On September 11, 2024, the Supreme People’s Court (SPC) released eight typical cases on anti-monopoly and anti-unfair competition. These cases involve multiple industries and different types of improper competition and monopoly behaviors, demonstrating how fair and competitive market order can be maintained through judicial means. The following is a brief summary of these cases:
1. Supreme People’s Court (2023) ZhiMinZhong No. 653 - Dispute over horizontal monopoly agreement between Yunnan Yi Mou Run Dian Rice Noodle Co. Ltd. and Yunnan Run Mou Food Co. Ltd., Kunming Lin Mou Qiugu Food Manufacturing Co. Ltd. and others
Case Background
Yunnan Yi Mou Run Dian Rice Noodle Co. Ltd. (hereinafter referred to as Yi Mou Run Dian Company), a rice noodle producer, sued and claimed that Yunnan Run Mou Food Co., Ltd. (hereinafter referred to as Run Mou Company) and Kunming Lin Mou Qiugu Food Manufacturing Co., Ltd. (hereinafter referred to as Lin Mou Qiugu Company) and seven other defendants reached and implemented a horizontal monopoly agreement of fixing commodity prices and boycotting transactions, which led to Yi Mou Run Dian Company’s operational difficulties, and eventually stopped rice noodle production and processing. Yi Mou Run Dian Company requested compensation for economic loss of RMB 5 million and reasonable expenses of RMB 200,000. The court of first instance held that the accused monopoly actors reached but did not implement the horizontal monopoly agreement to fix commodity prices, did not reach a joint boycott of the transaction agreement, therefore, the court of first instance ordered the accused monopoly actors to jointly and severally pay Yi Mou Run Dian Company RMB 20,000 of reasonable expenses, and rejected the other litigation request. Yi Mou Run Dian Company appealed.
Court Trial
The Supreme People’s Court in the second instance held that Run Mou Company, Lin Mou Qiugu Company, and other rice noodle factories established a unified procurement price for rice noodles through the signing of purchase and sales contracts. Run Mou Company and seven other defendants accused of monopolistic conduct then fixed the retail prices and supply prices of the rice noodles sold by the rice noodle factories to stalls and intermediaries through shareholder resolutions, price adjustment notices, and other means, thereby reaching and implementing a horizontal price-fixing monopoly agreement.
Additionally, Run Mou Company and the seven defendants, in the name of Run Mou Company, reached cooperation agreements with intermediaries and supply agreements with rice noodle stalls, requiring the intermediaries and stalls to only distribute or sell rice noodles produced by the agreed-upon factories. If this requirement was violated, the intermediaries or stalls would be required to pay a penalty of RMB 50,000 to Run Mou Company, and the agreement manufacturers would collectively cut off supplies to the violating intermediary or stall. The aforementioned purchase and sales contracts also stipulated that rice noodle factories such as Lin Mou Qiu Gu Company, except for their own business, were prohibited from selling to third parties other than Run Mou Company, and required the rice noodle factories that signed the contracts to not accept intermediaries’ cross-factory procurement of rice noodles, otherwise they would face fines ranging from RMB 20,000 to RMB 50,000.
Furthermore, Run Mou Company and the seven defendants accused of monopolistic conduct also adopted measures such as signing guarantee letters and forming a specialized working group, and established corresponding reward and punishment mechanisms to supervise each other and ensure the implementation of the joint boycott agreement. These actions led to coordinated efforts between the rice noodle factories, intermediaries, and retail stalls within the agreement, thereby reinforcing each other at every level and excluding non-agreement factories from entering the local rice noodle sales market. During the implementation, they specifically targeted and suppressed Yi Mou Run Dian Company, effectively executing the horizontal monopoly agreement for a joint boycott and excluding and restricting market competition.
Typical Significance
This case involves a horizontal monopoly agreement concerning price-fixing of goods and a joint boycott of transactions. Through a detailed analysis of the alleged monopolistic behavior, the judgment clarifies the horizontal and vertical interwoven contractual arrangements adopted by several operators with competitive relationships to jointly boycott other competing operators. It concludes that the joint boycott in this case constitutes a horizontal monopoly agreement.
2. Supreme People’s Court (2023) ZhiMinZhong No. 383 - a case of abuse of dominant market position disputes between Huafang Visual Maintenance Station and China Broadcasting Network Co., Ltd. Anshan Branch
Case Background
China Broadcasting Network Co., Ltd. Anshan Branch (hereinafter referred to as “CBN Anshan Branch”) is the sole company in Anshan City, Liaoning Province, that provides scrambled cable television signals and broadband service signals. The Huafang Visual Maintenance Station (hereinafter referred to as “Huafang Maintenance Station”) entered into a three-year cooperation agreement with CBN Anshan Branch on November 23, 2018, agreeing that CBN Anshan Branch would transmit scrambled cable digital television signals within the cooperative area, and Huafang Maintenance Station would independently access CBN Anshan Branch’s cable television network. The agreement also stipulated that after the set-top boxes supplied by Huafang Maintenance Station to customers in the cooperative area were used up, only set-top boxes provided by CBN Anshan Branch could be used. After the expiration of the cooperation period, Huafang Maintenance Station would have the right of first renewal under the same conditions. On November 21, 2021, CBN Anshan Branch notified Huafang Maintenance Station by letter that the cooperation agreement would not be renewed upon the expiration of its term. After unsuccessful negotiations, Huafang Maintenance Station filed a lawsuit in the court of first instance, requesting a ruling that CBN Anshan Branch cease its refusal to transact, renew the contract according to the original pricing terms, invalidate its practice of tying the sale of set-top boxes and IC cards, and allow Huafang Maintenance Station to use set-top boxes and IC cards from other brands for network access. It also requested compensation for legal fees incurred by Huafang Maintenance Station. The court of first instance held that CBN Anshan Branch’s conduct did not constitute abuse of its dominant market position, and thus dismissed all of Huafang Maintenance Station’s claims. Dissatisfied with the decision, Huafang Maintenance Station appealed.
Court Trial
The Supreme People’s Court, upon review in the second instance, found that the relevant market in this case should be defined as the scrambled cable digital television signal service market in Anshan City, Liaoning Province, and that CBN Anshan Branch, as the sole operator capable of providing city-wide coverage of such services, held a dominant position in this market. CBN Anshan Branch had no legitimate reason to require Huafang Maintenance Station to use only its provided set-top boxes after the set-top boxes purchased independently by Huafang Maintenance Station were exhausted. This not only restricted and deprived Huafang Maintenance Station of the freedom to choose other trading partners in the set-top box market but also excluded and limited existing or potential set-top box suppliers from trading with Huafang Maintenance Station, constituting a tying practice. Due to a combination of historical, policy, and technical factors, the objective situation of the scrambled cable digital television signal service market in Anshan City had fundamentally changed, and by the time the cooperation agreement expired, the basis for the continuation of the cooperation model had ceased to exist. Furthermore, CBN Anshan Branch had independently completed the construction of the cable television network in the cooperative area, and residents in the area were able to watch cable digital television programs normally. Therefore, CBN Anshan Branch’s decision not to renew the contract did not constitute refusal to transact. The legal fees of RMB 5,000 incurred by Huafang Maintenance Station in this case were fully supported. Accordingly, the Supreme People’s Court in the second instance ruled to overturn the first-instance judgment, ordered CBN Anshan Branch to compensate Huafang Maintenance Station for reasonable expenses in the amount of RMB 5,000, and dismissed the other claims of Huafang Maintenance Station.
