What is Trade Mark Squatting?

We’ve all heard about domain name squatters – people that register domain names covering well known brands and then sitting on the registration hoping that they’ll be able to sell the URL for lots of cash to the true owner. So is trade mark squatting a thing?

What is a trade mark?

Trade marks can be lots of things, provided it is used or intended to be used, to distinguish goods or services in the course of trade. In other words, it must be used to differentiate a particular product or service from other competitors.

A trade mark can be words, colours, sounds and even smells and registering your trade mark provides you with protection in Australia (or the country in which you file your application) and exclusive rights to use, sell and licence the mark in Australia/that country. 

Owning a trade mark

Registering a trade mark gives you the exclusive right to use/licence it in relation to the goods and services it is registered for. However, you can only register a trade mark if you are the owner of it – ie. the person who first used the trade mark in Australia (or elsewhere if it is well known). So if someone has sufficiently used a trade mark before you, and you attempt to register it, then they may be the true owner, not you. As such, they could oppose your application on the basis that you’re not entitled to register the trade mark.

Using a trade mark

When you lodge a trade mark application, you must intend to use that trade mark in relation to all of the goods and services covered by the application. This means you can’t just register trade marks for safekeeping or to secure the trade mark merely to preclude someone else from registering it. In fact, someone may oppose your application on the grounds that you do not intend to use it. If you have registered a trade mark on this basis, and haven’t used it, someone may apply to remove your trade mark from the Register on the grounds of non-use.

Trade mark squatting in Australia

Using a trade mark is important to establish and maintain your ownership of the trade mark.

Like domain name squatting, trade mark squatting is when a person registers a trade mark merely to sell it for a profit at a later time, generally to someone who is may be the true owner or who wants to use it.

When considering trade mark squatting, you need to consider ‘first to file’ -v- ‘first to use’, and this test varies in different countries.

  • First to use’

Australia and the USA (as well as other countries) has a ‘first to use’ approach when it comes to determining ownership of a trade mark. This means that if a person who applies for a trade mark isn’t the first to use that trade mark in Australia, it’s fairly easy to undermine their ownership of it. Even if a ‘squatter’ is the first user of a trade mark in Australia, a trade mark ‘owner’ can oppose their trade mark application or apply to have the registration cancelled. Grounds for opposition include that the squatter had no intention to use the trade mark applied for, that the application was applied for in bad faith as well as a number of other grounds..

  • First to file’

A ‘first to file’ approach determines ownership based on who filed the trade mark application first. China uses this approach. It’s not enough to use a trade mark first. This can be problematic for businesses who expand into the Chinese market before registering their trade mark there as it is more difficult to oppose registration of a trade mark application lodged by a squatter. Recent Chinese laws have sought to combat this by expanding the scope for opposing application on the grounds of ‘bad faith’.

Conclusion

In conclusion, a trade mark is a mark used to distinguish your brand from those of your competitors. In Australia, you have rights in a trade mark if you were the first person to use it. As an owner, you can register your trade mark.

However, your registration can be undermined if you don’t intend to or don’t use it in good faith.

If you are considering expanding your business overseas or wish to register your trade mark in Australia, or have discovered that a trade mark squatter is attempting to steal your trade mark, get in touch with our trade mark professionals to discuss next steps.

71 thoughts on “What is Trade Mark Squatting?”

Leave a Comment

Your email address will not be published. Required fields are marked *