China: Good-Faith Acquisition and Actual Use Cannot Cure the Impropriety of a Bad-Faith Trademark Registration
Published 6 November 2026
Xia Yu
In October 2026, the Supreme People’s Court of China (“SPC”) included Dongguan Laimou Electronic Technology Co., Ltd. v. China National Intellectual Property Administration, with Zhejiang Laimou Technology Co., Ltd. and Zhejiang Anmoluo Supply Chain Management Co., Ltd. as third parties — an administrative dispute over a trademark invalidation request — into the People’s Court Case Database as a reference case (Database Entry No. 2026-09-3-029-004).
By rejecting the retrial application, the SPC affirmed and reinforced a clear rule: where a trademark was registered by “other improper means”, the impropriety lies in the original registration act’s harm to the trademark registration order and the public interest, and constitutes an absolute ground for invalidation; even if the trademark is subsequently acquired by a good-faith assignee and put into actual use, that cannot cure the impropriety of the registration act, and the assignee’s remedy lies within the assignment relationship — a separate claim against the assignor. This rule anchors the assessment under Article 44(1) of the Trademark Law of the People’s Republic of China (as amended in 2019) in the registration act itself, separates the public-order evaluation of trademark registration from the private allocation of transactional risk, and carries direct significance for curbing bad-faith squatting, due diligence in trademark assignments, and contractual arrangements in such transactions. The case report expressly notes that the spirit of that provision in Article 44(1) is consistent with Article 19 of the 2026 revision, which is going to be implemented on 1 January 2027.
Case Facts
Zhejiang Anmoluo Supply Chain Management Co., Ltd. (“Anmoluo”) filed an application on 18 January 2021 to register “LaiX LAIFEN” Trademark No. 5306XXX (“Trademark at Issue”), covering goods in Class 8 such as “sharpening instruments; razors; curling tongs; hand implements for hair curling; razor blades”, among others, and subsequently assigned the Trademark at Issue to Zhejiang Laimou Technology Co., Ltd. (“Zhejiang Laimou”), with the assignment duly published. Dongguan Laimou Electronic Technology Co., Ltd. (“Dongguan Laimou”) is the registrant of “LaiX” Trademark No. 364397XX and “LAIFEN” Trademark No. 520683XX (“cited trademarks”). In July 2022, Dongguan Laimou petitioned for invalidation of the Trademark at Issue on the grounds of Articles 30, 32 and 44(1) of the Trademark Law (2019 amendment).
At the invalidation stage, the China National Intellectual Property Administration (“CNIPA”) held that the goods covered by the Trademark at Issue were not similar to those of the cited trademarks, that the evidence of prior use and reputation was insufficient, and that it was likewise not proven that the registration had been obtained by improper means; on 31 October 2022, it ruled to maintain the Trademark at Issue (Shang Ping Zi (2023) No. 205566) . The Beijing Intellectual Property Court, finding the contested ruling correct, dismissed Dongguan Laimou’s claims on 18 June 2024 ((2023) Jing 73 Xing Chu No. 17173).
On appeal, the Beijing Higher People’s Court (“Beijing Higher Court”), based on newly submitted evidence, found that Anmoluo had, over four years beginning in 2019, registered more than 200 trademarks across multiple classes of goods and services, including the Trademark at Issue — among them a number of trademarks identical or similar to others’ trademarks of certain repute — and had assigned dozens of those trademarks, including the Trademark at Issue, to third parties; Anmoluo produced no evidence that these Trademarks were needed for normal production and business operations or had been put into actual use; and “LaiX” is a coined word, under which Dongguan Laimou’s brand had already acquired a certain degree of reputation before the filing date of the Trademark at Issue. On 30 October 2024, the Beijing Higher Court vacated the first-instance judgment and the contested ruling, and ordered CNIPA to render a new decision ((2024) Jing Xing Zhong No. 6769).
Zhejiang Laimou applied to the SPC for retrial on the grounds that it had acquired the Trademark at Issue in good faith and had used it. On 7 May 2026, the SPC dismissed the retrial application ((2026) Zui Gao Fa Xing Shen No. 839).