Typical Significance
This case involves the determination of refusal to transact and tying practices in the context of abuse of dominant market position. Although the dispute occurred between the supplier and receiver of scrambled cable television signals, it directly affects end-users who watch cable digital television. The judgment in this case plays a positive role in the courts’ active exercise of antitrust judicial functions, scientifically defining the relevant market, precisely identifying abusive conduct, maintaining fair competition in the market, and fulfilling the legislative objectives of the Anti-Monopoly Law to prevent and stop monopolistic behavior.
3. Supreme People’s Court (2023) ZhiMinZhong No. 1547 - Bundled Transaction Dispute between Haidong Huamou Gas Appliance Trading Co., Ltd. Minhe Branch, and Qinghai Minhe Chuansou Petroleum and Natural Gas Co., Ltd.
Case Background
Haidong Huamou Gas Appliance Trading Co., Ltd. Minhe Branch (hereinafter referred to as “Huamou Gas Appliance Company”) filed a lawsuit, claiming that in October 2017, it sold and installed gas wall-hung boilers to more than 10 villagers, including Ma Mou, from Mouwan Village in Minhe Hui and Tu Autonomous County, Haidong City, Qinghai Province (hereinafter referred to as “Minhe County”). Qinghai Minhe Chuansou Petroleum and Natural Gas Co., Ltd. (hereinafter referred to as “Chuansou Gas Company”) required these villagers to install wall-hung boilers designated by Chuansou Gas Company when handling their applications for natural gas, or they would not be connected to the natural gas supply. The villagers were forced to remove the boilers they had already installed, and since the removed boilers could not be resold, Huamou Gas Appliance Company suffered losses. It requested that Chuansou Gas Company be ordered to compensate for economic losses amounting to RMB 107,200. In May 2020, the Qinghai Provincial Market Supervision Administration issued an administrative penalty decision, determining that Chuansou Gas Company had violated the provisions of the Anti-Monopoly Law prohibiting operators with dominant market positions from tying sales of goods without legitimate reasons. Dissatisfied with the administrative penalty decision, Chuansou Gas Company filed an administrative lawsuit. After two rounds of administrative litigation, the administrative penalty decision became legally effective at the time of this civil lawsuit. The court of first instance held that Chuansou Gas Company’s monopolistic behavior constituted a tying practice prohibited by the Anti-Monopoly Law and ruled that Chuansou Gas Company must compensate Huamou Gas Appliance Company for economic losses of RMB 80,000. Chuansou Gas Company, dissatisfied with the ruling, filed an appeal.
Court Trial
The Supreme People’s Court in the second instance held that this case was a follow-up civil compensation lawsuit filed after an administrative penalty decision by an anti-monopoly enforcement agency. The administrative penalty decision determined that Chuansou Gas Company, as the sole urban pipeline natural gas supplier in the main urban area of Minhe County, had engaged in a tying practice that constituted an abuse of its dominant market position between 2009 and 2018. Chuansou Gas Company failed to submit evidence to overturn the basic facts recognized by the administrative penalty decision. Since Huamou Gas Appliance Company had already submitted the administrative penalty decision, which had become effective, it was not required to provide further evidence to prove Chuansou Gas Company’s monopolistic behavior as alleged in this case. Due to Chuansou Gas Company’s tying behavior, the wall-hung boilers sold and installed by Huamou Gas Appliance Company for the villagers could not be used, as they were unable to connect to the natural gas supply, forcing Huamou Gas Appliance Company to refund the boiler payments to the villagers. Huamou Gas Appliance Company claimed economic losses of RMB 107,200, which included both the refunded boiler payments and installation fees. Considering that the installation fees had already been incurred and that wall-hung boilers have high safety requirements, making their resale value drop significantly after removal, the court of first instance reasonably set the compensation at RMB 80,000. The Supreme People’s Court in the second instance upheld the original ruling and dismissed the appeal.
Typical Significance
This case is a follow-up civil compensation lawsuit that arose after an anti-monopoly enforcement agency made a penalty decision. The judgment in this case legally reduced the plaintiff’s burden of proof regarding the alleged abuse of market dominance by the defendant, and comprehensively considered the plaintiff’s actual losses and potential lost profits when ruling for the defendant to pay damages. The case is significant in punishing monopolistic behavior, regulating market competition in the residential natural gas industry, and enhancing public awareness of anti-monopoly laws.
4. Supreme People’s Court (2024) ZhiMinZhong No. 748 - Abuse of Dominant Market Position Dispute between Tan Mou and Changsha Ma Moudui Agricultural Products Co., Ltd.
Case Background
Tan Mou filed a lawsuit claiming that Changsha Mamoudun Agricultural Products Co., Ltd. (hereinafter referred to as “Mamoudun Company”) holds a dominant market position in the vegetable supply market in Changsha County, Changsha City, Hunan Province. In December 2017, Tan Mou, as a wholesale vegetable merchant, signed the contract in question with Mamoudun Company and moved into the Jimou Logistics Park operated by Mamoudun Company. In June 2023, Mamoudun Company unilaterally increased Tan Mou’s service fee standard to three times the previous amount, citing Tan Mou’s simultaneous operations in the Hongmou Market as the reason. They further stated that only if Tan Mou exited the Hongmou Market would the original service fee standard be restored, and they refused to refund the overcharged service fees. Tan Mou argued that Mamoudun Company abused its dominant market position by restricting him to trade exclusively with them and charging unfairly high service fees, while imposing discriminatory pricing on merchants under the same conditions. Therefore, Tan Mou requested to terminate the contract between him and Mamoudun Company, asked the court to order Mamoudun Company to refund the remaining rent, entry fees, and overcharged service fees, and sought compensation for his economic losses. The court of first instance held that the contract contained an arbitration clause, and thus the court did not have jurisdiction over the case, ruling to dismiss Tan Mou’s lawsuit. Dissatisfied with the ruling, Tan Mou appealed.
Court Trial
The Supreme People’s Court, in the second instance, held that although the contract stipulated that disputes arising during the performance of the contract could be resolved through arbitration, the trial of this case was not limited to the contractual rights and obligations between Tan Mou and Mamoudun Company as stipulated in the contract. It also involved determining whether Mamoudun Company had a dominant market position and whether it had engaged in abusive practices, both of which directly relate to fair market competition, consumer interests, and public interest. Therefore, the existence of an arbitration agreement between the parties does not necessarily exclude the People’s Court from accepting this case, and it falls within the court’s jurisdiction. The alleged abuse of market dominance occurred during the performance of the contract, and since Tan Mou sought to terminate the contract, this case should be treated as a civil monopoly dispute, with jurisdiction determined according to the provisions for contract disputes. The court of first instance, therefore, has jurisdiction over this case. Accordingly, the ruling of the court of first instance was overturned, and the case was remanded to the lower court for trial. The court of first instance has now reopened the case and it is under trial.
