China's First-to-File Rule: How Squatters Legally Take Your Brand Before You Launch

In most of Europe, trademark rights grow out of use. In China, they grow out of filing. Under China's first-to-file principle, the party who submits the trademark application first owns the rights — even if you have sold under that brand for a decade, everywhere but China.

This single difference creates an entire gray industry: trademark squatting. And European brands are its favorite targets.

How squatting actually works

A squatter doesn't need to counterfeit anything. They simply file your brand name (or its Chinese transliteration) at CNIPA as their own trademark. Filing is cheap — the official fee is a few dozen euros — and fully legal on its face. Once the mark is registered, the squatter owns it, and you don't.

From that position, they can:

• Block your imports. Chinese customs enforces registered trademarks. Goods bearing "their" mark can be seized at the border — including your own genuine goods.
• File takedowns against you. On Alibaba, Taobao and Tmall, the registered party is the rights holder. Your listings become the infringing ones.
• Demand a buyout. The classic move: sell the mark back to you for tens of thousands of euros.
• License it back to you. Some squatters prefer a monthly royalty — a permanent tax on your brand.

Who squats — it's often people you know

The uncomfortable truth: many squattings are insider jobs.

• Your OEM factory. The most common case we see. The factory that makes your goods registers your brand "to protect the production line" — in its own name.
• Your distributor or former employee. Anyone who saw your products and your ambitions.
• Professional squatters. They monitor EU registers, trade fairs and Amazon bestseller lists, and mass-file foreign brands that look promising. Your EUTM application is public — filing in Europe effectively announces your brand to them.

"But I'll just challenge them later"

You can — squatted marks can be opposed (within 3 months of publication) or invalidated later (on bad-faith or prior-rights grounds). But:

• It takes 1–3 years and significant fees.
• You must prove prior use or bad faith — assembling that evidence abroad is slow and expensive.
• You may be blocked from the market the entire time.
• There is no guarantee: some squatted registrations survive challenge.

Compare that with filing first: a few hundred euros and a paperwork form. Prevention isn't just cheaper — it's cheaper by two orders of magnitude.

The 4-step prevention checklist

1. Search before you assume. Check the CNIPA database for your brand name and its likely Chinese transliterations. It's free to check (we do it for you, free, in plain English).
2. File in your own company's name — now. Not the supplier's, not a partner's. Your name, filed by an independent local agent.
3. Cover Class 35 and the Chinese-language mark. Class 35 (retail/e-commerce) is the squatters' favorite hiding spot, and the Chinese character version of your brand is the version that will actually circulate.
4. File before you announce. Any public exposure — trade fairs, crowdfunding, EU filings, Amazon listings — can tip off squatters. File first, launch second.