Be careful to buy squatted or hoarded trademarks in China

Mr. Xiaoming Liu, Chofn IP

According to the online media report, the China National Intellectual Property Administration (CNIPA) has begun to issue potential rejection against assignment of squatted trademarks to prevent the squatters from profiting from squatting or hoarding trademarks, without true intention to use.

The potential rejection is based on Article 42 of the Chinese Trademark Law. That is, the Trademark Office shall not approve the assignment of a registered trademark that is likely to cause confusion or result in other harmful effects….

In the report, the assignor's name is concealed, but it should be the investment company who applied for thousands of trademarks in 2017 as a kind of investment aiming to profit from hoarding trademarks. The assignor has already assigned many of the trademarks to different parties, which has attracted the CNIPA's attention.

The CNIPA and the Courts have taken effective steps to prevent or punish trademark squatting or hoarding in such procedures as new applications, oppositions, and invalidations. To our knowledge, it is the first time that the CNIPA raises potential rejection against assignment so. Although the CNIPA gave the assignor a month to prove its use or bona fide intention to use, we doubt the availability of the use evidence or justifiable reasons.

Because of this new change, companies should take precaution steps to acquire hoarded or squatted trademarks in China. We suggest that the buying companies should consider, in the deed of assignment, requiring the refund of the assignment fees or late payment until the trademark has been successfully assigned or the companies'own trademarks mature into registration, to be on the safer side.

Source of the media report: The Number of Trademark Applications Ranked Fourth Four Years Ago, Trademark Assignment Suspected of Hoarding for Profit and Having Harmful Effects Today (

Related article: Trademark Acquisition Pitfall and Tips in China (