Key takeaways
• China's revised Trade Mark Law, which takes effect on 1 January 2027, introduces substantial reforms targeting trade mark squatting and stockpiling, including new penalties for bad-faith applicants and the trade mark agencies that facilitate them.
• Combined with judicial enforcement through civil damages, these measures mean that large-scale squatting is no longer a zero-cost exercise. However, foreign brands continue to face four recurring categories of risk in China: the Chinese-name gap, squatting by business partners, reverse complaints and channel disruption, and exposure from export-only manufacturing.
• Because China remains fundamentally a first-to-file jurisdiction, proactive registration - including Chinese-character, pinyin and abbreviation variants - is far cheaper than ex-post enforcement.
• Businesses should also maintain evidence of genuine use of their Chinese registrations, and monitor for conflicting applications within the shortened two-month opposition window.
Introduction
On 26 June 2026, the Standing Committee of the National People’s Congress adopted a comprehensive revision of China’s Trade Mark Law. The revised law will take effect on 1 January 2027 and represents a significant policy shift towards genuine trade mark use and against trade mark squatting and stockpiling.
With nearly 50 million registered trade marks on the Chinese mainland by the end of 2025, policymakers have increasingly focused on improving the quality of registrations rather than simply expanding the volume of filings. Trade mark squatting has long been among the most commonly cited IP concerns for international companies entering the foreign markets, with opportunistic parties registering foreign brands before legitimate owners secured protection, forcing businesses into costly legal battles or negotiations. Previous reforms largely focused on refusing problematic applications or invalidating registrations after the fact, but did not impose direct financial consequences on bad-faith applicants. The 2026 revision goes further, seeking to strengthen confidence in China's trade mark system by targeting bad-faith filings more aggressively and emphasising the need for genuine commercial use.
Key legislative changes
• Good faith principle: The revised law expressly prohibits the abuse of trade mark rights to harm national interests, public interests or the legitimate rights and interests of others. This gives enforcement authorities and courts a broader basis to address conduct that exercises trade mark rights in a way that causes harm to third parties or the public.
• Bad-faith filing penalties: A new administrative penalty provision targets trade mark applicants who file in bad faith. Where an application is not made for the purpose of genuine use and exceeds normal business needs, the China National Intellectual Property Administration (CNIPA) may issue a warning and impose a fine of up to RMB 100,000 (approximately AUD $21,150). Trade mark agencies that knowingly facilitate bad-faith applications also face penalties.
• Misleading marks: Penalties also apply for marks that are deceptive or misleading. Applicants who knowingly file marks with deceptive elements face warnings and fines of up to RMB 100,000 (approximately AUD $21,150).
• Non-use cancellation: CNIPA may now cancel a trade mark registration that has been unused for three years, or that has become generic, without having to wait for another party to file a cancellation petition. This is a significant shift that places greater emphasis on maintaining evidence of genuine use.
• Dynamic marks: The revised law recognises dynamic marks, reflecting the growing commercial use of animated logos, motion graphics and similar branding elements.
• Internet use: Use conducted through the internet has been added as an accepted form of trade mark use, allowing owners to demonstrate genuine use of their registrations through e-commerce platforms, social media and other digital channels.
• Opposition period: The opposition period for any person opposing a preliminarily approved trade mark has been shortened from three months to two months from the date of publication. Rights holders must closely monitor for conflicting applications and ensure they compile evidence, prepare submissions and file their opposition within the shortened timeframe.
What this means for foreign brand owners
The reforms are clearly aimed at curbing bad-faith applications by squatters who register foreign brands before the legitimate owner secures protection in China.
As Gina Tresidder, Partner at Russell Kennedy, observes: "One of the most frustrating situations we see is when a client is ready to expand into China. They have the product, the strategy, the momentum, only to discover that their trade mark has already been registered by someone else. These reforms are a welcome step, but they do not replace the need for early and strategic filing”.
The expanded good faith, bad-faith and misleading mark provisions, together with new penalties for trade mark agencies that facilitate such filings, should make large-scale squatting less commercially attractive.
However, foreign brand owners should not assume these reforms eliminate the need for proactive registration. China remains a first-to-file jurisdiction, and businesses with existing portfolios should ensure they maintain evidence of genuine use, particularly given CNIPA's new power to cancel unused marks without a third-party petition.
Ke Ban, Partner at Chance Bridge, notes that the revised law firmly establishes the principle of “balancing registration with use”, backed by real financial consequences for bad-faith applicants and the agencies that assist them.
Recent judicial developments reinforce the legislative reforms. In the Supreme People's Court's 2025 Intellectual Property Typical Cases, the 蓝妹 (Blue Girl) trade mark case confirmed that persistent, bulk bad-faith filings can be challenged under the Anti-Unfair Competition Law. The first-instance court awarded RMB 500,000 in damages and held the complicit agency jointly liable for RMB 100,000. As Ke observes: “Together, the legislative and judicial branches are forging an ‘administrative fine + invalidation + civil damages’ combination. Squatting is no longer a zero-cost game”.