Typical Significance
This case, in accordance with the provisions of the newly issued judicial interpretations on anti-monopoly civil litigation, recognizes that the arbitration agreement between the parties does not exclude the People’s Court from accepting civil monopoly disputes. It also clarifies the standard for determining jurisdiction over disputes arising from the abuse of market dominance during contract performance, in line with the plaintiff’s claims. The judgment in this case highlights the Anti-Monopoly Law’s role as a fundamental law in a market economy and provides a reference for the People’s Courts in accepting and adjudicating monopoly disputes.
5. Supreme People’s Court (2023) ZhiMinZhong No. 1590 - Zhejiang Jimou Holding Group Co. Ltd., Zhejiang Jimou Automobile Research Institute Co. Ltd. and Weimou Automotive Technology Group Co., Ltd., Weimou Automobile Manufacturing Wenzhou Co. Ltd. and other infringement of technical secrets dispute case
Case Background
Nearly 40 senior managers and technical personnel from subsidiaries of Zhejiang Jimou Holding Group Co., Ltd. left their positions to join Weimou Automotive Technology Group Co., Ltd. and its affiliated companies (collectively referred to as “Weimou Group”), with 30 of them joining shortly after resigning in 2016. In 2018, Zhejiang Jimou Holding Group Co., Ltd. and Zhejiang Jimou Automotive Research Institute Co., Ltd. (collectively referred to as “Jimou Group”) discovered that Weimou Group had filed 12 patent applications using part of the technical staff who had left Jimou Group as inventors or co-inventors. These patent applications involved the use of technical information about the application of new energy vehicle chassis technology and 12 sets of chassis component drawings and digital models that had been accessed at their former employer (hereinafter referred to as the “trade secrets involved”). Jimou Group also found that the Weimou EX series of electric vehicles allegedly infringed upon these trade secrets. Jimou Group filed a lawsuit in the court of first instance, requesting that Weimou Group be ordered to cease infringement and pay a total of RMB 2.1 billion in economic losses and reasonable expenses. After trial, the court of first instance determined that Weimou Automotive Manufacturing Wenzhou Co., Ltd. (hereinafter referred to as “Weimou Wenzhou Company”) had infringed on the technical secrets of five sets of chassis component drawings belonging to Jimou Group. The court ordered Weimou Wenzhou Company to compensate Jimou Group for economic losses and reasonable expenses totaling RMB 7 million. Both Jimou Group and Weimou Wenzhou Company appealed.
Court Trial
The Supreme People’s Court, in the second instance, held that this case involved the organized and planned mass recruitment of technical talent and resources related to new energy vehicles, carried out through improper means, resulting in the infringement of trade secrets. Through comprehensive analysis and judgment, it was determined that Weimou Group had unlawfully acquired all the trade secrets involved, illegally disclosed part of these secrets through patent applications, and used all the trade secrets in question. The second-instance judgment, in addition to ordering Weimou Group to immediately stop disclosing, using, or allowing others to use the trade secrets, further clarified and specified the methods, content, and scope of stopping the infringement, including but not limited to: unless with Jimou Group’s consent, Weimou Group must cease disclosing, using, or allowing others to use the trade secrets in any form; they must not implement, license others to implement, transfer, pledge, or otherwise dispose of the 12 patents involved. Weimou Group must also destroy or transfer all drawings, digital models, and other technical materials containing the trade secrets to Jimou Group. In addition, they must inform all their employees, affiliated companies, and relevant component suppliers of the court’s judgment and the requirements to cease infringement through public announcements and internal notices, and request relevant personnel and entities to sign confidentiality and non-infringement commitments.
Given the obvious intent to infringe, the malicious nature of the infringement, and the severe consequences, punitive damages amounting to twice the profit Weimou Group gained from the infringement from May 2019 to the first quarter of 2022 were applied. Weimou Group was ordered to compensate Jimou Group for approximately RMB 640 million in economic losses and reasonable expenses. To ensure compliance with non-monetary obligations, the second-instance judgment further stipulated that if Weimou Group violated the order to cease infringement or other non-monetary obligations, they would be subject to a daily fine of RMB 1 million for delayed compliance; in the event that Weimou Group improperly disposed of the 12 patents, a one-time payment of RMB 1 million per patent would be imposed.
Typical Significance
This case is a typical example of effectively combating organized, planned, and large-scale infringement of trade secrets. Based on the overall assessment of the infringement, the People’s Court not only applied punitive damages to determine the compensation amount but also explored proactive and beneficial approaches to determining civil liability for stopping the infringement and calculating delay fines for non-monetary obligations. The judgment demonstrates a clear attitude of strict intellectual property protection and a firm resolve to combat unfair competition, contributing to the creation of a legal environment that respects originality, promotes fair competition, and protects technological innovation.
6. People’s Court of Yuhang District, Hangzhou City, Zhejiang Province (2022) Zhe 0110 MinChu No.8714 - Unfair Competition Dispute between Beijing Weimou Vision Technology Co., Ltd. and Hangzhou Damou Network Technology Co., Ltd. and Aimo Ma (Hangzhou) Network Technology Co., Ltd.
Case Background
The Doumou platform, operated by Beijing Weimou Vision Technology Co., Ltd. (hereinafter referred to as “Beijing Weimou Company”), is a short video sharing platform that recommends videos based on user preferences. Its algorithmic recommendation mechanism is designed through a program based on several indicators, including video completion rate, number of comments, likes, shares, livestream room popularity, and user follower count. This mechanism relies on real user feedback on videos, livestreams, etc., to enable intelligent content recommendations. Hangzhou Damou Network Technology Co., Ltd. (hereinafter referred to as “Hangzhou Damou Company”) designed, developed, and operated the “Qingdou” product targeting the Doumou platform (in forms such as a website, app, and mini-program). Users who need to increase their follower count, views, and other data could pay to post “tasks” on the “Qingdou” product, attracting other users to complete tasks such as following accounts or watching videos on the Doumou platform in exchange for rewards. Aimo Ma (Hangzhou) Network Technology Co., Ltd. (hereinafter referred to as “Aimo Ma Company”) was responsible for receiving payments for the “Qingdou” product. Beijing Weimou Company filed a lawsuit, claiming that the defendants’ organization and operation of the “Qingdou” series of services constituted unfair competition, and requested the court to order the defendants to cease infringement, eliminate the negative impact, and jointly pay compensation of RMB 4.5 million.
Court Trial
The court of first instance held that Beijing Weimou Company has legitimate rights under competition law over the data represented by video views, livestream room popularity, and user follower counts on the Doumou platform. The company’s operation and utilization of these data resources should be protected due to their potential commercial value and competitive benefits. The defendants’ conduct, by operating a transaction platform to assist and guide traffic-demanding users in posting tasks, and allowing “task takers” to pose as normal users to complete fake tasks, such as boosting views and follows, artificially created false clicks and follower counts. This disrupted the platform’s traffic distribution mechanism, constituting unfair competition as regulated by Article 8, Paragraph 2 of the Anti-Unfair Competition Law. Therefore, the court ruled that the two defendants must cease the infringement, eliminate the impact, and jointly bear compensation liability of RMB 4 million. Dissatisfied with the ruling, the defendants appealed, but the Hangzhou Intermediate People’s Court in the second instance dismissed the appeal and upheld the original judgment.
