$5M Case Highlights Risk From Chinese Trademark Trolls

Law360, New York (October 17, 2012, 3:11 PM ET) -- Under Chinese trademark law, only a registered trademark enjoys protection and the first person or entity to register it becomes its lawful owner, even if that trademark has already been used by others in China. The only exception to this rule is that of an unregistered trademark which, through its intense and prolonged use in China, has acquired a good reputation among the relevant public or has become famous nationwide at the time of registration of a hostile trademark.

Known as "trademark trolls," certain Chinese companies or individuals are known to actively follow a strategy of registering intellectual property rights in China that arguably belong to their foreign competitors. Aware of the very strict "first to file" principle, they identify, apply and register trademarks belonging competitors who have forgotten or not yet taken steps to register them.