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International Brands at Risk Due to Trademark Trolls

International Brands at Risk Due to Trademark Trolls

International Brands at Risk Due to Trademark Trolls

Trademark trolls are relatively a new concept in Intellectual Property (IP) and business world, but like their patent troll counterparts, trademark trolls are often a fly in the ointment of brand expansion.

A trademark troll is a term used to define any individual or organization that uses predatory trademark registrations as a way to exploit payment from alleged infringers. A troll typically registers the name of an existing business, product or web domain as a trademark and then uses a claim of infringement to demand cash to license, lease or sell it back to the original company. Also like patent trolling, the practice of trademark trolling is growing, with particular frequency in certain markets such as China.

Trademark Squatting in China

Many major brand owners have found themselves at the mercy of trademark trolls in China who own their Chinese mark. In some of the worst cases, brand owners have had their goods seized by authorities or deemed as counterfeits because the Chinese trademark troll or squatter has recorded his own mark with the authorities. In nearly all of these cases, local Chinese entities have registered the names of foreign brands purely for the purpose of extracting money from the rightful brand owner. Some of the more high profile cases involve Google, Apple and Tesla Motors. However, thanks to China’s new Trademark Law, the trolls’ reign may be coming to an end.

China’s Trademark Law Reforms

China’s relatively new Trademark Law was enacted on August 30th, 2013 and came into effect on May 1, 2014 since, then many amendments have taken place in order to make it robust. It addresses sweeping reforms to trademark registration and enforcement, and mainly:

  • Establishes a new framework for all aspect of the trademark registration process
  • Deters trademark squatting by imposing good faith filing requirements
  • Increases penalties for trademark infringement six-fold to 3 million yuan (about 500,000 U.S. dollars)
  • Mitigates trademark holders’ responsibility in providing proof of infringement, saying alleged offenders shall provide their account books or other materials for investigation. Otherwise, compensation could be determined according to amounts proposed by trademark holders.
  • Prohibits trademark agencies from accepting assignment if they know or should know that their clients are engaging in malicious registration or infringing on the trademark rights of others
  • Offers protection for well-known trademarks, giving owners the right to ban others from registering their trademarks or using similar ones
  • Strengthens protections for famous or well-known trademarks
  • Disallows the words “renowned trademark” in promotions or advertising
  • Allows that sounds can be eligible as registered as trademarks as long as they are easily distinguishable and recognizable

While, not much change has been seen in the rising trend of trademark trolling the best protection which is available against it is to register your trademarks in key markets as soon as possible.

In order to have a detailed understanding on how the trademark trolls can be deterred kindly, attend our Global IP ConfEx , 16th March, 2016.

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