INTRODUCTION
Trademark squatting is a type of intellectual property infringement that occurs when a third-
party registers or uses a trademark that belongs to someone else, with the intention of profiting from it or preventing the rightful owner from using it. This typically involves registering a trademark that is similar or identical to an existing trademark, either to sell the trademark to the rightful owner at a high price, or to use it to generate profits through unfair competition. Trademark squatting is a significant challenge for businesses, as it can lead to confusion among consumers, damage to brand reputation, and loss of revenue.
MEANING
Trademark squatting, also known as brand squatting, is the practice of registering a trademark that is identical or similar to a well-known or established brand, with the intention of profiting from its use, or selling it to the legitimate owner of the brand at an inflated price. Essentially, it involves registering a trademark with the sole intention of exploiting or extorting the legitimate trademark owner.
Trademark squatting is often considered unethical and can be illegal in some cases, as it can
lead to confusion among consumers and dilute the value of a brand. Trademark squatting is
more common in countries with weaker trademark protection laws, and is often associated with cybersquatting, where someone registers a domain name that is identical or similar to an
established brand, with the intention of profiting from it or selling it to the legitimate brand
owner.
PURPOSE
The purpose of trademark squatting is typically to exploit the reputation and goodwill of an
established brand. By registering a trademark that is identical or similar to a well-known brand, the squatter hopes to profit from the confusion that can arise among consumers who may mistake their products or services for those of the legitimate brand owner.
Trademark squatting can also be a way for squatters to extort money from the legitimate brand owner by demanding payment for the transfer or assignment of the trademark. Alternatively, they may use the trademark to generate revenue through advertising or by selling counterfeit or inferior products under the brand name.
CASE STUDY
One high-profile case of trademark squatting involved the Chinese sportswear company
Qiaodan Sports and basketball legend Michael Jordan. Qiaodan Sports, which was founded in
1984, registered the trademark “Qiaodan” in 1997, which is a Chinese translation of Jordan’s
name. The company then used the name and a logo resembling the Nike ‘Jumpman’ logo to
sell sportswear and sneakers.
In 2012, Michael Jordan filed a lawsuit against Qiaodan Sports, alleging that the company had
used his name and likeness without permission and that the use of the Qiaodan trademark had caused confusion among consumers. Jordan argued that the company’s use of his name and likeness constituted trademark infringement and dilution, and that the company had engaged in unfair competition by using his fame to sell its products.
In 2016, a Chinese court ruled in favour of Michael Jordan, finding that Qiaodan Sports had
“damaged the reputation and interests” of the basketball star by using his name and likeness
without permission. The court ordered the company to stop using the Qiaodan trademark and
to pay damages of 8.8 million yuan (approximately $1.3 million USD) to Jordan.
The case was seen as a victory for brand owners in China, where trademark squatting is a
common problem. It highlighted the importance of protecting one’s intellectual property rights, especially in countries where the legal framework for such protection may be weaker or less developed. It also underscored the potential harm that trademark squatting can cause to legitimate brand owners and the need for robust legal remedies to address this issue.
PREVENTIVE MEASURES
- Conduct a trademark search: Conduct a comprehensive trademark search before
applying for a trademark registration. This will help identify any potentially conflicting
marks and enable the brand owner to avoid using or applying for a mark that is similar
to an existing one. - File for trademark registration early: File for trademark registration as early as possible
to establish priority rights and prevent others from registering a similar or identical
mark. - Monitor trademark registrations: Continuously monitor trademark registries to identify
any applications for marks that are similar to your own. This can be done manually or
through the use of trademark watching services. - Register trademarks in relevant jurisdictions: Register trademarks in all relevant
jurisdictions where the brand is used or plans to expand to. This will prevent others
from registering similar marks in those jurisdictions. - Take legal action: Take legal action against suspected trademark squatters to protect
your intellectual property rights. This can include filing oppositions, cancellation
actions, or infringement lawsuits. - Educate employees and partners: Educate employees and partners on the importance of
trademark protection and the risks associated with trademark squatting. This will help
to ensure that they understand the value of intellectual property and take appropriate
measures to protect it.
CONCLUSION
In conclusion, trademark squatting can have serious consequences for businesses, particularly those operating in global markets. The practice of registering or using a trademark that belongs to someone else can lead to confusion among consumers, damage to brand reputation, and loss of revenue. To protect their trademarks, businesses should be proactive in monitoring their intellectual property and taking legal action against those who engage in trademark squatting.
Additionally, businesses should consider obtaining trademark registrations in countries where
they operate or do business, to strengthen their legal rights and protect their intellectual
property.
Rossel Aggarwal
Associate Trainee- Lawgenix- Legal Geniuses