China Trademark Squatting: How Foreign Brands Lose Their Name (and How to Fight Back)

In 2021, an Italian luxury footwear brand with 40 years of heritage and a flagship store on Milan’s Via Montenapoleone opened its first e-commerce channel to Chinese consumers. Three weeks later, the brand’s lawyers discovered that its name had been registered as a Chinese trademark four years earlier — not by the brand, not by any of its distributors, but by a company in Wenzhou with no connection to Italian fashion. The squatter offered to sell the trademark back for €180,000. The brand spent the next two years in opposition proceedings and ultimately lost the case in first-instance court. It never entered the Chinese market.

This is not a rare case. China’s “first-to-file” (先注册) trademark system — in which rights go to whoever files the application first, regardless of who used the mark first — is uniquely vulnerable to bad-faith filings. CNIPA, China’s trademark office, has acknowledged the problem repeatedly and reformed its rules several times. Squatting is still endemic. CNIPA’s 2024 statistics showed that over 40% of foreign-related trademark disputes involved bad-faith filings.

This guide explains how squatting works, why it is so common in China, the three stages it usually follows, what you can do to defend against it, and what recovery costs when prevention fails.

Real cases of foreign brands losing their name

The Italian footwear brand above is one of thousands. A few other well-documented cases illustrate how the pattern repeats across industries.

The Tesla trademark dispute

When Tesla Motors sought to register its brand in China in 2012, it discovered that a Chinese businessman had filed for the “Tesla” mark in 2006 — six years before Tesla’s application. The squatter agreed to transfer the mark for an undisclosed sum (rumoured to be in the millions of dollars). Tesla ultimately resolved the case, but the price illustrates the leverage a squatting registration gives the holder.

The New Zealand honey brand

A New Zealand manuka honey brand had sold product in mainland China through distributors for several years before registering its Chinese trademark. By the time they filed, the brand’s Chinese name had been registered by a competitor who had copied the brand’s Chinese-language packaging. The brand lost its primary sales channel in China and spent four years in litigation.

The Australian wine label

An Australian winery received a cease-and-desist letter from a Beijing-based company demanding it stop exporting to China under its own brand name. The Beijing company had registered the winery’s English name as a Chinese trademark in 2014, four years before the winery had applied. The case was eventually settled out of court for an undisclosed sum.

Why China’s first-to-file rule is unique

Trademark systems worldwide generally fall into two camps:

• First-to-use (common law jurisdictions, including the US): Rights go to whoever used the mark in commerce first. Registration is optional and provides additional protection but is not the basis of rights.
• First-to-file (most civil law jurisdictions, including China and the EU): Rights go to whoever registers the mark first. Use in commerce is not required for registration.

China’s first-to-file system has been in place since 1982, with the Trademark Law most recently amended in 2019. The system is well-designed for the Chinese market, where counterfeiting has historically been rampant: it provides clarity for consumers and a clear legal basis for enforcement. The downside is that bad-faith filers can register marks they have no intention of using, purely as leverage against the rightful owner.

China’s 2019 amendments tried to address this by strengthening the bad-faith provisions. A squatter can be challenged on grounds including:

• Prior use with influence (在先使用并有一定影响): If the original brand was using the mark in China before the squatter’s filing, and had built “influence” (a vague but enforceable standard), the squatter’s registration can be invalidated.
• Pre-emptive registration of a well-known mark (抢注他人驰名商标): If the original brand was well-known in China or globally, the squatter’s registration is invalid.
• Bad-faith intent: If the squatter’s intent was clearly to extract payment from the rightful owner, the registration can be challenged.

These defenses exist, but they are slow, expensive, and uncertain. The much better strategy is to register your trademark before the squatter does.

The 3 stages of trademark squatting

Squatting operations follow a recognisable three-stage pattern. Understanding the stages helps you know what you’re dealing with when prevention has failed.

Stage 1: Opportunistic squatting

Small-time operators monitor international brand launches, IPO filings, trade show appearances, and Chinese-language media coverage. As soon as they identify a brand with Chinese-market potential, they file the trademark in 1-3 Nice classes. They typically file in bulk — dozens or hundreds of brands at once — knowing that only a fraction will ever be contested.

Opportunistic squatters are usually easy to deal with. They are looking for a quick payout, typically $5,000-$50,000. If you offer a modest buyout or simply demonstrate that you have started formal opposition proceedings, many will surrender the mark rather than face the cost of defending it.

Stage 2: Organised squatting

Larger operations run by IP holding companies that have been in the business for years. They often hold portfolios of hundreds or thousands of trademarks, many of which are well-known foreign brands. They have legal teams and the capital to defend opposition proceedings for years.

Organised squatters rarely offer to sell. Their strategy is to license the mark to counterfeit producers, taking a royalty on every counterfeit product sold. When the original brand files an opposition, the organised squatter defends it vigorously because losing the mark would force them to wind down a multi-year counterfeiting operation.

Stage 3: Defensive squatting

Some squatting is done by companies that operate legitimately in adjacent fields but register foreign brands defensively — to prevent competitors from gaining a foothold in their category. An importer of mid-range Italian handbags, for example, might register a number of premium Italian brand names in the handbag class to prevent those brands from selling directly in China.

Defensive squatting is often harder to challenge than pure bad-faith squatting, because the squatter can plausibly claim legitimate commercial intent. Opposition outcomes in this category are more uncertain.