Typical Significance
This case is a typical example of cracking down on the “fake follower and view boosting” industry within the black and gray areas of the internet. The People’s Court accurately applied the legal provisions of the Anti-Unfair Competition Law concerning the prohibition of false advertising, effectively regulating the unfair competition conduct of organizing “fake follower and view boosting” to illegitimately gain traffic for platform broadcasters. This case has played a positive role in guiding and promoting the integrity of platform broadcasters, ensuring a healthy livestreaming environment.
7. Jiangsu Higher People’s Court (2021) SuZhiZhong No. 19 - trademark infringement and unfair competition dispute between Schmidt Electric (China) Co. Ltd. and Suzhou Schneider Elevator Co., Ltd.
Case Background
Schneider Electric Europe Company (hereinafter referred to as Schneider Europe Company) granted a license for the use of its registered trademark “Schneider,” approved for use on Class 9 products such as circuit breakers and electric switches, to its invested entity Schneider Electric (China) Co., Ltd. (hereinafter referred to as Schneider China Company). Schneider China Company has invested in multiple electrical manufacturing enterprises across the country, many of which operate under the trade name “Schneider.” The series of trademarks, including “Schneider,” have high market recognition in the electrical industry and market. Schneider China Company claimed that Suzhou Schneider Elevator Co., Ltd. (hereinafter referred to as Suzhou Schneider Company) prominently used the “Schneider” and “SCHNEIDER” logos, constituting trademark infringement. Furthermore, Suzhou Schneider Company’s registration of a corporate name containing the trade name “Schneider” and its use of a domain name similar to the core elements of the trademark “Schneider Electric” constituted unfair competition. Consequently, Schneider China Company filed a lawsuit requesting that Suzhou Schneider Company cease its infringement, change its corporate name, compensate for damages, and eliminate the impact of its actions. In its defense, Suzhou Schneider Company argued that the use of the contested logos was authorized by a foreign company and that there was no subjective fault of exploiting the goodwill of the disputed trademark.
Court Trial
After trial, the first-instance court determined that the contested actions constituted trademark infringement and unfair competition, and ruled that Suzhou Schneider Company must immediately cease the infringing activities, change its corporate name, compensate damages of RMB 40 million, and cover reasonable expenses of RMB 150,000. Additionally, Suzhou Schneider Company was ordered to publish a statement to eliminate the impact of its actions. In the second-instance ruling, the Jiangsu High People’s Court held that Suzhou Schneider Company was fully aware of the reputation of the disputed trademark and trade name, and entered into a brand usage agreement with a foreign company to obtain authorization for similar logos to the disputed trademark, intending to exploit the goodwill of the disputed trademark. The court found that the first-instance judgment correctly determined the existence of trademark infringement and unfair competition. Considering factors such as the fame and market value of the disputed trademark, the subjective malice of Suzhou Schneider Company, and the duration and scale of the infringement, the compensation amount of RMB 40 million determined by the first-instance judgment was deemed appropriate. The Jiangsu High People’s Court rejected the appeal and upheld the original judgment.
Typical Significance
This case serves as a typical example of the severe punishment of “free-riding” and other acts of imitation and confusion. When sufficient evidence proves that the profits from infringement exceed the statutory limit for compensation, the people’s courts appropriately allocate the burden of proof and correctly apply discretionary compensation methods to determine the compensation amount. This approach effectively combats market confusion through the exploitation of others’ goodwill, significantly increases the cost of infringement, and clearly reflects the judiciary’s strong stance on enhancing intellectual property protection.
8. Shenzhen Intermediate People’s Court of Guangdong Province (2023) Yue 03 MinZhong 4897 - Unfair Competition Dispute between Shenzhen Changmoushun Enterprise Management Consulting Co., Ltd. and Beijing Tianmoucha Technology Co., Ltd. and Beijing Jinmou Technology Co., Ltd.
Case Background
Shenzhen Changmoushun Enterprise Management Consulting Co., Ltd. (hereinafter referred to as Changmoushun Company) accused Beijing Jinmou Technology Co., Ltd. (hereinafter referred to as Jinmou Company) and Beijing Tianmoucha Technology Co., Ltd. (hereinafter referred to as Tianmoucha Company) of engaging in unfair competition through the following actions: 1). The data published on the “Tianmoucha” website did not include its equity information registered with the Shenzhen United Property Rights Exchange; 2). The shareholding relationship between Changmoushun Company and Shenzhen Aomoude Group Co., Ltd. (hereinafter referred to as Aomoude Company) as published on the “Tianmoucha” website was inconsistent with the actual situation; 3). After receiving a lawyer’s letter and attachments from Changmoushun Company, the defendants failed to correct the data on the “Tianmoucha” website. On this basis, Changmoushun Company requested that the court order the defendants to list it as a shareholder of Aomoude Company, eliminate the impact of the misinformation, and compensate for its legal expenses.
Court Trial
Upon trial, the Shenzhen Intermediate People’s Court held that the original data in question related to the external shareholding information of Changmoushun Company, and that a company’s external investments and historical changes directly relate to its market competitive position. As Changmoushun Company was the original data subject in the credit data system operated by Jinmou Company and Tianmoucha Company, it possessed competitive rights under competition law with respect to the external shareholding information published by this credit data system. Jinmou Company and Tianmoucha Company, as data users, had an obligation to ensure the quality of the data for the original data subject. If there were issues with data quality when Jinmou Company and Tianmoucha Company published corporate data, it could result in an increase or decrease in the competitive rights of the original data subject, as well as damage the interests of data consumers who rely on the data in good faith.
In this case, after receiving Changmoushun Company’s complaint regarding data accuracy and related evidence, the operators of the “Tianmoucha” website had an obligation to verify and update the relevant data. However, they neither reviewed the authenticity of the complaint materials nor took reasonable measures to correct the discrepancies in the credit data system, resulting in Changmoushun Company’s external shareholding information not being displayed on the “Tianmoucha” website for an extended period. The incorrect shareholding information inevitably led data consumers to make erroneous judgments about Changmoushun Company’s operational status, thereby harming the company’s market competitive rights and infringing on data consumers’ right to know, as well as disrupting the normal market competition order in the internet credit information industry.
In summary, the actions of Jinmou Company and Tianmoucha Company constituted unfair competition. They should bear civil liabilities such as ceasing the infringement and eliminating the impact. Therefore, the court ordered Jinmou Company and Tianmoucha Company to list Changmoushun Company’s shareholding information on Aomoude Company’s shareholder page on the “Tianmoucha” website, publish a statement to eliminate the impact, and compensate Changmoushun Company for its reasonable legal expenses in the amount of RMB 30,880.
Typical Significance
This case is a typical example of determining unfair competition behavior by data users. The People’s Court fully considered the developmental stage of the big data industry, business models, technological conditions, and the current state and patterns of the digital economy. The court actively explored the application of the principled provisions of the Anti-Unfair Competition Law, reasonably defined the scope of competitive rights for the original data subject, and clarified the data quality obligations of data users. This has positive significance for promoting the healthy development of the data industry and fostering an open, healthy, and secure digital ecosystem.
