Prevent your business partners from squatting on your TM

China is too big a market to ignore, and has become a top global priority for brands. Many foreign brand owners have business in China. Checking the legitimacy of a business partner is important for a successful business in China, and it is equally important to prevent your trademark from being squatted by a local business partner.

Many foreign brand owners do not know the territorial nature of trademark rights. Protection derived from trademarks exists only within the country that has granted the rights. Many foreign brands, particularly some small to medium-sized enterprises (SMEs) do not know that a domestic trademark provides protection within their home countries only. This lack of knowledge about territoriality may cause problems for them.

China adopts the “first to file” principle for its trademark registration system. Unregistered trademarks enjoy very limited or even no protection. Before entering China, a business not having a successful trademark registration, or at least a trademark application, is exposed to high risk.

Maggie Yang is a partner at Corner Stone & Partners