Understand the risks of trademark squatting, its impact on global business, and how the Madrid Protocol helps prevent it. Learn about key cases and legal perspectives.
Trademark Squatting is a malicious practice, done by squatters who take advantage of negligence by registered trademarks, with an intent to impersonate someone’s brand or to damage their brand reputation.
This usually happens when companies file for a trademark in their home country but not in other countries where they might expand their business someday.
Similar Trademark Registrations may not always be done with malicious intentions, but when it comes to Trademark Squatting, it is a legal business model involving doctrine of bad faith to earn profits or defame someone else’s brand reputation.
A famous example of Trademark Squatting is as under:-
When a Chinese company registered the trademark for iPhone in China in 2004, Apple couldn’t do much about it but spent a humongous amount of $3.6 million to get the trademark back. Two years later, Apple had to pay $60 million to another company to settle an iPad trademark dispute.
The big disadvantage of Trademark Squatting is when someone else has already registered your brand’s trademark in their home country, it may become difficult for you to conduct business in that country and can lead to an unwanted legal battle.
The most famous approach to Trademark Squatting is First To File Approach, most commonly used in China, which has made China a famous hub for trademark squatters.
In the First to File approach, the ownership of the trademark is determined by whoever first filed the trademark. That means, if a trademark squatter registers for your brand’s trademark in a country that uses the First to File approach, it can become challenging for the real owner to expand the business in another country or get the trademark back.
Reason for the amendment brought in 2019 in The Trademark Act of China:-
After seeing several brands struggle with trademark issues, which in turn made large corporations hesitant in bringing their business into China, China brought amendments in their Trademark Act in order to prevent Trademark Squatting.
A famous case that occurred in China in regards to Trademark Squatting is as under:-
The English name ‘Tesla’ along with the logo ‘T’ was trademarked by a businessman in China. This businessman then demanded the company to shut down its showrooms and other marketing activities unless they pay $3.9 million.
The conclusion of the case was :-
Tesla filed a lawsuit against the man and fortunately won it after a long battle, but the businessman appealed the decision, and both parties settled for an undisclosed amount.
Thus, it becomes extremely important to prevent our trademark in early stages itself to avoid getting stuck in long legal battles and jurisdictional disputes.
Prevention Of Trademark Squatting :- The Madrid Protocol :-
The Madrid Protocol, prevalent in 112 countries currently, is an international system that allows a person to obtain protection for a trademark in other countries with one single application. As soon as the trademark is granted by the World Intellectual Property Organization (WIPO), it is registered and recognized in all the member countries.
Advantages of The Madrid Protocol :-
1. This makes the registration of trademarks in other countries easy and safe.
2. Helps in prevention of Trademark Squatting.
3. Easy management of Trademarks.
4. Cost – effective tool.
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Introduction of Author:- Winner of the Title ‘Best Paper Presenter’ in ICAI National Conference of Indore in the Technical Session of GST, Ishwin Kaur is a dedicated and diligent professional, awarded for her academic excellence and communication skills. Along with being a Contributor at ICAI newsletters of various branches, she is also a Professional Associate of many leading professional sites, and has contributed many publications in the same. She is also a Book Author and a Podcast Speaker, and has been featured in Top Newspapers Twice.
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