademark squatting, the first and most important step is to evaluate the feasibility of taking back through legal action, rather than considering how to buy at a high price. The above-mentioned case could be a warning to trademark squatters that the business from trademark squatting could be unsustainable. Meanwhile, for the brand owners whose trademarks are taken by others, it is a light for them to re-gain hope when entering the China market.