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China's Supreme People's Procuratorate (SPP) has released five typical cases concerning the punishment of malicious intellectual property litigation, covering utility model patents, design patents, trademark rights, and unfair competition across multiple intellectual property domains.
Among these, the case of Company A v. Company B regarding trademark infringement and unfair competition was selected as one of the typical examples.
Basic Facts
Company A was established in 1998 and listed on the Shenzhen Stock Exchange in 2010. It is a high-tech enterprise whose core business revolves around electricity/power (电) . Since its founding, Company A has used "Changgao" (长高) as its trade name, and from 2006 onwards, it registered a series of "Changgao" trademarks in Class 9 for power equipment and related goods.
Between March and April 2022, Company B applied to register 12 "Changgao Dianxin" (长高电新) trademarks1 across more than 10 classes of goods and services. In September 2022, Company B used the "Changgao Dianxin" trademark as intellectual property capital to establish Company C.
In November 2022, Company B and Company C filed a lawsuit against Company A before the Changsha Intermediate People's Court, alleging trademark infringement and unfair competition, and seeking an injunction and CNY 10 million in damages.
Procuratorial Supervision
During routine case monitoring, the Changsha People's Procuratorate identified leads suggesting that Company B and Company C were engaged in malicious litigation. In March 2023, the procuratorate officially accepted the case for investigation and established the following key facts:
First, Company A had long used "Changgao" as its trade name and had registered corresponding trademarks in its core business field (electricity/power equipment).
Second, on-site inspections revealed that Company B's registered address showed no signs of business activity, and Company C's registered address had no production facilities. Neither company had employee social security records, and their products did not comply with industry standards.
Third, between March 2021 and November 2022, Company B applied for a total of 129 trademarks, most of which covered goods and services outside its actual business scope.
Fourth, Company B had applied to register several trademarks that were identical or similar to the trade names of multiple enterprises in other provinces, with the application timing closely aligning with those companies' name changes.
Fifth, there was a suspiciuous timing and motive behind Company B’s actions. The day after Company A publicly announced its name change to "Changgao Dianxin," Company B applied to register the identical "Changgao Dianxin" trademark. After securing the registration in September, Company B immediately filed the present lawsuit in November seeking CNY 10 million in damages, which demonstrated a clear indication of an improper motive.
The Changsha People's Procuratorate concluded that Company B and Company C had preemptively registered the "Changgao Dianxin" trademark in bad faith, without any genuine intent to use it, and that their rights were fundamentally defective. After securing the registration, the two companies sued Company A for infringement and unfair competition, seeking substantial damages with the intent to obtain undue benefits, violating the principle of good faith and constituting malicious litigation.
In September 2023, the Changsha People's Procuratorate referred the case to the Changsha Intermediate People's Court, alerting the court to the suspected malicious litigation and recommending appropriate sanctions.
In December 2023, the Changsha Intermediate Court found that Company B and Company C had engaged in malicious litigation, dismissed their claims, and imposed a fine of CNY 100,000. Company B and Company C applied for reconsideration, but the High People's Court of Hunan Province upheld the decision in January 2024. Meanwhile, through coordination among the procuratorate, the court, and the Changsha Intellectual Property Office, the CNIPA declared 72 registered trademarks held by Company B, Company C, and their affiliated entities invalid.
Significance of the Case
Where a party, knowing that its trademark was preemptively registered in bad faith and that its rights are defective, initiates litigation to seek undue benefits, such conduct constitutes malicious litigation. Malicious litigation not only harms the legitimate rights and interests of others but also disrupts judicial order, undermines judicial authority, damages the social credit system, and harms public interests.
Where procuratorial authorities identify leads of malicious litigation during their routine work, they may initiate supervisory procedures ex officio under Article 37(1) of the Rules of Civil Litigation Supervision by the People's Procuratorate. For cases that have been concluded where the plaintiff's claims were upheld, the procuratorate should file a protest or issue a supervisory recommendation against the effective judgment. For cases still pending, the procuratorate should promptly refer the case to the court, alerting the court to the suspected malicious litigation and recommending that the court exercise caution and make a proper determination in accordance with the law.
Footnote
1. Note: Company A's trade name "Changgao" (长高), combined with its core business "electricity" (电), forms the basis of its corporate identity. The disputed mark "Changgao Dianxin" (长高电新) directly incorporates both elements — "Changgao" (Company A's established trade name) and "Dian" (electricity, Company A's core business), which is central to the allegation of bad-faith preemptive registration.
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