Your Brand, Registered by Someone Else: Trademark Squatting in China

The script is remarkably consistent, and I hear a version of it every few months. A foreign buyer has sourced from China for years; the brand is on every carton, every invoice, every listing — and no one ever registered it in China, because the goods were all exported anyway. Then a factory, a distributor, or a complete stranger files the mark first, and the buyer discovers what first-to-file means: years of honest use count for less than a one-week-old application. Here is how the rule actually works, the three defensive windows the Trademark Law gives you, and the paperwork that makes the whole problem disappear before it starts.

1. The Pattern: How Your Own Brand Gets Taken

Three filers, in rough order of frequency:

• Your factory. The most common filer is the company that has been stamping your brand on your own products for years. It knows the mark, it knows your volumes, and filing costs it almost nothing.
• Your distributor. A China distributor — or an ex-employee with the contacts — registers the brand and now holds the legal key to the market you built. This is the classic endgame of an exclusive distribution relationship where the trademark paperwork was never signed (see exclusive distribution in China).
• A stranger. Professional squatters monitor Chinese export declarations and marketplace data for foreign brands with visible volume and no Chinese registration. Filing is cheap; the leverage is the product.

The consequences arrive fast. Your own genuine goods can be flagged as infringing at the border. Marketplaces take your listings down on the squatter's complaint. And the obvious fix — buying your name back — can cost a multiple of what defensive registration would have cost in year one, if the squatter will sell at all.

The root cause is a rule, not bad luck: China is first-to-file, not first-to-use. Use abroad does not, by itself, create rights in China. Whoever files first generally wins — unless you can reach one of the windows below.

2. The Rule: First to File, With Two Brakes

Two provisions of the PRC Trademark Law do almost all the work in these disputes, and you should understand both before spending money:

• Article 31 — the earlier filing prevails. Where two or more applicants file for the same or a similar mark for the same or similar goods, the earlier application is examined first. This is why the race matters: once the squatter's application is on file, you are in reaction mode, paying for windows you could have ignored.
• Article 32 — the anti-squatting brake. An application must not damage another person's existing prior rights, and a mark must not be registered by unfair means by preempting a mark that another party has already used and that has certain influence. This is the provision squatters get caught by: your prior use of the mark, your copyright in the logo, your rights in the Chinese-character name, or evidence that the filer knew your brand — it was your factory, after all — all feed this argument.

In plain terms: the squatter owns the filing, but you may own the arguments. Whether the arguments are strong enough depends almost entirely on evidence you either kept or did not — dated use of the mark, contracts showing who the filer is to you, sales records, copyright registrations for the artwork.

3. Your Three Defensive Windows

Window	Who can invoke it	Deadline	What it takes
Opposition	Anyone; prior-rights owners argue Article 32	During the 3-month publication period after preliminary approval (Article 33)	The cheapest fight — the mark is not registered yet. Earlier-use evidence, copyright, and bad-faith proof do the work
Invalidation	Article 44 (absolute grounds): anyone. Article 45 (relative grounds — prior rights, bad faith): the prior-rights holder	Article 45: within 5 years of registration; no time bar for bad-faith or famous-mark cases. Article 44: no time limit	The workhorse when you missed the opposition window. Longer, heavier — and the mark is registered while you fight it
Negotiation / buyback	Anyone with cash and leverage	None	Sometimes rational — sometimes it funds the next squat. If you buy, paper the assignment and register the transfer

Three notes on using them:

• Opposition is the cheap fight. Anyone may oppose a published application within the 3-month publication window (Article 33), and a prior-rights owner argues Article 32 there. Catch a squat inside the window and the mark never registers — no detentions, no takedowns, no buyback talks. This is why watching your class (below) matters more than any single legal skill.
• Invalidation is the workhorse. Miss the publication window — the usual case — and invalidation is the road back: Article 45 for relative grounds such as prior rights and bad faith, brought by the prior-rights holder within 5 years of registration, with no time bar in bad-faith and famous-mark cases; Article 44 for absolute grounds, open to anyone with no time limit. Heavier, slower, and the squatter's registration is live while you fight it.
• Buyback is sometimes rational. If the squatter is your ex-distributor with real leverage and your evidence is thin, a negotiated transfer can be cheaper than two years of proceedings. But be honest about what you are funding: a squatter who gets paid talks, and others watch the same export data. Negotiate quietly, paper the assignment properly, and register the transfer.

4. The OEM Trap: Manufacturing for Export Under Your Brand

Many buyers are not selling into China at all — their goods are manufactured in China and exported under the buyer's own brand. The squatter's classic move in that scenario is to register the buyer's mark in China, then attack the factory's exports as infringement.