1. Supreme People’s Court (2023) ZhiMinZhong No. 653 - Dispute over horizontal monopoly agreement between Yunnan Yi Mou Run Dian Rice Noodle Co. Ltd. and Yunnan Run Mou Food Co. Ltd., Kunming Lin Mou Qiugu Food Manufacturing Co. Ltd. and others
Case Background
Yunnan Yi Mou Run Dian Rice Noodle Co. Ltd. (hereinafter referred to as Yi Mou Run Dian Company), a rice noodle producer, sued and claimed that Yunnan Run Mou Food Co., Ltd. (hereinafter referred to as Run Mou Company) and Kunming Lin Mou Qiugu Food Manufacturing Co., Ltd. (hereinafter referred to as Lin Mou Qiugu Company) and seven other defendants reached and implemented a horizontal monopoly agreement of fixing commodity prices and boycotting transactions, which led to Yi Mou Run Dian Company’s operational difficulties, and eventually stopped rice noodle production and processing. Yi Mou Run Dian Company requested compensation for economic loss of RMB 5 million and reasonable expenses of RMB 200,000. The court of first instance held that the accused monopoly actors reached but did not implement the horizontal monopoly agreement to fix commodity prices, did not reach a joint boycott of the transaction agreement, therefore, the court of first instance ordered the accused monopoly actors to jointly and severally pay Yi Mou Run Dian Company RMB 20,000 of reasonable expenses, and rejected the other litigation request. Yi Mou Run Dian Company appealed.
Court Trial
The Supreme People’s Court in the second instance held that Run Mou Company, Lin Mou Qiugu Company, and other rice noodle factories established a unified procurement price for rice noodles through the signing of purchase and sales contracts. Run Mou Company and seven other defendants accused of monopolistic conduct then fixed the retail prices and supply prices of the rice noodles sold by the rice noodle factories to stalls and intermediaries through shareholder resolutions, price adjustment notices, and other means, thereby reaching and implementing a horizontal price-fixing monopoly agreement.
Additionally, Run Mou Company and the seven defendants, in the name of Run Mou Company, reached cooperation agreements with intermediaries and supply agreements with rice noodle stalls, requiring the intermediaries and stalls to only distribute or sell rice noodles produced by the agreed-upon factories. If this requirement was violated, the intermediaries or stalls would be required to pay a penalty of RMB 50,000 to Run Mou Company, and the agreement manufacturers would collectively cut off supplies to the violating intermediary or stall. The aforementioned purchase and sales contracts also stipulated that rice noodle factories such as Lin Mou Qiu Gu Company, except for their own business, were prohibited from selling to third parties other than Run Mou Company, and required the rice noodle factories that signed the contracts to not accept intermediaries’ cross-factory procurement of rice noodles, otherwise they would face fines ranging from RMB 20,000 to RMB 50,000.
Furthermore, Run Mou Company and the seven defendants accused of monopolistic conduct also adopted measures such as signing guarantee letters and forming a specialized working group, and established corresponding reward and punishment mechanisms to supervise each other and ensure the implementation of the joint boycott agreement. These actions led to coordinated efforts between the rice noodle factories, intermediaries, and retail stalls within the agreement, thereby reinforcing each other at every level and excluding non-agreement factories from entering the local rice noodle sales market. During the implementation, they specifically targeted and suppressed Yi Mou Run Dian Company, effectively executing the horizontal monopoly agreement for a joint boycott and excluding and restricting market competition.
Typical Significance
This case involves a horizontal monopoly agreement concerning price-fixing of goods and a joint boycott of transactions. Through a detailed analysis of the alleged monopolistic behavior, the judgment clarifies the horizontal and vertical interwoven contractual arrangements adopted by several operators with competitive relationships to jointly boycott other competing operators. It concludes that the joint boycott in this case constitutes a horizontal monopoly agreement.
2. Supreme People’s Court (2023) ZhiMinZhong No. 383 - a case of abuse of dominant market position disputes between Huafang Visual Maintenance Station and China Broadcasting Network Co., Ltd. Anshan Branch
Case Background
China Broadcasting Network Co., Ltd. Anshan Branch (hereinafter referred to as “CBN Anshan Branch”) is the sole company in Anshan City, Liaoning Province, that provides scrambled cable television signals and broadband service signals. The Huafang Visual Maintenance Station (hereinafter referred to as “Huafang Maintenance Station”) entered into a three-year cooperation agreement with CBN Anshan Branch on November 23, 2018, agreeing that CBN Anshan Branch would transmit scrambled cable digital television signals within the cooperative area, and Huafang Maintenance Station would independently access CBN Anshan Branch’s cable television network. The agreement also stipulated that after the set-top boxes supplied by Huafang Maintenance Station to customers in the cooperative area were used up, only set-top boxes provided by CBN Anshan Branch could be used. After the expiration of the cooperation period, Huafang Maintenance Station would have the right of first renewal under the same conditions. On November 21, 2021, CBN Anshan Branch notified Huafang Maintenance Station by letter that the cooperation agreement would not be renewed upon the expiration of its term. After unsuccessful negotiations, Huafang Maintenance Station filed a lawsuit in the court of first instance, requesting a ruling that CBN Anshan Branch cease its refusal to transact, renew the contract according to the original pricing terms, invalidate its practice of tying the sale of set-top boxes and IC cards, and allow Huafang Maintenance Station to use set-top boxes and IC cards from other brands for network access. It also requested compensation for legal fees incurred by Huafang Maintenance Station. The court of first instance held that CBN Anshan Branch’s conduct did not constitute abuse of its dominant market position, and thus dismissed all of Huafang Maintenance Station’s claims. Dissatisfied with the decision, Huafang Maintenance Station appealed.
Court Trial
The Supreme People’s Court, upon review in the second instance, found that the relevant market in this case should be defined as the scrambled cable digital television signal service market in Anshan City, Liaoning Province, and that CBN Anshan Branch, as the sole operator capable of providing city-wide coverage of such services, held a dominant position in this market. CBN Anshan Branch had no legitimate reason to require Huafang Maintenance Station to use only its provided set-top boxes after the set-top boxes purchased independently by Huafang Maintenance Station were exhausted. This not only restricted and deprived Huafang Maintenance Station of the freedom to choose other trading partners in the set-top box market but also excluded and limited existing or potential set-top box suppliers from trading with Huafang Maintenance Station, constituting a tying practice. Due to a combination of historical, policy, and technical factors, the objective situation of the scrambled cable digital television signal service market in Anshan City had fundamentally changed, and by the time the cooperation agreement expired, the basis for the continuation of the cooperation model had ceased to exist. Furthermore, CBN Anshan Branch had independently completed the construction of the cable television network in the cooperative area, and residents in the area were able to watch cable digital television programs normally. Therefore, CBN Anshan Branch’s decision not to renew the contract did not constitute refusal to transact. The legal fees of RMB 5,000 incurred by Huafang Maintenance Station in this case were fully supported. Accordingly, the Supreme People’s Court in the second instance ruled to overturn the first-instance judgment, ordered CBN Anshan Branch to compensate Huafang Maintenance Station for reasonable expenses in the amount of RMB 5,000, and dismissed the other claims of Huafang Maintenance Station.