Reasoning and Key Holding
The dispute centered on one question: where a trademark has been acquired by a good-faith assignee and actually used, can that cure the impropriety of the original registration act?
The key holding published in the People’s Court Case Database reads: Where the applicant for the Trademark at issue has, on a large and systematic scale, preemptively registered others’ trademarks of certain repute, such conduct should be found to constitute “obtaining registration by other improper means,” and a trademark so registered shall be declared invalid. Because such conduct seriously harms the public interest, it constitutes an absolute ground for invalidation; even where the trademark is subsequently acquired by a good-faith assignee and actually used, that cannot cure the impropriety of the registration act, and the trademark shall still be declared invalid. The assignee may assert a separate claim against the assignor in accordance with Article 53 of the Trademark Law and other relevant provisions. The reference to “Article 53 of the Trademark Law” in the holding follows the numbering of the 2026 revision, corresponding to Article 47 of the 2019 amendment in force when the conduct occurred.
Analysis and Commentary
As a matter of legal doctrine, the rule’s reasoning is clear and rigorous. Under Article 44(1) of the Trademark Law and Article 24 of the SPC’s Provisions on Several Issues Concerning the Trial of Administrative Cases Involving the Granting and Confirmation of Trademark Rights (Fa Shi [2017] No. 2, as amended in 2020), “other improper means” refers to conduct that disrupts the trademark registration order, harms the public interest, improperly occupies public resources, or seeks illegitimate gain. Because the object infringed is the public interest and the registration order — not any specific private right — the ground is absolute: its legal consequences do not change with a change in the holder of the right. In other words, the “original sin” of the registration act is not “laundered” by a subsequent good-faith transfer.
In this case, the court found that Anmoluo had registered more than 200 trademarks, including the Trademark at Issue, across multiple classes over four years beginning in 2019 (a number of them identical or similar to others’ trademarks of certain repute), had assigned dozens of them to others, and could not show that the trademarks were needed for normal operations or had been put into actual use. Moreover, “LaiX” is a coined word, and Dongguan Laimou’s “LaiX” brand already enjoyed a certain reputation before the filing date; Anmoluo’s application for the identical word element could “hardly be a coincidence”. The squatting bad faith formed a complete evidentiary loop across three dimensions: volume, behavioral pattern, and source of the sign.
Zhejiang Laimou’s retrial argument — good-faith acquisition coupled with actual use — has considerable equitable appeal: a genuine operating business paid for a trademark, invested resources in using it, and ultimately lost the Trademark altogether. Legally, however, the argument had almost no chance from the moment the retrial application was filed, because it pitted “derivative acquisition of a right” against “an absolute ground of invalidity attaching to the registration act” — two propositions that simply do not operate on the same plane. The SPC’s holding makes the point plainly: the good-faith assignee’s loss is remediable through a claim against the assignor under Article 47 of the Trademark Law (2019 amendment; carried forward in Article 53 of the 2026 revision) and related provisions — not through the preservation of a registration that should never have existed.
What stands out most in this case is the same party’s markedly different evidentiary strategy at different stages. At the invalidation and first-instance stages, Dongguan Laimou followed the conventional “relative grounds” path — arguing similarity of goods, prior rights, and prior use with a certain degree of influence. That path places the burden of proof on the claimant itself: proving its own reputation, proving similarity of goods, and proving that the applicant had access to its marks. CNIPA and the first-instance court found the evidence insufficient on precisely those points.
On appeal, Dongguan Laimou shifted its evidentiary focus from establishing the fame of its own marks to exposing the applicant’s bad faith. The newly submitted evidence — Anmoluo’s trademark application and assignment records — bore directly on the absolute ground under Article 44(1): more than 200 registrations, a four-year span, dozens of outward assignments, and no genuine intent to use. Together with CNIPA and SPC policy documents on combating bad-faith registrations, this evidence completed the picture of a mass squatter registering and reselling trademarks for profit. Once the case came to be assessed under the absolute ground, similarity of goods and the reach of the cited trademarks’ reputation were no longer decisive.
In squatting cases, where the squatter exhibits a pattern of mass registration and mass assignment, Article 44(1) is often a sharper weapon than Articles 30 and 32 — it is not confined by the scope of similar goods, nor does it depend on the strength of proof of prior rights. Investigating the applicant’s “registration profile” first, and only then choosing the principal statutory ground, should become standard practice in invalidation petitions.
