Recently, the People’s Court of Ningguo City, Anhui Province rendered a first-instance judgment in a case handled by Attorney Gao Qiang’s team from Landing Law Offices, involving a former employee who secretly established a company to maliciously register multiple trademarks of his former employer and used the employer’s well-known trade name to engage in unfair competition. The court ruled that the two shareholders of a certain Anhui technology company had, under the instruction of the behind-the-scenes controller, invested to establish the company and registered multiple trademarks identical to the corporate name of a Zhejiang purification materials company (the client), and that their acts constituted unfair competition, making them jointly liable for damages.

This ruling marks the final victory in a series of trademark and unfair competition cases that the client, represented by Attorneys Gao Qiang and Ning Sijia, had pursued for nearly four years. From 2020, when the China National Intellectual Property Administration (CNIPA) successively invalidated several malicious trademark registrations, to 2023, when the Shanghai Intellectual Property Court reversed an earlier judgment and found that the registrant’s establishment of a competing company constituted unfair competition, and finally to this year’s Anhui Ningguo court decision piercing the corporate veil to hold two shareholders personally liable. Attorney Gao’s team, through a systematic, full-chain strategy, successfully resolved the industry-wide challenge of ex-employees “riding on brand reputation” through hidden corporate setups, thereby fortifying the client’s brand protection system.

I. Case Background: Former Employee’s “Free-Riding” and Malicious Imitation of Trade Name

The client, a Zhejiang purification materials company, was founded in 2005 and specializes in industrial filter paper, air filtration materials, food filter paper, filter cores, and non-woven industrial fabrics integrating production, processing, and sales. It is a leading enterprise in the filtration materials sector, having received multiple honors such as “Little Giant Enterprise,” “Outstanding Enterprise,” and “Technology Innovation Award.” Its trade name “Mingguan” has become a highly recognized brand in the industry.

In August 2014, the company completed a shareholding reform and was listed on the NEEQ on January 6, 2015, now preparing for a main board IPO.

The dispute originated from the malicious acts of Mr. Zhang, a former sales manager (2008–2012), who was well aware of the company’s brand influence and commercial value. Before resigning in 2012, Zhang and his spouse established a Shanghai filtration materials company with a business scope nearly identical to that of the client, even opening an online store on Alibaba under the client’s name to market their products.

Starting in 2018, Zhang’s company further engaged in trademark squatting, applying to register multiple trademarks containing the client’s trade name or its full pinyin across Classes 16 and 24 (filter materials, fabrics, and filter paper).

In November 2021, after receiving customer complaints, the client discovered that Zhang’s company had been promoting and soliciting business under the client’s name, causing public confusion and reputational harm. The client then engaged Attorney Gao Qiang’s team to design and implement a comprehensive rights-protection strategy.

II. First Battle: Initial Setback, Strategic Appeal Victory

After taking on the case, Attorneys Gao Qiang and Ning Sijia conducted extensive factual research and advised the client to file an unfair competition lawsuit under the Anti-Unfair Competition Law. The case’s main challenges were (1) proving the client’s trade name had gained market influence and (2) demonstrating the defendant’s bad faith despite holding registered trademarks.

1. First Instance – Defendant’s Arguments
The defendant raised three defenses:

The trade name was not original, allegedly used earlier by a defunct Suzhou paper company;

Its trademarks were legally registered, and it relied on administrative approval in good faith;

Its store clearly identified its own name, preventing consumer confusion.

Although Gao’s team presented extensive evidence, including valid administrative judgments, notarizations, and CNIPA rulings, the first-instance court still dismissed the client’s claims, citing the defendant’s valid trademark rights and the weakening effect of prior trade name usage.

2. Second Instance – Turning the Tide
In the face of the unfavorable first-instance judgment, Gao’s team did not lose heart. With the client’s full trust and strong support, the team conducted an in-depth deconstruction and analysis of the first-instance decision. After repeated reviews and simulations, they identified three key issues for the second-instance proceedings and formulated targeted ‘breakthrough’ strategies:

Strengthening evidence of the influence of the client’s trade name: Additional materials were submitted, including the client’s exhibition contracts over the years, cooperation agreements with well-known enterprises, and patent certificates. Combined with the administrative judgment of the Beijing High People’s Court recognizing the client’s industry reputation, these materials demonstrate the continuous use and strong influence of the client’s trade name in the industry, meeting the standard of “a trade name with a certain level of influence.”