Typical Significance
This case involves the determination of refusal to transact and tying practices in the context of abuse of dominant market position. Although the dispute occurred between the supplier and receiver of scrambled cable television signals, it directly affects end-users who watch cable digital television. The judgment in this case plays a positive role in the courts’ active exercise of antitrust judicial functions, scientifically defining the relevant market, precisely identifying abusive conduct, maintaining fair competition in the market, and fulfilling the legislative objectives of the Anti-Monopoly Law to prevent and stop monopolistic behavior.
3. Supreme People’s Court (2023) ZhiMinZhong No. 1547 - Bundled Transaction Dispute between Haidong Huamou Gas Appliance Trading Co., Ltd. Minhe Branch, and Qinghai Minhe Chuansou Petroleum and Natural Gas Co., Ltd.
Case Background
Haidong Huamou Gas Appliance Trading Co., Ltd. Minhe Branch (hereinafter referred to as “Huamou Gas Appliance Company”) filed a lawsuit, claiming that in October 2017, it sold and installed gas wall-hung boilers to more than 10 villagers, including Ma Mou, from Mouwan Village in Minhe Hui and Tu Autonomous County, Haidong City, Qinghai Province (hereinafter referred to as “Minhe County”). Qinghai Minhe Chuansou Petroleum and Natural Gas Co., Ltd. (hereinafter referred to as “Chuansou Gas Company”) required these villagers to install wall-hung boilers designated by Chuansou Gas Company when handling their applications for natural gas, or they would not be connected to the natural gas supply. The villagers were forced to remove the boilers they had already installed, and since the removed boilers could not be resold, Huamou Gas Appliance Company suffered losses. It requested that Chuansou Gas Company be ordered to compensate for economic losses amounting to RMB 107,200. In May 2020, the Qinghai Provincial Market Supervision Administration issued an administrative penalty decision, determining that Chuansou Gas Company had violated the provisions of the Anti-Monopoly Law prohibiting operators with dominant market positions from tying sales of goods without legitimate reasons. Dissatisfied with the administrative penalty decision, Chuansou Gas Company filed an administrative lawsuit. After two rounds of administrative litigation, the administrative penalty decision became legally effective at the time of this civil lawsuit. The court of first instance held that Chuansou Gas Company’s monopolistic behavior constituted a tying practice prohibited by the Anti-Monopoly Law and ruled that Chuansou Gas Company must compensate Huamou Gas Appliance Company for economic losses of RMB 80,000. Chuansou Gas Company, dissatisfied with the ruling, filed an appeal.
Court Trial
The Supreme People’s Court in the second instance held that this case was a follow-up civil compensation lawsuit filed after an administrative penalty decision by an anti-monopoly enforcement agency. The administrative penalty decision determined that Chuansou Gas Company, as the sole urban pipeline natural gas supplier in the main urban area of Minhe County, had engaged in a tying practice that constituted an abuse of its dominant market position between 2009 and 2018. Chuansou Gas Company failed to submit evidence to overturn the basic facts recognized by the administrative penalty decision. Since Huamou Gas Appliance Company had already submitted the administrative penalty decision, which had become effective, it was not required to provide further evidence to prove Chuansou Gas Company’s monopolistic behavior as alleged in this case. Due to Chuansou Gas Company’s tying behavior, the wall-hung boilers sold and installed by Huamou Gas Appliance Company for the villagers could not be used, as they were unable to connect to the natural gas supply, forcing Huamou Gas Appliance Company to refund the boiler payments to the villagers. Huamou Gas Appliance Company claimed economic losses of RMB 107,200, which included both the refunded boiler payments and installation fees. Considering that the installation fees had already been incurred and that wall-hung boilers have high safety requirements, making their resale value drop significantly after removal, the court of first instance reasonably set the compensation at RMB 80,000. The Supreme People’s Court in the second instance upheld the original ruling and dismissed the appeal.
Typical Significance
This case is a follow-up civil compensation lawsuit that arose after an anti-monopoly enforcement agency made a penalty decision. The judgment in this case legally reduced the plaintiff’s burden of proof regarding the alleged abuse of market dominance by the defendant, and comprehensively considered the plaintiff’s actual losses and potential lost profits when ruling for the defendant to pay damages. The case is significant in punishing monopolistic behavior, regulating market competition in the residential natural gas industry, and enhancing public awareness of anti-monopoly laws.
4. Supreme People’s Court (2024) ZhiMinZhong No. 748 - Abuse of Dominant Market Position Dispute between Tan Mou and Changsha Ma Moudui Agricultural Products Co., Ltd.
Case Background
Tan Mou filed a lawsuit claiming that Changsha Mamoudun Agricultural Products Co., Ltd. (hereinafter referred to as “Mamoudun Company”) holds a dominant market position in the vegetable supply market in Changsha County, Changsha City, Hunan Province. In December 2017, Tan Mou, as a wholesale vegetable merchant, signed the contract in question with Mamoudun Company and moved into the Jimou Logistics Park operated by Mamoudun Company. In June 2023, Mamoudun Company unilaterally increased Tan Mou’s service fee standard to three times the previous amount, citing Tan Mou’s simultaneous operations in the Hongmou Market as the reason. They further stated that only if Tan Mou exited the Hongmou Market would the original service fee standard be restored, and they refused to refund the overcharged service fees. Tan Mou argued that Mamoudun Company abused its dominant market position by restricting him to trade exclusively with them and charging unfairly high service fees, while imposing discriminatory pricing on merchants under the same conditions. Therefore, Tan Mou requested to terminate the contract between him and Mamoudun Company, asked the court to order Mamoudun Company to refund the remaining rent, entry fees, and overcharged service fees, and sought compensation for his economic losses. The court of first instance held that the contract contained an arbitration clause, and thus the court did not have jurisdiction over the case, ruling to dismiss Tan Mou’s lawsuit. Dissatisfied with the ruling, Tan Mou appealed.
Court Trial
The Supreme People’s Court, in the second instance, held that although the contract stipulated that disputes arising during the performance of the contract could be resolved through arbitration, the trial of this case was not limited to the contractual rights and obligations between Tan Mou and Mamoudun Company as stipulated in the contract. It also involved determining whether Mamoudun Company had a dominant market position and whether it had engaged in abusive practices, both of which directly relate to fair market competition, consumer interests, and public interest. Therefore, the existence of an arbitration agreement between the parties does not necessarily exclude the People’s Court from accepting this case, and it falls within the court’s jurisdiction. The alleged abuse of market dominance occurred during the performance of the contract, and since Tan Mou sought to terminate the contract, this case should be treated as a civil monopoly dispute, with jurisdiction determined according to the provisions for contract disputes. The court of first instance, therefore, has jurisdiction over this case. Accordingly, the ruling of the court of first instance was overturned, and the case was remanded to the lower court for trial. The court of first instance has now reopened the case and it is under trial.