While the legislative reforms are welcome, Ke cautions that foreign brands entering China continue to face four categories of risk.
• The Chinese-name gap. Whether or not an Australian brand chooses its own Chinese name, the market will assign one - and whoever registers it owns it. Ke points to the well-known Penfolds example: “Treasury Wine Estates' (TWE) Penfolds was assigned the transliteration "奔富" (Benfu) by the Chinese market. When a Fujian company squatted "奔富酒园" (Benfu Winery) in 2012, TWE commenced invalidation and infringement proceedings that culminated in a February 2026 appellate victory after a 14-year battle. Had the Chinese transliteration been filed early, the cost would have been negligible”.
• Squatting by business partners. The most frequent squatters are often not professional trade mark pirates, but Chinese distributors, sales agents, OEM factories, consultants or former employees who file in their own name "to help with registration" or hold the registration as leverage in commercial negotiations. While the revised law substantially strengthens agency regulation, the burden remains on the brand owner to preserve written evidence - distribution agreements, NDAs, correspondence and sample invoices - that establishes the squatter's "actual knowledge” of the brand.
Gina adds: “This is one of the most common scenarios we see with our Australian clients. A business enters the Chinese market through a local distributor or agent, and only later discovers that the partner has registered the trade mark in their own name. The relationship often starts well, but when it breaks down the trade mark becomes a bargaining chip. We always advise clients to file their own registrations before entering into any distribution or manufacturing arrangement in China, and to include clear IP ownership provisions in their agreements”.
• Reverse complaints and channel disruption. Once squatters secure registration, they often strike immediately before major online sales events such as “618" or "Double 11", filing infringement complaints against the brand's dealers and retailers and triggering instantaneous takedowns on platforms such as Tmall, JD, Taobao and Douyin. Channel partners are rarely willing to absorb this disruption, leaving the brand cornered.
• Export-only manufacturing risk. Even "export-only" manufacturing is not safe. In its 2019 HONDA decision ((2019) SPC Civil Retrial No. 138), the Supreme People's Court held that affixing a mark to goods manufactured in China entirely for export constitutes “trade mark use" under Chinese law and can infringe a Chinese registration. So-called "overseas trade mark licences" are no defence. This means Australian businesses that only manufacture in China - without selling there - must still ensure the marks affixed on their production lines are registered in China.
Gina observes: “Many Australian businesses assume that if they are only manufacturing in China for export, they do not need a Chinese trade mark registration. The HONDA decision makes clear that this is not the case. We regularly advise clients in this position to register their marks in China as a matter of priority, even where they have no plans to sell into the Chinese market”.
The shortened opposition window and recognition of internet use as valid trade mark use are a double-edged sword. As Ke notes: “E-commerce, livestreaming, and short-video use can now defend against non-use cancellation - but only if the brand maintains high-frequency monitoring and complete evidentiary records”.
Practical recommendations
Drawing on his experience advising foreign enterprises in China, Ke recommends that brand owners build their protection across three layers:
• Registration: Conduct a portfolio audit; close gaps in Chinese-character, pinyin and abbreviation coverage; and extend protection to dynamic marks and other new-age identifiers recognised under the revised law.
• Use: Establish a routine internet-use evidence repository - including records of e-commerce sales, social media activity and digital marketing - to withstand ex-officio cancellation of idle marks under the new regime.
• Enforcement: Elevate trade mark watch frequency to monthly or even weekly; respond within the shortened two-month opposition window; and deploy the full arsenal - administrative reports, invalidation petitions and civil infringement actions - when squatting occurs.
Ke also stresses the importance of carefully selecting a compliant and professional Chinese trade mark agency. The revised law strengthens oversight of agencies and empowers authorities to suspend non-compliant agencies from handling trade mark matters: “Once an agency is suspended, a foreign enterprise's pending applications, oppositions, renewals and other deadlines will be left in limbo”. Businesses should ensure their Chinese agency can provide sustained and stable support for their long-term China trade mark strategy.
How we can help
Russell Kennedy and Chance Bridge advise Australian and international businesses on Chinese trade mark protection, enforcement and portfolio management. If you would like to discuss how the proposed reforms may affect your business, please contact one of the authors.
Our teams can assist with:
• Monitoring and enforcing trade mark rights by identifying potentially conflicting applications in China and preparing opposition proceedings within the shortened two-month window.
• Advising on trade mark squatting and bad-faith filings, including leveraging the expanded good faith and bad-faith provisions to challenge opportunistic applications and protect valuable brand assets.
• Assisting with trade mark portfolio reviews, including auditing existing Chinese registrations, identifying gaps in protection and ensuring evidence of genuine use is maintained.
• Supporting cross-border brand protection strategies for Australian and international businesses manufacturing, exporting or distributing products in China, ensuring trade marks are protected before entering the market.
• Providing strategic advice on trade mark enforcement and commercialisation, drawing on Russell Kennedy’s Australian IP expertise and Chance Bridge’s on-the-ground knowledge of China’s trade mark system.
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This alert was jointly prepared by Gina Tresidder (Russell Kennedy) and Ke Ban (Chance Bridge).