Defense playbook: register before you launch

The most effective defense against squatting is also the simplest: register your trademark in China before the squatter does. The ideal timeline is to file 6-12 months before any market entry or significant exposure to the Chinese market.

What to register

• Your English brand name. This is the obvious starting point.
• Your Chinese name (simplified characters). If you have an official Chinese name, register it. If you don’t, commission a professional Chinese brand translation before registering.
• Your pinyin version. The romanisation of your Chinese name is a common squatter target. Register both the pinyin and the Chinese characters.
• Your logo (as a figurative mark). If your logo is distinctive, register it as a separate trademark.
• Common transliterations. If your brand is sometimes translated differently by customers or media, register those variants too.

Which Nice classes to file in

The Nice Classification has 45 classes — 34 for goods, 11 for services. Most brands need to file in 3-5 classes to cover their actual product range plus the obvious adjacent categories. Filing in too few classes leaves gaps that squatters can exploit. Filing in too many classes is expensive — typically $80-$150 per class per jurisdiction.

A typical consumer goods brand should file at minimum:

• Class 25: Clothing, footwear, headwear (if relevant)
• Class 35: Advertising, business services, retail services
• Class 9: Electronics (if relevant)
• Class 14: Jewellery, watches (if relevant)
• Class 41: Education, entertainment (if relevant)
• Class 42: Technology services (if relevant)

Where to file

For most brands, mainland China (CNIPA registration) is the priority. Hong Kong, Macao, and Taiwan have separate trademark systems and require separate filings. If you have any expectation of selling in those markets, plan additional filings there too.

Working with a trademark agent

Foreign applicants must use a CNIPA-approved trademark agent to file in mainland China. The agent handles search, application, examination follow-up, and registration. Our trademark service includes a Chinese-language search across all 45 classes, an opinion on registrability, agent coordination, and the official filing. Total cost typically runs $400-$800 per mark per class, with no ongoing monitoring unless added separately.

Ongoing monitoring: catch squatters early

Even with preventive registration, ongoing monitoring is essential. Two reasons:

1. Detect applications in classes you didn’t file in. A squatter may target a class you overlooked. Early detection gives you a chance to oppose during the 3-month publication window.
2. Detect similar marks. A squatter may register a confusingly similar mark rather than an identical one. Catching this early gives you leverage to oppose before the mark becomes entrenched.

CNIPA publishes all new applications in the Trademark Gazette (商标公告). Our monitoring service includes weekly scans of the gazette, full-text search of CNIPA’s database for your brand name, Chinese translation, pinyin, and key transliterations. When a potentially conflicting application is detected, we alert you within 24 hours and provide an opposition strategy if action is needed.

When squatting happens: opposition & invalidation

If prevention has failed and a squatter has already filed, two main legal paths exist. The right one depends on the timing.

Path 1: Opposition during the publication window

After a trademark application passes substantive examination, CNIPA publishes it in the Trademark Gazette for a 3-month opposition window. During this window, any third party can file an opposition arguing that the application should not be registered.

Opposition is the cheaper and faster route. Costs typically run $3,000-$8,000 at first instance, with timeline of 12-18 months. Outcomes are uncertain but better than invalidation because the mark is not yet registered.

Path 2: Invalidation after registration

If the 3-month window has passed and the squatter’s mark has been registered, the next step is an invalidation action before CNIPA’s Trademark Office of Adjudication (or, in some cases, the Beijing IP Court).

Invalidation is more expensive and slower. Costs typically run $5,000-$15,000 at first instance, with appeals adding another $5,000-$15,000. Timeline is 18-36 months from filing to final, enforceable decision.

Common grounds for both opposition and invalidation

Ground	Strength	Evidence required
Pre-emptive registration of a well-known mark (驰名商标)	Strongest — if you qualify	Evidence of significant fame in China (sales, advertising, media coverage, awards)
Prior use with influence (在先使用并有一定影响)	Strong — if you have prior China sales	Evidence of pre-squat use in China, including invoices, distributor agreements, marketing materials
Bad-faith filing (恶意抢注)	Moderate — requires showing intent	Evidence of multiple squatting marks by the same filer, prior demands for buyout, etc.
Relationship between parties (特定关系)	Moderate — if there was a prior business relationship	Prior contracts, agent agreements, distributor correspondence

The “well-known mark” ground is the strongest but hardest to prove. It requires showing that your brand had substantial fame in China before the squat — typically meaning years of sales, advertising, or media presence. The “bad-faith filing” ground is more commonly available and easier to argue when the squatter has a pattern of registering other foreign brands.

Recovery cost vs prevention cost

The economics of trademark protection in China are stark.

Path	Typical cost	Timeline	Outcome certainty
Preventive registration (3 classes)	$1,200-$2,400	6-12 months to registration	High — if your mark is distinctive
Opposition (1st instance)	$3,000-$8,000	12-18 months	Moderate
Invalidation (1st instance)	$5,000-$15,000	9-15 months	Moderate
Full litigation (through appeals)	$15,000-$40,000+	24-48 months	Low to moderate

Preventive registration is 10-30x cheaper than recovery, and the outcome is far more certain. For any foreign brand with any China exposure — whether through distributors, e-commerce platforms, trade shows, or even Chinese-language media coverage — preventive registration is one of the highest-ROI investments you can make in your intellectual property.

If your brand is worth selling in China, it is worth protecting in China. The first move is not your marketing plan, your distributor contract, or your e-commerce launch. The first move is your trademark filing.