Trademark squatting is the practice of registering another company's brand name, logo or product name in China before the genuine owner does. China grants trademark rights to the first to file, not the first to use, so a squatter — often a distributor, an ex-employee, a manufacturing partner or a professional filer — can obtain a presumptively valid registration of "your" mark with no business of its own.
Why it matters
A squatted mark is not a nuisance; it is a weapon. The registrant can demand a six- or seven-figure payment to sell the mark back, sue your Chinese operations for infringement of your own brand, force your products off Tmall and JD listings, and — by filing a customs IP recordal — have your export shipments seized at the port. Recovery through opposition, invalidation or three-year non-use cancellation is possible, especially against bad-faith filers under the amended Trademark Law, but it takes years and the outcome is uncertain. Filing first costs a few hundred dollars per class; recovering a squatted mark routinely costs tens of thousands. Register before you exhibit, manufacture or sell in China — and register the Chinese-character version of your brand before the market or a squatter coins one for you.
Example
A craft beverage brand exhibits at a Shanghai trade fair, then signs a distributor. Two years later, talks break down — and the brand discovers the distributor registered both its English mark and a Chinese transliteration in 2021. The distributor demands USD 300,000. The brand wins invalidation 26 months later by proving the prior business relationship, but loses two selling seasons.
Common mistakes
- Waiting to register until China revenue "justifies it" — squatters move at the first trade fair
- Registering only the English mark and leaving the Chinese name unprotected
- Filing in the obvious class but missing China's subclass system and related classes
- Letting a distributor or factory handle filings in its own name
- Ignoring squatter registrations until a customs seizure or platform takedown forces the issue