You Built the Brand. A Court Says You Infringe It.

There is a version of this dispute where the brand owner is the defendant. They created the name, designed the logo, built the following and sold the product. Someone else filed first. And the court, looking at the register, sees an infringer.

This is not a hypothetical edge case. It is the predictable outcome of a first-to-file system meeting a brand that expanded faster than its filings did.

The uncomfortable part is not that the squatter wins. It is that the squatter can win while being obviously wrong, because the register does not record who created anything. It records who filed.

Quick answer: A granted Chinese registration is the basis for an infringement action regardless of authorship. Article 59(3) provides a prior use defence where the defendant used an identical or similar mark on identical or similar goods before the filing date, and that mark has acquired a certain influence, allowing continued use within the original scope with a possible requirement to add a distinguishing marker. Invalidation, non-use cancellation and settlement are the alternatives, and the arithmetic of defending usually favours settlement over trial.

The case that shows how far this can go

The clearest illustration is the long dispute between Chateau Lafite Rothschild and a Chinese applicant over the mark Chateau Lafei.

Lafite held a Chinese registration for LAFITE dating from 1996. In 2005, a Nanjing company applied for Chateau Lafei in class 33, covering wine. The opposition and invalidation proceedings ran for years.

At first instance the contested registration was cancelled. On appeal, the reasoning changed. The appellate court observed that the contested mark had been registered and used for around ten years and had established a stable market position, and on that basis maintained the registration. The French producer lost at that level.

The Supreme People's Court later corrected the outcome on retrial.

The significance is not the final result. It is the intermediate reasoning, which is available in the published record: a mark that plainly copied a famous foreign brand was defended on the ground that the copying had gone on long enough to acquire its own market position.

The other pattern: a dead mark used as a weapon

The second illustration is the honeysuckle mark dispute, which ran through Chinese courts and the administration between 2019 and 2022.

Registration 603857 for the honeysuckle mark was filed in 1992 and cancelled for improper registration in 1994, with the cancellation published in 1995. It was then transferred twice, in 1999 and 2010, and renewed three times, in 2002, 2012 and 2021. In 2019 the holder began filing hundreds of infringement actions across the country, seeking damages reported in aggregate above ten million yuan, and winning most of them at first instance.

In 2022 the Supreme People's Court took up the matter. The second-instance court reversed and found for the defendants. The trademark administration then revoked the approved transfers and renewals, and declared the transfer announcements, renewal announcements and the lost-certificate notice all invalid.

Two lessons, and they point in opposite directions.

The system can eventually correct itself. The correction came, and it was thorough.

The correction took three years and required the Supreme People's Court. For the defendants who settled in the interim, the correction arrived after they had already paid.

The full timeline and its procedural lessons are in how trademark squatters operate in China.

What the prior use defence actually gives you

Article 59(3) is the provision brand owners reach for, and it is narrower than the relief it appears to offer.

The provision applies where, before the registrant filed its application, another party had already used an identical or similar mark on identical or similar goods, and that mark has acquired a certain influence. In that case the registrant may not prohibit the earlier user from continuing to use the mark within the original scope, though it may require an appropriate distinguishing marker to be added.

Three conditions, each of which is a real obstacle.

Use before the filing date. Not before you learned about the registration. Before the registrant filed. This requires dated evidence, and dated evidence is exactly what a growing brand tends not to keep in usable form.

A certain influence. This is a threshold, not a formality. It means recognition among the relevant Chinese public, established through sales, advertising, duration and geographic reach. A brand with strong foreign sales and thin Chinese presence struggles here, for the reasons set out in why a US registration does nothing in China.

The original scope. You may continue within it. You may not expand. The scope is defined by how you were actually using the mark, on which goods, in which territory, at what scale. Growth beyond that boundary is outside the defence.

So the honest description of a successful Article 59(3) defence is this: you are permitted to keep existing, at your current size, with a marker added to distinguish you from the person who took your name.

The arithmetic that makes this a business

Understanding why this recurs requires looking at the incentives rather than the law.

Look at the last two rows together. For the party filing the claim, the cost of suing is low and the cost of losing is bounded. For the party defending, the cost of defending is high and mostly unrecoverable, and the cost of settling is a known number that is usually smaller than the cost of defending.

That asymmetry is the model. A holder with a portfolio of registrations can file broadly, settle most claims at a level below defence cost, and abandon the ones that meet real resistance. No individual case needs to be strong for the aggregate to be profitable.

This is why the strategic question in these disputes is rarely "will we win". It is "is defending cheaper than settling, and is the precedent worth the difference".

What actually works, in order of cost

1. Invalidate or cancel the registration. This removes the basis for the claim, which is better than defending against it. Non-use cancellation at CNY 450 is the cheapest option where the mark is idle, which squatted marks frequently are. The procedure is in the non-use cancellation guide.

2. Run the Article 59(3) defence. Available where the evidence of prior use and acquired influence exists. It preserves your business but does not remove the registration, so the dispute can recur.

3. Negotiate. Often correct, and it should be negotiated with the invalidation or cancellation running in parallel rather than as an alternative to it. Leverage in the negotiation is a function of how likely the registration is to survive. The structure is in buying a mark back without overpaying.

4. Rebrand. The option nobody wants and every brand should price. If the registration is old, used, and defensible, the cost of a rebrand may be lower than the cost of a decade of disputes. Deciding this early is much cheaper than deciding it in year three.

Which of these applies depends on the registration's age, use and vulnerability, and the assessment framework is in the bad-faith registration defense guide. Where the registrant is a supplier, the recovery path is different and is set out in supplier hijacking and OEM recovery.

Questions that come up every time

Can a squatter sue me in China for using my own brand?

Yes. A granted registration is the basis for an infringement action regardless of who created the mark. The court assesses the registration, not the authorship history, unless a defence or an invalidation succeeds.

What is the prior use defence?

Article 59(3) allows a party that used an identical or similar mark on identical or similar goods before the registrant filed, and whose mark has acquired a certain influence, to continue within the original scope. The registrant may require an appropriate distinguishing marker.

Does the prior use defence let me keep selling under my brand?

Within limits. You may continue within the original scope, meaning the same goods and the same commercial and territorial extent. You cannot expand, and you may be required to add a distinguishing marker.

Why would a court uphold a squatted trademark?

Because registration is the right, and continued use can build independent market position. In the Chateau Lafite dispute the appellate court reasoned that the contested mark had been registered and used for around ten years with a stable market position, and maintained it. The Supreme People's Court later corrected that on retrial.

Is it cheaper to fight or settle?

Usually to settle, which is why the model works. Defence costs typically exceed a modest settlement demand, and that gap is the business.

How do I avoid being on the receiving end?

Register before you have anything worth squatting. A CNIPA registration costs about USD 40 per class and removes the entire category of risk, because a squatter cannot obtain a registration over an existing one.

Does winning the defence end the matter?

Not necessarily. The registration remains in force, so the dispute can be reopened. Removing the registration is a different objective from surviving the claim.

What if the registration is very old and heavily used?

That is the hardest case, and it is where a rebrand has to be priced honestly against a decade of disputes. The age of the registration is a real obstacle to invalidation, and the use is a real obstacle to non-use cancellation.