Typical Significance
This case, in accordance with the provisions of the newly issued judicial interpretations on anti-monopoly civil litigation, recognizes that the arbitration agreement between the parties does not exclude the People’s Court from accepting civil monopoly disputes. It also clarifies the standard for determining jurisdiction over disputes arising from the abuse of market dominance during contract performance, in line with the plaintiff’s claims. The judgment in this case highlights the Anti-Monopoly Law’s role as a fundamental law in a market economy and provides a reference for the People’s Courts in accepting and adjudicating monopoly disputes.
5. Supreme People’s Court (2023) ZhiMinZhong No. 1590 - Zhejiang Jimou Holding Group Co. Ltd., Zhejiang Jimou Automobile Research Institute Co. Ltd. and Weimou Automotive Technology Group Co., Ltd., Weimou Automobile Manufacturing Wenzhou Co. Ltd. and other infringement of technical secrets dispute case
Case Background
Nearly 40 senior managers and technical personnel from subsidiaries of Zhejiang Jimou Holding Group Co., Ltd. left their positions to join Weimou Automotive Technology Group Co., Ltd. and its affiliated companies (collectively referred to as “Weimou Group”), with 30 of them joining shortly after resigning in 2016. In 2018, Zhejiang Jimou Holding Group Co., Ltd. and Zhejiang Jimou Automotive Research Institute Co., Ltd. (collectively referred to as “Jimou Group”) discovered that Weimou Group had filed 12 patent applications using part of the technical staff who had left Jimou Group as inventors or co-inventors. These patent applications involved the use of technical information about the application of new energy vehicle chassis technology and 12 sets of chassis component drawings and digital models that had been accessed at their former employer (hereinafter referred to as the “trade secrets involved”). Jimou Group also found that the Weimou EX series of electric vehicles allegedly infringed upon these trade secrets. Jimou Group filed a lawsuit in the court of first instance, requesting that Weimou Group be ordered to cease infringement and pay a total of RMB 2.1 billion in economic losses and reasonable expenses. After trial, the court of first instance determined that Weimou Automotive Manufacturing Wenzhou Co., Ltd. (hereinafter referred to as “Weimou Wenzhou Company”) had infringed on the technical secrets of five sets of chassis component drawings belonging to Jimou Group. The court ordered Weimou Wenzhou Company to compensate Jimou Group for economic losses and reasonable expenses totaling RMB 7 million. Both Jimou Group and Weimou Wenzhou Company appealed.
Court Trial
The Supreme People’s Court, in the second instance, held that this case involved the organized and planned mass recruitment of technical talent and resources related to new energy vehicles, carried out through improper means, resulting in the infringement of trade secrets. Through comprehensive analysis and judgment, it was determined that Weimou Group had unlawfully acquired all the trade secrets involved, illegally disclosed part of these secrets through patent applications, and used all the trade secrets in question. The second-instance judgment, in addition to ordering Weimou Group to immediately stop disclosing, using, or allowing others to use the trade secrets, further clarified and specified the methods, content, and scope of stopping the infringement, including but not limited to: unless with Jimou Group’s consent, Weimou Group must cease disclosing, using, or allowing others to use the trade secrets in any form; they must not implement, license others to implement, transfer, pledge, or otherwise dispose of the 12 patents involved. Weimou Group must also destroy or transfer all drawings, digital models, and other technical materials containing the trade secrets to Jimou Group. In addition, they must inform all their employees, affiliated companies, and relevant component suppliers of the court’s judgment and the requirements to cease infringement through public announcements and internal notices, and request relevant personnel and entities to sign confidentiality and non-infringement commitments.
Given the obvious intent to infringe, the malicious nature of the infringement, and the severe consequences, punitive damages amounting to twice the profit Weimou Group gained from the infringement from May 2019 to the first quarter of 2022 were applied. Weimou Group was ordered to compensate Jimou Group for approximately RMB 640 million in economic losses and reasonable expenses. To ensure compliance with non-monetary obligations, the second-instance judgment further stipulated that if Weimou Group violated the order to cease infringement or other non-monetary obligations, they would be subject to a daily fine of RMB 1 million for delayed compliance; in the event that Weimou Group improperly disposed of the 12 patents, a one-time payment of RMB 1 million per patent would be imposed.
Typical Significance
This case is a typical example of effectively combating organized, planned, and large-scale infringement of trade secrets. Based on the overall assessment of the infringement, the People’s Court not only applied punitive damages to determine the compensation amount but also explored proactive and beneficial approaches to determining civil liability for stopping the infringement and calculating delay fines for non-monetary obligations. The judgment demonstrates a clear attitude of strict intellectual property protection and a firm resolve to combat unfair competition, contributing to the creation of a legal environment that respects originality, promotes fair competition, and protects technological innovation.
6. People’s Court of Yuhang District, Hangzhou City, Zhejiang Province (2022) Zhe 0110 MinChu No.8714 - Unfair Competition Dispute between Beijing Weimou Vision Technology Co., Ltd. and Hangzhou Damou Network Technology Co., Ltd. and Aimo Ma (Hangzhou) Network Technology Co., Ltd.
Case Background
The Doumou platform, operated by Beijing Weimou Vision Technology Co., Ltd. (hereinafter referred to as “Beijing Weimou Company”), is a short video sharing platform that recommends videos based on user preferences. Its algorithmic recommendation mechanism is designed through a program based on several indicators, including video completion rate, number of comments, likes, shares, livestream room popularity, and user follower count. This mechanism relies on real user feedback on videos, livestreams, etc., to enable intelligent content recommendations. Hangzhou Damou Network Technology Co., Ltd. (hereinafter referred to as “Hangzhou Damou Company”) designed, developed, and operated the “Qingdou” product targeting the Doumou platform (in forms such as a website, app, and mini-program). Users who need to increase their follower count, views, and other data could pay to post “tasks” on the “Qingdou” product, attracting other users to complete tasks such as following accounts or watching videos on the Doumou platform in exchange for rewards. Aimo Ma (Hangzhou) Network Technology Co., Ltd. (hereinafter referred to as “Aimo Ma Company”) was responsible for receiving payments for the “Qingdou” product. Beijing Weimou Company filed a lawsuit, claiming that the defendants’ organization and operation of the “Qingdou” series of services constituted unfair competition, and requested the court to order the defendants to cease infringement, eliminate the negative impact, and jointly pay compensation of RMB 4.5 million.
Court Trial
The court of first instance held that Beijing Weimou Company has legitimate rights under competition law over the data represented by video views, livestream room popularity, and user follower counts on the Doumou platform. The company’s operation and utilization of these data resources should be protected due to their potential commercial value and competitive benefits. The defendants’ conduct, by operating a transaction platform to assist and guide traffic-demanding users in posting tasks, and allowing “task takers” to pose as normal users to complete fake tasks, such as boosting views and follows, artificially created false clicks and follower counts. This disrupted the platform’s traffic distribution mechanism, constituting unfair competition as regulated by Article 8, Paragraph 2 of the Anti-Unfair Competition Law. Therefore, the court ruled that the two defendants must cease the infringement, eliminate the impact, and jointly bear compensation liability of RMB 4 million. Dissatisfied with the ruling, the defendants appealed, but the Hangzhou Intermediate People’s Court in the second instance dismissed the appeal and upheld the original judgment.
