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What is trademark squatting and is it legal?

On Behalf of | Aug 14, 2021 | intellectual property law

Memorable brand names and eye-catching trademarks distinguish your products from your competitors. When your brand becomes successful over the internet, however, you may discover other parties using your trademarks without your permission.

Also referred to as bad-faith filing, trademark squatting typically occurs when an unauthorized party registers your existing trademark or patent in another country. As explained by the United States Patent and Trademark Office, the practice exists because the agency may only protect intellectual properties registered within the U.S.

Infringement vs. bad-faith trademark filing

Infringers may use your trademarks and goodwill to produce counterfeit products. This may confuse your customers and deprive your business of revenue. Unlike counterfeiters, however, bad-faith filers may hope that you will pay them to retrieve your trademark’s registration in their native country.

Until they begin selling their products across borders, many businesses may remain unaware of unauthorized use. According to the Anti-Cybersquatting Consumer Protection Act, bad faith filers may register domain names similar to your company and products. As noted by Forbes magazine, filers may use an extension other than “.com” to profit from your branding.

When to take steps to reduce the risk of trademark squatting

Trademark registration and legal protection offered through the USPTO generally do not extend outside U.S. boundaries. Each country that you plan to sell your products in has its own procedures for registering and protecting your brand. As reported by Vogue Business, China provides legal protection to whichever party can prove it used a name or trademark first.

Trademark and patent registrations offer companies legal rights against unauthorized use of their brands, logos or slogans. If your business sells products online to international customers, you may wish to consider protecting your intellectual properties outside the U.S.