Fighting the Squatters: How Article 4 Targets Bad Faith and Hoarding in China

Trade mark squatting has long been one of the most pressing challenges in China. The country’s first-to-file system, combined with historically low filing fees and a massive register, created fertile ground for bad faith applicants who file marks with no intention to use them — either to sell them to the legitimate brand owner or to block competitors. The 2019 amendment to the Trademark Law addressed this directly by strengthening Article 4, giving CNIPA examiners the power to proactively reject applications filed without a genuine intent to use.

The 2019 Amendment: What Changed

Before 2019, Article 4 simply stated that any natural person, legal person, or other organisation that needs to obtain exclusive trade mark rights shall file an application. The 2019 amendment added a critical clause: “A malicious trademark application not intended for use shall be rejected.”

This gave CNIPA examiners an ex officio tool to identify and reject bad faith applications during the initial examination stage — before the mark ever reaches publication. Previously, the primary remedies were opposition and post-registration invalidation, both of which are more costly and time-consuming.

Indicators of Bad Faith

The CNIPA and the courts have developed a set of indicators used to identify bad faith filings. While no single factor is dispositive, the following patterns raise red flags:

Mass Filings (Trademark Hoarding)

Applicants who file hundreds or thousands of trade mark applications within a short period, covering a broad range of goods and services that far exceed any reasonable business need, are prime targets. The sheer volume of filings, combined with no evidence of commercial activity, suggests the marks are being hoarded for sale rather than use.

Copying Multiple Famous Brands

Applicants who systematically file marks that are identical or confusingly similar to well-known international brands across multiple classes — particularly where the applicant has no apparent connection to those industries — demonstrate a pattern of copying that supports a bad faith finding.

Filing Unrelated to Business Scope

When an applicant files marks in categories completely unrelated to their actual business operations, this suggests the filings are speculative rather than based on genuine commercial need. CNIPA examiners may request explanations and evidence of the applicant’s business scope.

Prior Squatting History

Applicants who have been previously identified as squatters in opposition or invalidation proceedings face heightened scrutiny on subsequent filings.

How Article 4 Works in Practice

When the CNIPA suspects bad faith, the examiner may issue an office action requiring the applicant to provide explanations and evidence of genuine intent to use the mark. Under the 2019 amendment, the CNIPA can require applicants to submit “explanations” as well as “evidence” during the examination process.

If the applicant cannot demonstrate a legitimate commercial purpose, the application is rejected. The CNIPA has also become more receptive to complaint letters from brand owners who alert the office to suspicious filings at the preliminary examination stage.

Article 4 in Opposition and Invalidation

Article 4 is not limited to examination. It can also be invoked in:

• Opposition proceedings: Within the three-month publication period, any interested party can oppose a published mark on the ground that it was filed in bad faith without intent to use.
• Invalidation proceedings: After registration, the mark can be declared invalid under Article 44(1), which prohibits registrations obtained by “fraud or other improper means.” There is no time limit for invalidation actions based on Articles 4 or 44(1).

Interaction with Other Anti-Squatting Tools

Article 4 works alongside other provisions that combat bad faith:

• Article 15: Prevents agents, representatives, or other parties with prior relationships from filing the principal’s mark without authorisation.
• Article 32: Protects prior rights (including copyrights, trade names, and personal names) and prohibits registration of a mark that the applicant knows another party has been using.
• Article 44(1): Allows invalidation of marks registered by fraud or improper means — often used in tandem with Article 4 for serial squatters.

The Assignment Restriction

The CNIPA has also tightened controls on trade mark assignments involving suspected hoarders. If the CNIPA suspects the assignor is a trade mark hoarder, it may require evidence of actual use or legitimate intent before approving the transfer. Even if the assignee is the legitimate brand owner, an assignment from a known squatter may be blocked.

Strategic Recommendations

• File first: In China’s first-to-file system, the best defence against squatting is to file your marks early — before entering the market.
• Monitor the register: Use trade mark watch services to identify squatter filings during the three-month publication period, when opposition is most cost-effective.
• Submit complaint letters: If you discover a suspicious filing before publication, submit a complaint letter to the CNIPA drawing attention to the bad faith indicators.
• Document your own intent to use: If you are filing defensively in multiple subclasses, maintain records demonstrating your legitimate business plans to avoid Article 4 challenges to your own applications.

Common Mistakes

• Waiting to file until market entry: In China, by the time you enter the market, a squatter may have already registered your brand name.
• Over-filing without a use strategy: Brand owners who file defensively in dozens of classes without any plan to use the marks may themselves face Article 4 objections.
• Assuming Article 4 alone will solve the problem: While strengthened, Article 4 is one tool among many. A comprehensive anti-squatting strategy combines Article 4 with Articles 15, 32, and 44, plus well-known mark protection where available.

Key Takeaway

The 2019 amendment to Article 4 was a landmark reform in China’s fight against trade mark squatting. By empowering CNIPA examiners to reject applications filed without genuine intent to use, China has added a critical preventive tool to its arsenal. However, squatting remains a significant risk, and brand owners must combine early filing, active monitoring, and prompt enforcement to protect their rights in the world’s largest trade mark market.