Apple paid $60 million. New Balance was ordered to pay $15.8 million — for using its own name. Michael Jordan spent years fighting a company called "Qiaodan Sports" that had registered nearly 80 trademarks based on his identity. These are not edge cases. They are the predictable result of a trademark system where the first party to file an application owns the mark, regardless of who actually built the brand.
China's first-to-file system has made trademark squatting a cottage industry for decades. But the landscape is shifting. CNIPA cracked down on roughly 470,000 malicious registrations in 2023 alone — up 27% from the prior year — and the fifth amendment to China's Trademark Law, submitted for legislative review in December 2025, introduces administrative fines and a "zero-tolerance" framework for bad-faith filings.
This guide breaks down the problem, the recent reforms, and — most importantly — what you should actually do about it.
First-to-File vs. First-to-Use: Why China Is Different
Most Western brands operate under the assumption that building a brand and using it in commerce gives you trademark rights. In the United States, that is broadly true — the "first-to-use" principle means prior commercial use establishes priority over a later filing.
China operates on the opposite principle. Trademark rights are granted to the first party to file an application with CNIPA, regardless of prior use anywhere in the world. If a local entrepreneur files your brand name in China before you do, they own it — and you may have to pay them to get it back, or spend years in opposition and invalidation proceedings.
This fundamental difference is the root cause of China's squatting problem. It is also why defensive filing before market entry is not optional — it is a strategic necessity.
The Scale of the Problem — and the Crackdown
China processes more trademark applications than any other country. Even after significant declines from peak levels, CNIPA handled approximately 6.4 million trademark applications through November 2024. The sheer volume creates both opportunity for squatters and a processing burden that historically limited case-by-case scrutiny.
China Trademark Applications by Year (millions of class counts) — CNIPA / WIPO Data
The decline from a peak of roughly 9.5 million class counts in 2021 to approximately 7 million in 2024 is not a sign of a weakening economy alone. A significant driver is CNIPA's intensified enforcement against malicious filings. In the first half of 2023 alone, 249,000 malicious registrations were blocked. For the full year, the total reached approximately 470,000 — a 27% increase over 2022.
The number of registered trademark agencies also collapsed, dropping from 71,446 to 35,712 after a re-registration requirement eliminated firms that had been facilitating bulk bad-faith filings.
Famous Cases: What $60 Million Lessons Look Like
These cases illustrate why proactive filing is cheaper than reactive litigation — every time.
Apple iPad — $60 Million Settlement
When Apple launched the iPad in China, it discovered that Proview Technology, a Shenzhen-based display manufacturer, had registered the "iPad" trademark in China back in 2001. Apple had acquired iPad rights in multiple countries through a UK subsidiary, but the Chinese registration belonged to a separate Proview entity. After protracted litigation, Apple settled in 2012 for $60 million — simply to use a name it had created.
New Balance — Ordered to Pay for Its Own Brand Name
A Chinese individual named Zhou Lelun registered "Xin Bai Lun" (the phonetic Chinese rendering of "New Balance") and then sued New Balance for trademark infringement — for using the Chinese translation of its own brand. The Guangzhou Intermediate People's Court initially awarded Zhou RMB 98 million ($15.8 million). On appeal, the Guangdong Higher People's Court reduced damages to RMB 5 million, but still upheld that New Balance had infringed Zhou's registered mark.
Michael Jordan vs. Qiaodan Sports
Qiaodan Sports registered the Chinese transliteration of "Jordan" along with nearly 80 related trademarks starting in 2000, building a sportswear empire that traded directly on Michael Jordan's name and likeness. Jordan fought the case through multiple courts over more than a decade. In 2020, China's Supreme People's Court finally ruled in his favor on selected marks, cancelling registrations of his Chinese-character name — but the company retained its romanized "Qiaodan" marks.
