Firms face trade mark squatting woes

International law firms face being held to ransom after falling foul of China’s problematic trade mark filing rules.

Firms including Osborne Clarke, Norton Rose Fulbright and Squire Patton Boggs have been targeted by a local trade mark ‘squatter’.

Squatters anticipate a mark or brand’s popularity and register a trade mark before the rightful owner is able to.

They are prolific in China because the country adopts a first-to-file trade mark system. Under Chinese rules, the first person to file for a particular mark generally becomes its owner if their application is successful irrespective of whether they have used the mark in the past.

Businesses have found it difficult to retrieve the mark and either have to buy it off the perpetrator or prove non-use, which has been problematic.

The domain names squirepattonboggs.net and the trade mark for the firm’s name are registered to a company called Qinhuangdao Hongshun Technology Development. The company also owns trade marks for the names Osborne Clarke and Norton Rose Fulbright. 

A Norton Rose Fulbright spokesperson said the firm had taken action to protect its brand and reputation and that the disputes had been succesfully resolved.

A spokesperson for Squire Patton Boggs said it had been aware of the Chinese entity and its efforts to use its, and other law firms’, names.

‘We will continue to take all necessary measures to protect our brand in China and minimise any unlikely confusion this illegitimate activity could cause in that market,’ they added.

Osborne Clarke has been contacted for comment.

James Love, solicitor at Harrogate firm James Love Legal and a member of the Law Society's IP Committee, told the Gazette: ‘In the UK, if you have been using a brand extensively, you have a certain amount of protection if someone chooses to file your mark ahead of you. In China, though, the general rule is whoever files first owns the rights.

‘Even if you have been using a brand in China, if you do not register a trade mark, you can be held to ransom by a squatter who has registered your brand,’ he said.

Although recovery of the name is possible [Starbucks recovered a mark for Xingbake – ‘xing’ means star and ‘bake’ is pronounced ‘bah-kuh’], Love said it will usually mean establishing that the squatter acted in bad faith, for which the hurdle is ‘relatively high’.

‘Many businesses are put off by the cost and uncertainty of a legal action in China, and are forced into changing their Chinese branding.’

Electronic car company Tesla, the wine producer Castel Group and ex-basketball player Michael Jordan have been targeted by trademark squatting.

It is common for a name to be registered as a transliteration of the British word. For example, in the ‘Castel’ dispute, the Chinese applicant registered ‘Ka-Si-Te’, and in the Michael Jordan dispute a sports company had registered Chinese characters which when read aloud were pronounced ‘Qiaodan’.