# Why China Uses "First-to-File" System? What to Do If Your Brand Gets Squatted

📋 Key Takeaway

China's "first-to-file" trademark system means the first person to register a trademark owns it — regardless of who used it first. This creates significant risks for international brands, but there are effective strategies to protect your brand and recover squatted trademarks.

❓ Why China Uses "First-to-File" System

Historical Context

China adopted the "first-to-file" system when it established its modern trademark law in 1982. This system was chosen for several practical reasons:

  • •Administrative Efficiency: Easier to verify filing dates than to prove first use
  • •Legal Certainty: Clear ownership based on registration records
  • •International Alignment: Follows the Paris Convention and Madrid Protocol standards
  • •Economic Development: Encourages formal registration and brand protection

How It Works

First-to-File Principle:

  • ✓The first applicant to file a trademark application owns the mark
  • ✓No requirement to prove prior use or intent to use
  • ✓Registration grants exclusive rights nationwide
  • ✓Priority dates determine ownership in conflicts

Contrast with "First-to-Use" Systems (like the US):

  • ✓US: Rights acquired through actual use in commerce
  • ✓China: Rights acquired through registration
  • ✓US: Common law rights exist without registration
  • ✓China: No common law rights without registration

Why This Matters for International Brands

The Risk:

  • ✓Competitors can register your brand name before you do
  • ✓Trademark squatters actively monitor international brands
  • ✓Once registered, the squatter has legal rights to the mark
  • ✓Recovering squatted trademarks is difficult and expensive

Real-World Impact:

  • ✓Foreign brands entering China often discover their name is already registered
  • ✓Some brands pay thousands of dollars to buy back their own trademark
  • ✓Others must rebrand for the Chinese market entirely
  • ✓Legal battles can take years and cost significant resources

📌 What Happens When Your Brand Gets Squatted

Common Scenarios

Scenario 1: Direct Squatting

  • ✓Competitor registers your exact brand name
  • ✓They use it for similar goods/services
  • ✓You discover it when entering the Chinese market

Scenario 2: Defensive Squatting

  • ✓Local company registers your mark to prevent you from entering
  • ✓They may not use it, but block your registration
  • ✓Common in competitive industries

Scenario 3: Opportunistic Squatting

  • ✓Individual or company registers famous international brands
  • ✓Plans to sell the trademark back to the original owner
  • ✓Targets brands with high market value

Legal Consequences

Once your brand is squatted in China:

  • •You Cannot Register: Your application will be rejected due to prior registration
  • •You Cannot Use: Using the mark may constitute infringement
  • •You Must Buy Back: Often at inflated prices
  • •You Must Rebrand: Create a new name for the Chinese market

📌 Strategies to Prevent Trademark Squatting

1. Register Before Entering China

Best Practice:

  • ✓File trademark application 1-2 years before market entry
  • ✓Register in all relevant Nice Classification classes
  • ✓Consider defensive registration in related classes
  • ✓Monitor the application process

Why This Works:

  • ✓Establishes priority date before squatters can act
  • ✓Gives you legal ownership from day one
  • ✓Prevents competitors from blocking your entry
  • ✓Cost-effective compared to recovery efforts

2. Use the Madrid Protocol

Benefits:

  • ✓File international application designating China
  • ✓Single application, single fee
  • ✓Priority date from home country application
  • ✓Streamlined process through WIPO

Requirements:

  • ✓Must have trademark registration in home country
  • ✓Application filed through national trademark office
  • ✓China designated as target country
  • ✓Fees paid in Swiss Francs

3. Monitor Trademark Gazette

How to Monitor:

  • ✓Subscribe to China Trademark Gazette (商标公告)
  • ✓Watch for similar marks in your industry
  • ✓File oppositions within 3-month publication period
  • ✓Use professional monitoring services

What to Look For:

  • ✓Identical or similar marks
  • ✓Related goods/services
  • ✓Same industry competitors
  • ✓Known squatters

4. Register Chinese Translations

Why This Matters:

  • ✓Register both English and Chinese versions
  • ✓Include pinyin transliterations
  • ✓Consider common translations and variations
  • ✓Protect against localized squatting

Example:

  • ✓English: "Apple"
  • ✓Chinese: "苹果" (Píngguǒ)
  • ✓Pinyin: "PINGGUO"
  • ✓All should be registered

📌 How to Recover a Squatted Trademark

Option 1: Negotiate Purchase

Process:

  • •Identify the current registrant
  • •Contact them to negotiate purchase
  • •Agree on price and terms
  • •Transfer trademark ownership

Pros:

  • ✓Fastest resolution
  • ✓Guaranteed outcome
  • ✓No legal uncertainty

Cons:

  • ✓Can be expensive (often ,000-,000+)
  • ✓No guarantee of fair price
  • ✓May encourage more squatting

Tips:

  • ✓Use a local agent to negotiate
  • ✓Don't reveal your identity initially
  • ✓Set a budget limit
  • ✓Get legal advice on fair valuation

Option 2: File Non-Use Cancellation

Grounds:

  • ✓Trademark not used for 3 consecutive years
  • ✓No legitimate reason for non-use
  • ✓Registration was obtained in bad faith

Process:

  • •Gather evidence of non-use
  • •File cancellation application with CNIPA
  • •Wait for registrant's response
  • •If no valid use evidence, mark is cancelled

Timeline: 9-12 months

Pros:

  • ✓Lower cost than purchase
  • ✓Legal remedy available
  • ✓Deters future squatting

Cons:

  • ✓Requires evidence of non-use
  • ✓Registrant may submit fake evidence
  • ✓Time-consuming process

Option 3: File Invalidity Application

Grounds:

  • ✓Registration obtained through fraud
  • ✓Bad faith filing
  • ✓Violation of prior rights
  • ✓Similar to well-known mark

Process:

  • •Gather evidence of bad faith
  • •File invalidity application with CNIPA
  • •Provide proof of your prior rights
  • •Wait for CNIPA decision

Timeline: 12-18 months

Pros:

  • ✓Can recover mark if successful
  • ✓Establishes your rights
  • ✓Punishes bad faith squatters

Cons:

  • ✓Difficult to prove bad faith
  • ✓High burden of proof
  • ✓Uncertain outcome

Option 4: Legal Action

Grounds:

  • ✓Trademark infringement
  • ✓Unfair competition
  • ✓Bad faith registration

Process:

  • •File lawsuit in Chinese court
  • •Gather evidence of your prior rights
  • •Prove bad faith or infringement
  • •Seek injunction and damages

Timeline: 1-3 years

Pros:

  • ✓Can obtain damages
  • ✓Establishes legal precedent
  • ✓Strong deterrent effect

Cons:

  • ✓Very expensive
  • ✓Time-consuming
  • ✓Uncertain outcome

🛡️ Case Study: Farmskins Brand Protection

Background

Farmskins, a CS2 gaming platform, discovered that competitors were bidding on their brand keywords in Baidu search ads. This was costing them significant traffic and revenue.

Problem

  • ✓Competitors using "Farmskins" in their ad copy
  • ✓Brand traffic being diverted to competitors
  • ✓No trademark protection in China
  • ✓Limited legal recourse without registration

Solution

RTMCN helped Farmskins:

  • •Register Trademark: Filed application in Class 42 (software services)
  • •Monitor Competitors: Tracked unauthorized use of brand
  • •Enforce Rights: Filed complaints with Baidu and CNIPA
  • •Protect Traffic: Successfully stopped competitors from using brand

Results

  • ✓Trademark registered in 10 months
  • ✓Competitors stopped using brand in ads
  • ✓Brand traffic restored and protected
  • ✓Long-term brand security established

Key Lesson: Early trademark registration is the best defense against brand squatting and competitor interference.

❓ Why Professional Help Is Essential

Complexity of Chinese Trademark Law

Challenges:

  • ✓Language barrier (all applications in Chinese)
  • ✓Cultural differences in business practices
  • ✓Complex legal procedures
  • ✓Frequent law changes
  • ✓Local administrative requirements

RTMCN's Expertise:

  • ✓Licensed CNIPA agent
  • ✓100% success rate
  • ✓Local Shanghai office
  • ✓Bilingual team (English/Chinese)
  • ✓Deep understanding of CNIPA procedures

Cost of DIY vs. Professional

DIY Risks:

  • ✓Application rejection (40% rejection rate)
  • ✓Missed deadlines
  • ✓Incorrect classifications
  • ✓Incomplete documentation
  • ✓No local representation

Professional Benefits:

  • ✓Higher approval rate
  • ✓Faster processing
  • ✓Correct classifications
  • ✓Complete documentation
  • ✓Local representation

🚀 Next Steps

🔗 Source Links

  • ✓CNIPA Official Website: http://www.cnipa.gov.cn/
  • ✓WIPO Madrid System: https://www.wipo.int/madrid/en/
  • ✓Paris Convention: https://www.wipo.int/treaties/en/ip/paris/
  • ✓China Trademark Law: http://www.cnipa.gov.cn/art/2019/11/1/art_53_1492.html
  • ✓Nice Classification: https://www.wipo.int/classifications/nice/

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult with a licensed trademark agent for guidance specific to your situation.