Tesla — Won, but at a Cost
Before Tesla entered the Chinese market, a Guangzhou businessman named Zhan Baosheng registered the "Tesla" trademark. Tesla challenged the registration and won in 2014, with the court ordering Zhan to cease use and pay 1.47 million yuan in damages. But the legal process consumed years that could have been avoided with a preemptive filing costing a few hundred dollars.
Starbucks — A Rare Clean Win
Starbucks successfully challenged "Xingbake" — a Chinese coffee chain whose name combined "xing" (star) and "bake" (phonetically similar to "bucks"). The Shanghai court ruled in Starbucks' favor in 2006, finding the name was confusingly similar. But Starbucks only prevailed because it had already registered its marks in China and could demonstrate well-known status.
Opposition Success Rates Are Improving
CNIPA's opposition process has become meaningfully more favorable for legitimate brand owners. Success rates have climbed steadily, reflecting both better enforcement and clearer legal standards for identifying bad-faith filings.
China Trademark Opposition Success Rate (%) — CNIPA Data
For cases specifically brought under Article 30 (prior rights), the success rate reached 91.6% in 2023 when including partially favorable outcomes. This is a significant shift from just a few years ago, when foreign brand owners routinely lost opposition proceedings.
However, timelines remain long. The average opposition review takes 11 to 18 months. Invalidation proceedings typically require around 12 months. Non-use cancellation takes approximately 9 months. And if a case goes to appeal at the Beijing IP Court, add another 12 to 18 months. The lesson: even when you win, the process is slow and expensive.
The 2025 Trademark Law Reform
China's fifth amendment to the Trademark Law was submitted for its first reading to the National People's Congress Standing Committee on December 22, 2025, with the draft published for public consultation five days later. Enactment is expected in the first half of 2026.
The key provisions targeting squatting include:
- Intent-to-use requirement: Applications filed without genuine intent to use that "obviously exceed normal production or business operational needs" will be rejected outright.
- Administrative fines: Article 53 introduces fines of up to RMB 100,000 (approximately $14,000) for bad-faith registration acts that cause adverse effects — the first time monetary penalties have been attached to filing behavior.
- Whole-chain enforcement: The reform establishes a "pre-prevention, in-process review, post-punishment" regulatory framework, creating multiple checkpoints for catching bad-faith applications.
- Cumulative penalties for serial squatters: Repeat offenders face escalating consequences, including potential cancellation of all related registrations.
These reforms are meaningful, but they do not eliminate the need for proactive filing. The first-to-file principle remains intact.
China's Subclass System: A Hidden Vulnerability
China's trademark classification includes a subclass system that subdivides each of the 45 Nice classes into smaller groups. Items within the same subclass are presumed similar; items in different subclasses — even within the same class — are presumed dissimilar. This is unique to China and creates a specific vulnerability.
A trademark registration only protects the subclasses it covers. A squatter can register your brand in a different subclass of the same class and CNIPA will not flag it as a conflict. For example, within Class 25 (clothing), sportswear and formal business attire may sit in different subclasses, meaning a registration for one does not block a filing for the other.
The defensive implication: when filing in China, you need to draft your goods and services specification to cover all relevant subclasses within each class — not just your core products.
The Cost Math: Defense vs. Litigation
The economics overwhelmingly favor preemptive filing over reactive enforcement.
| Action | Estimated Cost | Timeline |
|---|---|---|
| Defensive filing (1 class, including agent) | $350 - $500 | 7 - 12 months |
| Defensive filing (3 classes, including agent) | $1,000 - $1,500 | 7 - 12 months |
| Opposition proceeding | $3,000 - $8,000 | 12 - 18 months |
| Invalidation proceeding | $5,000 - $15,000 | 12 - 24 months |
| Court litigation (first instance) | $15,000 - $50,000+ | 12 - 24 months |
| Buying back a squatted mark | $5,000 - $100,000+ | Negotiation-dependent |
| What Apple paid for "iPad" | $60,000,000 | Years |
A three-class defensive filing costs roughly $1,000 to $1,500. An opposition costs $3,000 to $8,000 and takes over a year with no guarantee of success. Full-blown litigation can run into the tens of thousands — or, as Apple demonstrated, the tens of millions. The calculus is not close.
