Trademark squatting refers to applying to the trademark authority to register as a trademark a sign that the applicant knows or should know has been used earlier by another, is subject to another's prior rights, or has already gained considerable fame. Its institutional root lies in the principle of registration-based acquisition: trademark rights are in principle acquired by application rather than use, and the first applicant wins. The rule encourages early registration—and is maliciously exploited: squatters appropriate the goodwill others have built in the market, then demand high assignment fees, block the prior user's registration, or ride on the brand's coattails.
Constitutive Elements
The finding of squatting usually requires all three elements to be present: first, another's prior rights exist—such as a trademark used earlier with a certain influence, a trade name, a name, or a copyright; second, the applicant knew or should have known of the prior rights—for example, because an agency, representation, cooperation, or employment relationship existed between the parties, or the sign already had considerable fame among the relevant public; third, the application had an improper purpose—typically demanding high assignment fees, hoarding the slot, or blocking the prior user's registration. Merely "applying earlier" without knowledge and improper purpose does not constitute squatting.
Legal Nature: A General Concept, Not an Independent Proceeding
Squatting is not an independent legal proceeding, but a generalization of a category of registration conduct violating the principle of good faith; its regulation is scattered across multiple provisions of the Trademark Law: squatting another's trademark already used with a certain influence falls within the second half of Article 32; squatting by agents, representatives, and parties who learned of the trademark through business dealings is governed by Article 15; reproduction, imitation, or translation of well-known trademarks is governed by Article 13; bad-faith applications not intended for use are refused under Article 4, and registered ones may be declared invalid under Article 44(1).
Relationship with Malicious Registration
Malicious registration is the umbrella concept, broadly referring to applications filed against the principle of good faith or by improper means or for improper purposes; squatting is its most representative category, specifically referring to preemptive conduct targeting a specific party's prior rights. The two are often used interchangeably, but their extensions differ: bulk-hoarding public hot words or rushing to register names of public events, which does not necessarily target a particular prior rights holder, is malicious registration without necessarily constituting squatting.
The Effect Status of Squatted Trademarks
Before being lawfully negated, a squatted trademark is still formally a valid registration; the prior rights holder must clear it one by one through opposition, invalidation, or non-use cancellation. This is precisely why squatting is deceptive—it wears the cloak of lawful registration while the cost of enforcement falls on the prior rights holder.