Typical Significance
This case is a typical example of cracking down on the “fake follower and view boosting” industry within the black and gray areas of the internet. The People’s Court accurately applied the legal provisions of the Anti-Unfair Competition Law concerning the prohibition of false advertising, effectively regulating the unfair competition conduct of organizing “fake follower and view boosting” to illegitimately gain traffic for platform broadcasters. This case has played a positive role in guiding and promoting the integrity of platform broadcasters, ensuring a healthy livestreaming environment.
7. Jiangsu Higher People’s Court (2021) SuZhiZhong No. 19 - trademark infringement and unfair competition dispute between Schmidt Electric (China) Co. Ltd. and Suzhou Schneider Elevator Co., Ltd.
Case Background
Schneider Electric Europe Company (hereinafter referred to as Schneider Europe Company) granted a license for the use of its registered trademark “Schneider,” approved for use on Class 9 products such as circuit breakers and electric switches, to its invested entity Schneider Electric (China) Co., Ltd. (hereinafter referred to as Schneider China Company). Schneider China Company has invested in multiple electrical manufacturing enterprises across the country, many of which operate under the trade name “Schneider.” The series of trademarks, including “Schneider,” have high market recognition in the electrical industry and market. Schneider China Company claimed that Suzhou Schneider Elevator Co., Ltd. (hereinafter referred to as Suzhou Schneider Company) prominently used the “Schneider” and “SCHNEIDER” logos, constituting trademark infringement. Furthermore, Suzhou Schneider Company’s registration of a corporate name containing the trade name “Schneider” and its use of a domain name similar to the core elements of the trademark “Schneider Electric” constituted unfair competition. Consequently, Schneider China Company filed a lawsuit requesting that Suzhou Schneider Company cease its infringement, change its corporate name, compensate for damages, and eliminate the impact of its actions. In its defense, Suzhou Schneider Company argued that the use of the contested logos was authorized by a foreign company and that there was no subjective fault of exploiting the goodwill of the disputed trademark.
Court Trial
After trial, the first-instance court determined that the contested actions constituted trademark infringement and unfair competition, and ruled that Suzhou Schneider Company must immediately cease the infringing activities, change its corporate name, compensate damages of RMB 40 million, and cover reasonable expenses of RMB 150,000. Additionally, Suzhou Schneider Company was ordered to publish a statement to eliminate the impact of its actions. In the second-instance ruling, the Jiangsu High People’s Court held that Suzhou Schneider Company was fully aware of the reputation of the disputed trademark and trade name, and entered into a brand usage agreement with a foreign company to obtain authorization for similar logos to the disputed trademark, intending to exploit the goodwill of the disputed trademark. The court found that the first-instance judgment correctly determined the existence of trademark infringement and unfair competition. Considering factors such as the fame and market value of the disputed trademark, the subjective malice of Suzhou Schneider Company, and the duration and scale of the infringement, the compensation amount of RMB 40 million determined by the first-instance judgment was deemed appropriate. The Jiangsu High People’s Court rejected the appeal and upheld the original judgment.
Typical Significance
This case serves as a typical example of the severe punishment of “free-riding” and other acts of imitation and confusion. When sufficient evidence proves that the profits from infringement exceed the statutory limit for compensation, the people’s courts appropriately allocate the burden of proof and correctly apply discretionary compensation methods to determine the compensation amount. This approach effectively combats market confusion through the exploitation of others’ goodwill, significantly increases the cost of infringement, and clearly reflects the judiciary’s strong stance on enhancing intellectual property protection.
8. Shenzhen Intermediate People’s Court of Guangdong Province (2023) Yue 03 MinZhong 4897 - Unfair Competition Dispute between Shenzhen Changmoushun Enterprise Management Consulting Co., Ltd. and Beijing Tianmoucha Technology Co., Ltd. and Beijing Jinmou Technology Co., Ltd.
Case Background
Shenzhen Changmoushun Enterprise Management Consulting Co., Ltd. (hereinafter referred to as Changmoushun Company) accused Beijing Jinmou Technology Co., Ltd. (hereinafter referred to as Jinmou Company) and Beijing Tianmoucha Technology Co., Ltd. (hereinafter referred to as Tianmoucha Company) of engaging in unfair competition through the following actions: 1). The data published on the “Tianmoucha” website did not include its equity information registered with the Shenzhen United Property Rights Exchange; 2). The shareholding relationship between Changmoushun Company and Shenzhen Aomoude Group Co., Ltd. (hereinafter referred to as Aomoude Company) as published on the “Tianmoucha” website was inconsistent with the actual situation; 3). After receiving a lawyer’s letter and attachments from Changmoushun Company, the defendants failed to correct the data on the “Tianmoucha” website. On this basis, Changmoushun Company requested that the court order the defendants to list it as a shareholder of Aomoude Company, eliminate the impact of the misinformation, and compensate for its legal expenses.
Court Trial
Upon trial, the Shenzhen Intermediate People’s Court held that the original data in question related to the external shareholding information of Changmoushun Company, and that a company’s external investments and historical changes directly relate to its market competitive position. As Changmoushun Company was the original data subject in the credit data system operated by Jinmou Company and Tianmoucha Company, it possessed competitive rights under competition law with respect to the external shareholding information published by this credit data system. Jinmou Company and Tianmoucha Company, as data users, had an obligation to ensure the quality of the data for the original data subject. If there were issues with data quality when Jinmou Company and Tianmoucha Company published corporate data, it could result in an increase or decrease in the competitive rights of the original data subject, as well as damage the interests of data consumers who rely on the data in good faith.
In this case, after receiving Changmoushun Company’s complaint regarding data accuracy and related evidence, the operators of the “Tianmoucha” website had an obligation to verify and update the relevant data. However, they neither reviewed the authenticity of the complaint materials nor took reasonable measures to correct the discrepancies in the credit data system, resulting in Changmoushun Company’s external shareholding information not being displayed on the “Tianmoucha” website for an extended period. The incorrect shareholding information inevitably led data consumers to make erroneous judgments about Changmoushun Company’s operational status, thereby harming the company’s market competitive rights and infringing on data consumers’ right to know, as well as disrupting the normal market competition order in the internet credit information industry.
In summary, the actions of Jinmou Company and Tianmoucha Company constituted unfair competition. They should bear civil liabilities such as ceasing the infringement and eliminating the impact. Therefore, the court ordered Jinmou Company and Tianmoucha Company to list Changmoushun Company’s shareholding information on Aomoude Company’s shareholder page on the “Tianmoucha” website, publish a statement to eliminate the impact, and compensate Changmoushun Company for its reasonable legal expenses in the amount of RMB 30,880.
Typical Significance
This case is a typical example of determining unfair competition behavior by data users. The People’s Court fully considered the developmental stage of the big data industry, business models, technological conditions, and the current state and patterns of the digital economy. The court actively explored the application of the principled provisions of the Anti-Unfair Competition Law, reasonably defined the scope of competitive rights for the original data subject, and clarified the data quality obligations of data users. This has positive significance for promoting the healthy development of the data industry and fostering an open, healthy, and secure digital ecosystem.