Defensive Strategy: A Practical Playbook
1. File in China When You File Anywhere
Do not wait until you plan to enter the Chinese market. File your core marks with CNIPA at the same time you file in your home jurisdiction. At $350 to $500 per class (including agent fees), this is the cheapest insurance against squatting available.
2. Cover Multiple Classes and Subclasses
File beyond your core goods and services. If you sell software (Class 9), also consider Class 42 (software development services), Class 35 (online retail), and Class 38 (telecommunications). Within each class, ensure your specification covers all relevant subclasses.
3. Register Your Chinese-Language Name
Many squatting cases involve the Chinese transliteration or translation of a foreign brand name. Register both your romanized mark and any Chinese-character versions — including phonetic translations, meaning-based translations, and commonly used informal translations. New Balance's $15.8 million problem started because "Xin Bai Lun" was not registered.
4. Monitor Continuously
CNIPA publishes new trademark applications in its gazette. You have a three-month opposition window after publication. Miss it, and you are looking at the more expensive and time-consuming invalidation process. Automated monitoring services — including those powered by Signa's API across 200+ trademark offices — can catch squatter filings within days of publication.
5. Use the Madrid Protocol Strategically
You can designate China through a Madrid Protocol filing, which simplifies the process if you are filing in multiple jurisdictions simultaneously. However, be aware that Madrid designations in China are subject to the same substantive examination and opposition risks as direct filings. For your most critical marks, consider parallel direct filings for faster processing.
6. Act Fast on Oppositions
If a squatter files on your mark, oppose within the three-month window. CNIPA's improving success rates — now approaching 60% overall and over 90% for Article 30 prior rights claims — mean the odds are increasingly in your favor, provided you have prior rights or evidence of bad faith to cite.
Pre-Market Entry Checklist
Before entering or even considering the Chinese market, ensure you have addressed each of the following:
- Filed core trademark in romanized form across all relevant classes
- Filed Chinese-character versions (phonetic, semantic, and informal translations)
- Covered all relevant subclasses within each class filing
- Registered any key logos, stylized marks, or design elements separately
- Set up continuous monitoring for new applications on your marks and variants
- Identified and documented any prior use evidence (trade show participation, export records, media coverage in China)
- Engaged a local Chinese trademark agent for filing and monitoring
- Budgeted for potential oppositions (3-month window after competitor publications)
The first-to-file system means the window for proactive protection is now — not when your market entry plan is finalized. At a few thousand dollars for comprehensive defensive filing, the cost of action is a rounding error compared to the cost of inaction.
Data current as of March 2026. Cost estimates are approximate and vary based on complexity, number of classes, and choice of legal counsel. Always consult with a qualified trademark attorney for jurisdiction-specific advice.
Sources:
- WIPO World Intellectual Property Indicators 2024 — Trademarks
- WTR — Opposition Trends in China Reveal CNIPA Crackdown on Trademark Squatting
- CMS Law-Now — China's 2025 Draft Amendment to Trade Mark Law: Key Insights
- Bird & Bird — Close to Final Version: January 2026 Update on Amendment of China's Trademark Law
- Mondaq — A Legislative Milestone: China Releases the 2025 Draft Amendment to the Trademark Law
- National Law Review — China Trademark Registrations Down 29% in 2023
- Gowling WLG — China's Trademark Subclass System: A Guide
- Harris Sliwoski — China Trademarks: Subclasses and Basic Numbers
- Fortune — How New Balance Ran Into a Wall in China
- Lexology — 5 Major Brands That Faced Difficulties with Trademark Registration in China
- NPR — The Trademark Woes of Michael Jordan (And Many Others) in China
- Chambers — Trade Marks & Copyright 2025: China Trends and Developments