Trademark squatting is an old problem. However, as new products enter the market, this old problem finds new forms of expression. 

Recently, trademark squatting on cannabis-related brands has accelerated, particularly in brands that work with suppliers or sell items in China. 

What is Trademark Squatting?

Trademark squatting occurs when one party registers a trademark while another uses that trademark in commerce but hasn’t registered it. 

The party using the trademark may have invested considerable resources into developing the mark, printing it on products and packaging, and incorporating it into marketing materials. Suddenly, the “owner” shows up, threatening to file an infringement claim against the company using the trademark – the trademark the opponent has registered. The owner may also exercise its trademark rights to prevent the user’s goods from entering a country or being sold, despite the considerable effort the user has put into creating the trademark. 

Companies in this situation often face a difficult and expensive choice: Buy the trademark rights from the squatter or invest in recreating their trademark from scratch. 

Challengers from China

Trademark squatting is nothing new. Nor is the practice of trademark squatting by Chinese companies, which may use their registration of the mark in China to get law enforcement in that country to seize products coming from abroad. 

As cannabis becomes legal in various US states, companies that handle cannabis or cannabis-related items like vapes, trimmers, and packaging find themselves exposed to trademark squatters in China and other countries – especially if these companies rely on Chinese vendors or do business in China. While cannabis itself is rarely the product at issue in these claims, parts, paraphernalia, and packaging can all face trademark squatting issues. 

Trademark squatting is rarely an abstract situation. To squat on a company’s trademark, a squatter must first know the mark exists, is under development, or is used in another country. The people most likely to know this information are people you and your team may deal with personally: manufacturing representatives in China, printers of packaging materials, or website designers. They may be employees of your own company or of a Chinese company you’ve trusted for years. When these individuals decide to pass your information to a squatter – or file trademark paperwork in China themselves – your company can face serious and expensive issues.

Even companies that don’t do business in China or with Chinese companies may face exposure. A Chinese trademark squatter may register your mark under their name in China anyway. If they do, they may distribute goods with that mark in China, trading on the goodwill you’ve built in a global market. They may also block your goods from entering the country – turning you into the infringer for using a mark that is protected in other countries. 

Protecting Your Trademarks at Home and Abroad

While filing for trademark protection in the United States can be done through the USPTO, protecting trademarks worldwide is more challenging. There is no single registry for global trademark protection. 

The first step in protecting your trademark is to register it as soon as possible. Registering a mark with the USPTO protects the mark throughout the United States. Your USPTO proof of registration can also be used to bolster applications for registration in other countries – many other nations will accept proof of USPTO registration as evidence that you own the mark and they should approve your registration in their country as well. 

To mitigate the risk of trademark squatting or counterfeit products, register your trademark in all your primary sales markets as soon as possible. Recording your trademark with US Customs and Border Protection (CBP) adds an extra layer of security against fake goods entering the US with your mark on them. Similarly, registering your trademark with Chinese border officials will help them distinguish your goods from counterfeiters’ goods. 

What If I’m Already Dealing With Squatters?

These protective measures are most useful when implemented early – after you’ve finalized a trademark but before you’ve invested resources in deploying it. In some cases, however, a company may find itself facing bad-faith trademark registrants or squatters later in the process. 

Here, the best defense may be a good offense: To identify the bad-faith actor and fight back. In this case, understanding where your trademark may have been “leaked” to a squatter is a must. When you understand your company’s vulnerabilities – your employees’ conversations, your links to Chinese companies, and so on – you can take steps to protect your IP and track down bad-faith actors. 

To protect your investments in your trademark and brand, talk to an experienced trademark attorney today. The team at Cohen IP can help.