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What Is a Trademark Squatter?

  • By: Robert Klein

The United States Patent and Trademark Office (USPTO) assigns trademark registrations using a “use-based” system, meaning trademark registrations are awarded by “priority-of-use.” However, most foreign countries use a “first-to-file” system, where the first party to apply is given full trademark rights, even if they are not affiliated with the brand.

“Bad-faith trademark filing” or “trademark squatting” refers to an infringer’s attempt to register unaffiliated trademarks and then extort money from the rightful owner. In some cases, businesses try to expand overseas and realize they have to pay someone a substantial amount for their own trademark.

Tesla Motors Inc. is known for designing beautiful electric cars, which are praised for innovative technological details and high rates of customer satisfaction. The company recently offered competitors free access to its patents as a way to encourage more companies to build electric cars.

Tesla’s patents are under attack overseas. A Chinese businessman is suing the car company for the rights to the word “Tesla,” which he trademarked in 2009 with China’s State Administration of Industry and Commerce (SAIC).

He even applied for other Tesla-related trademarks, like the Chinese version of the name and the company’s logo. All of this took place three years after Tesla had been established in the United States.

The car company offered the man $50,000, then as much as $300,000 for the patents in 2012, but the man rejected both offers. Tesla insists the man “has not acted reasonably” in returning the trademarks, which is the only reason the company is taking administrative and legal action against him.

In July 2013, the SAIC revoked the man’s Tesla trademarks at the car company’s request, although he is currently appealing the ruling.

The man continues to claim that Tesla is infringing on his trademarks, and insists that the company shut down all showrooms, service centers and supercharging facilities in China, in addition to stopping all sales and marketing activity. He is requesting the company pay him $3.9 million in compensation.

The man owns several other trademarks including Loremo, Cobasys and Cuill. He claims the terms are unrelated to corresponding businesses in foreign countries, like German automaker Loremo and Robert Bosch GmbH’s Cobasys.

This man has clearly made a practice of maliciously obtaining patents in an effort to extort money from legitimate businesses. He even refused several legitimate offers for the trademarks in the hopes of collecting more money.

How Can I Protect My Trademark?

Prosecuting a trademark squatter can be complex and time-consuming, but a malicious infringer can do incalculable damage to your brand. To win your trademark infringement case, you need an experienced attorney on your side.

At Klein Trial Lawyers, we work to protect hardworking businesses from infringers who will try to profit from your hard work. If you need to protect your brand, schedule your free consultation today.

Did You Know: Only 15 percent of small businesses operating overseas know that U.S. trademarks are only protected in the United States.

Klein Trial Lawyers—Los Angeles business litigation lawyers

Source: www.bloomberg.com

Robert Klein

About the Author Attorney Robert Klein is a former CPA and known for
finding creative solutions to complex business lawsuits.