They carefully navigate the law and do things that, while technically “legal,” aren’t very nice.
Meet China’s “notorious” brand squatters…
They take advantage of brands who don’t understand China’s IP registration process.
In China, trademarks are like patents. It is a FIRST TO FILE environment where the earliest bird wins.
Beyond the simple strategy of registering the IP of others, the true squatter goes a step further…
THEY MONETIZE IT LEGALLY
They invest in new combinations of products and words that relate to the original brand but are different “enough” to defend under pressure.
AND they often get away with making a brand’s “name” a generic word that describes an entire category of trade, rather than someone’s IP.
Here’s how they do it:
1) Register the trademarks of a brand in Chinese and English to your local Chinese entity in categories the brand doesn’t operate or in unique combinations with slight variance.
2) Give your local entities official authorization under the trademarks to do business on and offline.
3) Register multiple Tmall and JD flagships, and all social channels to your local entities.
4) Sub authorize multiple reseller and boutique stores. Mirror the same policy offline.
5) Invest heavily in marketing to incentivize other merchants to use your trademarks as generic key words for the brand, on and offline.
6) Invest heavily in marketing key word combinations of the Chinese and English to create demand funnels owned exclusively by you.
7) Register all emerging Chinese nomenclature and “meme nicknames” to create an IP fortress.
In many cases, the brand doesn’t pay attention to China and only registers their “English” name or international mark in one or two categories.
And they often use their own “custom” Chinese name NOT known to local consumers.
With basic “screen” research, squatters see the correct nomenclature and register it in parallel to the brand’s original IP.
Many times, squatters register the most valuable IP and because it is generic (unrelated to the brand’s original set) they keep it FOREVER.