From the archive. This article first appeared on China Law Insider in April 2018. The scam patterns described remain common; contact the firm before acting on any unsolicited IP notice.
Most domain name scams in China begin with an email. A business owner sees an official-looking subject line and opens it, either out of worry or mere curiosity. Inside is an urgent-looking message informing you that another company has registered your domain name, or that you are in danger of losing it. The domain owner is usually given a seven-day window to reply and raise a claim over the domains before they are handed over to fictitious companies. The purpose of these messages is to create a sense of urgency so the domain owner leaps at the offer. It is an attempt to solicit business.
Please note that it is a scam, and do not fall for it.
Granted, these emails could incite you to be aggressive in protecting your intellectual property. Before you do so, it is worthwhile evaluating the value of the domain names and the costs of registering them, because not all of the domain names will be important to you. Multiple clients of ours have forwarded us domain name emails that appear to be scams and requested our assistance. It happens more often than you would think.
On the other hand, these scam emails serve as a warning to foreign enterprises that are unfamiliar with the China trademark system and do not see the necessity of registering their trademarks in China. We strongly advised one client, which we were assisting in setting up a wholly foreign-owned enterprise, to register its trademarks before officially entering the Chinese market. The client was unconcerned, despite our warning that there are people in China who do nothing but troll the internet for trademarks owned by foreign companies. One day, after receiving a domain name scam, the client understood the urgency of protecting its IP.
The trademark version of the scam
Just as serious as domain name scams are trademark scams. Many trademark owners are contacted by entities claiming to be trademark agents in China, informing them that someone has just applied for identical trademarks in respect of non-identical goods or services. They then suggest that, if the owner acts quickly, a pre-application opposition procedure can be initiated to stop the applicants from registering the marks.
In reality, there is no such pre-application opposition procedure in China. Under Chinese trademark law, whoever files an application first becomes its lawful owner, provided the mark has not already been registered and does not violate Chinese law.
Recently a client approached us after receiving a Facebook message that read, in its entirety, "Be careful, someone has registered your trademark." It sounded fishy, and it was: such unsolicited messages are designed to elicit engagement, whether from a scammer or from the trademark squatter himself. A trademark owner unfamiliar with Chinese practice may act impulsively and fall for it.
It is also worth noting that a legitimate agent would not disclose trademark applications it handles on behalf of existing clients. That alone marks these unsolicited messages as scams. Trademark owners should become familiar with Chinese trademark practice with the assistance of counsel, or seek professional advice immediately upon receiving such messages and before taking any action.
The rule of thumb
When you receive an urgent-looking email from an unknown source notifying you that you are about to lose your IP, do not act on it. Seek advice from your local counsel or, where applicable, your domain registrar first.