Exposing the infringer’s subjective bad faith: It was emphasized that Zhang, the legal representative of the infringing party and a former employee of the client, was fully aware of the commercial value of the client’s trade name yet proceeded with the preemptive trademark filings. Furthermore, during the civil litigation, the China National Intellectual Property Administration had already declared three of the infringer’s trademarks invalid. The decisions cited the Trademark Law and found that the infringer had “disrupted the order of trademark registration, harmed the public interest, and engaged in large-scale preemptive registration of others’ well-known trademarks for improper gain,” which is conduct prohibited by law.

Clarifying the retroactive effect of maliciously registered trademarks: Based on Article 47, Paragraph 2 of the Trademark Law, it was argued that even after a maliciously registered trademark is invalidated, the infringing use prior to invalidation still gives rise to liability for damages, and the infringer cannot avoid responsibility on the grounds that the trademark was once approved for registration.

The Shanghai Intellectual Property Court fully adopted the opinions of the attorneys in the second instance and issued the final judgment, overturning the first-instance decision. The court ruled that the Shanghai filtration materials company had committed unfair competition, ordering it to compensate the client for economic losses and reasonable enforcement expenses, and to publish a statement for three consecutive days on the homepage of its infringing online store to eliminate the adverse impact. This victory provides clear legal protection for the client’s trade name and clarifies the boundaries between trademark rights and enterprise name rights.

III. Continuing the Fight: Piercing the Veil to Hold Shareholders Liable

After the client prevailed in the unfair competition dispute against a Shanghai filtration materials company, Gao’s team discovered, during their review of the infringer’s compliance with legal obligations, that Zhang, a former employee of the client, had established, through his relatives, another company, Anhui Filtration Technology Co., Ltd., which continued to engage in infringing and unfair competition activities. This company was founded in 2018 by Zhang’s parents-in-law, with Zhang serving as financial director, and its business premises were located in a building owned by another company controlled by Zhang. Even more concerning, this company had also applied for and successfully registered, in filtration-related trademark classes, multiple marks consisting of the pinyin or pinyin initials of the client’s trade name.

In October 2024, after receiving further instructions from the client, Gao’s team formally filed an unfair-competition lawsuit against the Anhui company, seeking an order requiring the company to change its name, cease its unfair-competition activities, cancel the hijacked trademarks, and compensate the client for economic losses. Unfortunately, before the case reached trial, the company applied for deregistration without undergoing proper liquidation. In response, Gao’s team swiftly adjusted their litigation strategy and, pursuant to Article 240 of the Company Law, filed a lawsuit directly against the shareholders, seeking joint and several liability for the infringement.

During the shareholder-liability proceedings, the legal team submitted evidence showing the family relationship between Zhang and the two shareholders, Zhang’s actual control over the company, and the high degree of similarity between the infringing trade name and trademarks and the client’s enterprise name and registered trademarks. This evidence effectively demonstrated that the two shareholders’ investment in the company and the related trademark applications were orchestrated entirely by Zhang, the client’s former employee. As a result, the team successfully “pierced the corporate veil” and held the shareholders jointly liable for intellectual property infringement. Ultimately, the Ningguo Court of Anhui Province fully accepted the attorneys’ arguments and ruled that the company’s two shareholders had engaged in unfair competition and must bear liability for compensating the client’s economic losses.

IV. Key Takeaways: Professionalism and Systemic Thinking in Legal Strategy

Three-dimensional construction of the evidentiary chain: Covering the full cycle from “rights formation – infringement occurrence – liability pursuit,” the team integrated business registration files, notarized documents, administrative rulings, and other materials to build a closed-loop evidentiary system.

Dynamic strategy adjustment: In response to variables such as the first-instance loss and the infringing company’s deregistration, the strategy was adjusted from dual protection based on “trademark + unfair competition” to “corporate liability + shareholder joint liability,” ensuring that the enforcement goals were ultimately achieved.

Cross-disciplinary coordination: By integrating the Trademark Law, the Anti-Unfair Competition Law, and the Company Law, the team precisely applied the relevant legal frameworks to maximize the protection of the enterprise’s rights and interests.

These consecutive intellectual property enforcement actions not only helped the client, Zhejiang purification materials company, recover substantial economic losses, but also deterred “free-riding” behavior within the industry. Going forward, the Gao legal team will continue to provide full-chain professional services for enterprise IP protection, supporting the client’s stable and sustainable development.