Trademark Assignment Cannot Cleanse Malicious Registration

WISECODE Take

Buying a registered trademark does not automatically grant clear legal title. In the 'Fu Yuan Xiang' trademark invalidation case, the Beijing IP Court affirmed that the original applicant, Li, hoarded nearly 300 copied trademarks; even though the mark was transferred to a Hebei company in 2011, it was still declared invalid due to initial bad-faith registration. This highlights that subsequent assignment cannot cure an inherently flawed origin. For companies purchasing trademarks to enter a market quickly, the key risk is paying for an asset that could be invalidated at any time, whereas businesses applying for their own original trademarks are unaffected. Zhidian's trademark due diligence service helps companies assess seller history and registration risks before completing a deal. If purchasing a trademark, companies should take two concrete steps: first, check whether the seller has a history of hoarding third-party marks; second, require the seller to provide proof of original design and include indemnification clauses in the contract if the mark is invalidated. A buyer's good faith cannot wash away the original bad-faith defect of a trademark, making the seller's IP history far more vital than the transfer paperwork itself.