How can a principal deal with trademark squatting by an agent in business?
Article 15 of the Trademark Law: Without authorization, if an agent or representative registers a trademark of the principal or represented party in their own name, and the principal or represented party objects, the registration will not be granted and use will be prohibited.
If a trademark applied for registration for the same or similar goods is identical or similar to an unregistered trademark used by another party prior to the application, and the applicant has a contractual, business, or other relationship with the other party other than those stipulated in the preceding paragraph, and is aware of the existence of the other party's trademark, and the other party objects, registration will not be granted.
In commercial practices, especially in international business dealings, it is common for agents or representatives (hereinafter referred to as "agents") to register trademarks of the principal or represented party (hereinafter referred to as "principal") in their own name without authorization. The vast majority of cases handled in Chinese judicial practice applying Article 15 paragraph 1 are due to disputes caused by goods crossing borders but trademark registrations failing to do so. These disputes arise because the principal's trademark has not been applied for registration in the jurisdiction where the agent is selling the goods. How to protect the principal's trademark rights should be a priority for the principal.
In reality, for principals' products to quickly enter foreign markets outside their home country, they often choose a distributor franchise model at the outset. Principals believe that local distributors have a better understanding of the local market, mature marketing advantages, and established consumer groups. This agency model allows for the rapid promotion and integration of the principal's products and brands into the local market. However, at that time, the principal only registers the trademark in their home country and overlooks the regulation that trademark protection is subject to geographical limitations; the exclusive rights obtained in the home country do not automatically extend to other countries outside the home country.
The agency relationship should be a special legal relationship with dependence. The agent owes the principal special duties of loyalty and diligence, and should perform their duties faithfully and act in accordance with the principle of maximizing the principal's interests. However, in fact, agents often engage in the act of snatching registration of the principal's trademark. Therefore, the principal itself needs to do a good job in trademark protection and apply for trademark registration before the products enter other countries outside the home country, preventing trademark snatching by agents during cooperation from the source.
In short, the best way to deal with trademark snatching is to plan your trademark layout in advance and apply for trademark registration in a timely manner. If timely application for registration is not done, preserving evidence of trademark use and business documents with the agent will provide strong support in trademark snatching disputes.