Here the law has actually developed in the buyer's favor: Chinese courts have, in many cases, protected OEM producers who manufacture and export goods bearing a foreign buyer's brand, on the reasoning that goods made purely for export never enter the Chinese domestic market, so there is no consumer confusion in China to protect. That case law is genuinely useful — but it is case-by-case, and it is a defense you pay to run after someone has already filed or a container has already been stopped.

The clean answer is paper, not litigation:

1. An authorization clause in the OEM contract, under which the buyer authorizes the factory to use the specified mark solely for the buyer's goods, and the factory acknowledges the mark belongs to the buyer.
2. A defensive filing by the buyer, so no vacuum exists for a squatter to fill.

Both take days at signing. Relationships that rely on the case law alone discover, at the worst possible moment, in whose name the brand on the customs declaration was filed.

5. Prevention Economics, Honestly Costed

The honest comparison is not filing fees versus legal fees — it is one afternoon of decisions versus years of proceedings. Multi-class filing in China is routine and inexpensive relative to what a squat costs you, and the decisions that matter:

• File before you disclose. Register defensively before you show designs, molds, or packaging to a factory — disclosure is the moment squatters learn your mark exists, and an application filed before the factory ever saw the artwork also predates anything they can claim.
• Register the Chinese characters. The Latin brand and its Chinese name are different marks under Chinese law, and consumers, marketplaces, and customs all see the Chinese-character rendering. Register the name your customers actually use — or someone else will, and they will be registering the more valuable one.
• Cover the classes you are absent from. Your product class is the minimum; squatters file where you are absent — retail services, advertising, adjacent components — not where you are present.
• Watch your class. Applications are published for opposition; a monthly check of your mark and its obvious variants — or a watch service — catches squatters inside the 3-month opposition window instead of after registration.
• Use copyright as the parallel weapon. Copyright in your logo and packaging artwork arises automatically and survives as an invalidation ground independent of trademark. Registering the artwork is inexpensive and hands your lawyer a clean prior right to invoke under Article 32 — and it covers designs a trademark application never would.

None of this requires a Chinese presence; a filing agent handles it from your desk.

6. What a Squat Does to a Live Supply Chain

If a squat lands on an active supply chain, three things follow, and each has its own unwinding sequence:

• Customs detention of your own exports. The squatter records its mark with China Customs, and your factory's containers get stopped at the port. Unwinding means proving you are the true rights holder or the authorized user — where an OEM authorization clause earns its keep — and attacking the recordal itself. Recordal cuts both ways: see how China Customs recordal works, including the third direction where a squatter's mark gets your genuine goods detained.
• Marketplace takedowns. Takedown systems move fast for a registered mark. Fighting them means either a quick invalidation of the squat or a counter-complaint showing your prior rights. Keep every takedown notice — they document the squatter's enforcement campaign for the day you litigate.
• Leverage in price negotiations. The quietest and most expensive effect: the supplier now holds a legal claim over your brand and mentions it, gently, at renewal time. Every order becomes renegotiation. If you see this dynamic, fix the registration first — negotiating prices under a registration threat is negotiating with a knife on the table.

The sequencing rule for all three: the registration fight comes first. Detentions, takedowns, and negotiation leverage all hang off the squatter's registration; remove it and the rest collapses with it.

7. The Supplier Angle: Your Own Factory Is the Most Common Filer

Run the numbers on who files and the uncomfortable answer is your own factory. The fix is a clause, and it belongs in the manufacturing contract from day one:

"The Supplier shall not apply for, register, or attempt to register, in any jurisdiction, any trademark, trade name, or domain name identical or similar to the Buyer's Marks, or any Chinese-language rendering thereof. Any such registration obtained by the Supplier shall be deemed to have been made on behalf of the Buyer and shall be assigned to the Buyer upon the Buyer's request, at the Supplier's cost, together with all associated goodwill. The Supplier's right to use the Buyer's Marks is limited to the manufacture of goods for the Buyer and for no other purpose."

That is the NNN structure doing trademark work: a non-registration covenant, a non-use limit scoped to your orders, and an assignment-on-demand — the same trio that protects your designs and customer data. The full framework: NNN agreements for China deals.

What the clause costs when negotiated late: leverage. Asking a factory to sign a no-registration clause in year one of the relationship is usually a five-minute conversation. Asking it to assign a registration it already holds means buying something it owns — and the price will be set by what your next season of orders is worth to it. I have seen that number expressed in RMB that made a decade of defensive filing look like a rounding error, and I have seen buyers walk away from factories they could not afford to keep.

If you take one action from this article, take it before your next order: find out whether the entity you have been paying holds anything that looks like your brand. If you cannot answer that with certainty, start by verifying exactly who you have been dealing with — the verification method is here.

This article is general information, not legal advice, and does not create an attorney–client relationship. Nothing here is a guarantee of results.