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Oct 24, 2021Legal
Do First to File Systems Encourage Trademark Squatting?

One of the reasons that the majority of countries in the world apply the “first to file” system, including the European Union and China, must be that it’s and easy system to administer. Determination on who was the first to register and has the right to be owner of the trademark is quite effortless compared to the “first to use” countries where disputes are settled by judging who was the first to use the trademark, in a commercial sense or not depending on the legal definitions that country gives to the “fist to use”. On the debate “first to file” vs “first to use”, people who support the “first to use” system mention the trademark squatting as an argument to their help. What is it and is there a connection with the “first to file” system?
Trademark squatting is a form of bad faith in trademark, as someone else rather than its owner, applies and registers successfully a trademark in a country, all this for profit. When considering registration of the trademark, most IP consultants and attorneys advise their clients to prioritize the applications first on the countries which apply the “first to file” system. Indeed, trademark squatting is difficult to happen in the “first to use” countries due to the regulations that will recognize the ownership of a trademark at the moment it is used. So, what we can say with certainty is that trademark squatting, even given from its definition, occurs at countries that apply “first to file” system. But does this type of system encourage it? Remember that it is a system widely applied in the world with European Union and China as the most notorious examples. However, the country who gets most associated with trademark squatting is actually China. Does this happen because its population is several times bigger than European Union and it represents a bigger market with bigger interests? Not easy to answer but here we should mention that both “first to file” and “first to use” systems aren’t that straightforward as they sound. In “first to use” there are many regulations that define what’s considered usage of trademark before registration. Meanwhile, in the “first to file” countries like Europe, there are many specifications in recognizing the goodwill of the entity who files the trademark application and recognizing it as the legal owner. In Europe for example, being able to file first for registration doesn’t necessarily means it’s guaranteed that you will be the owner of the trademark. China on the other hand only lately has undertaken IP reforms that recognize the trademark squatting problem and attempt to address it by trying to recognize the will of actually using the trademark for commercial purposes after application. The effectivity of these new laws yet has to be seen but to conclude, it appears that while the trademark squatting occurs only in “first to file” countries, still its specific definition and laws that identify the goodwill of the applicant in that country can be effective or not in stopping the trademark squatting.

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