Practical Implications
In trademark grant-and-confirmation proceedings, background investigation of the applicant and evidentiary preparation are critical. Looking back, Dongguan Laimou had in fact invoked Article 44(1) from the outset of its invalidation petition, but it failed to adduce sufficient evidence of Anmoluo’s bad-faith registration pattern; the reversal came only after it supplemented the record on appeal with Anmoluo’s application and assignment lists. Had a systematic investigation of the applicant’s “registration profile” been completed before the petition was filed, with the evidentiary work on Article 44(1) done thoroughly in one pass, the case might well — with a fair degree of probability — have been resolved at the administrative stage. From the invalidation petition in July 2022 to the retrial ruling in May 2026, the nearly four years of administrative and judicial proceedings consumed not only the parties but also administrative and judicial resources.
For rights holders (the victims of squatting), we recommend searching trademark databases for the applicant’s full registration record, assignment history, and affiliated entities; where a mass-squatting pattern emerges, Article 44(1) should be made the principal ground, with relative grounds in a supporting role. The first-instance defeat teaches that evidence filed at the administrative stage alone may not suffice — key evidence can still be supplemented during administrative litigation (particularly on appeal) — but rather than pinning hopes on late-stage remedies, the better course is to do the evidentiary work in full when the invalidation petition is filed. As a coined word, “LaiX” should have enjoyed strong distinctiveness, yet Dongguan Laimou evidently had not laid out defensive registrations in Class 8 and other related classes in advance. The cost of cross-class defensive registration for a core Trademark is far lower than nearly four years of invalidation proceedings.
For assignees (trademark buyers), pre-assignment due diligence should examine the original applicant’s total registration volume, registration patterns, and any prior findings of bad-faith registration — not merely the status of the trademark itself. A trademark with “original sin” at its source is a liability at any price. In addition, the transaction documents should contain robust warranty provisions: the assignor should represent and warrant that “no ground exists for the trademark to be declared invalid”, with agreed refund and indemnity mechanisms in the event of invalidation. The court in this case pointed squarely to that remedial path (Trademark Law Article 47 / Article 53), and contractual arrangements will directly determine how easy or difficult recovery turns out to be.
Conclusion
This case restates, in the plainest terms, a simple principle: the legitimacy of a trademark right begins with the legitimacy of the registration act, and no amount of good faith or investment downstream can “endorse” bad faith upstream. For squatters, this is a warning; for parties to trademark transactions, it is a clarion call to move due diligence forward; and for brand owners, the best defense is always to complete one’s own filing layout before the squatters arrive.
By rejecting the retrial application, the SPC affirmed and reinforced a clear rule: where a trademark was registered by “other improper means”, the impropriety lies in the original registration act’s harm to the trademark registration order and the public interest, and constitutes an absolute ground for invalidation; even if the trademark is subsequently acquired by a good-faith assignee and put into actual use, that cannot cure the impropriety of the registration act, and the assignee’s remedy lies within the assignment relationship — a separate claim against the assignor. This rule anchors the assessment under Article 44(1) of the Trademark Law of the People’s Republic of China (as amended in 2019) in the registration act itself, separates the public-order evaluation of trademark registration from the private allocation of transactional risk, and carries direct significance for curbing bad-faith squatting, due diligence in trademark assignments, and contractual arrangements in such transactions. The case report expressly notes that the spirit of that provision in Article 44(1) is consistent with Article 19 of the 2026 revision, which is going to be implemented on 1 January 2027.
Case Facts
Zhejiang Anmoluo Supply Chain Management Co., Ltd. (“Anmoluo”) filed an application on 18 January 2021 to register “LaiX LAIFEN” Trademark No. 5306XXX (“Trademark at Issue”), covering goods in Class 8 such as “sharpening instruments; razors; curling tongs; hand implements for hair curling; razor blades”, among others, and subsequently assigned the Trademark at Issue to Zhejiang Laimou Technology Co., Ltd. (“Zhejiang Laimou”), with the assignment duly published. Dongguan Laimou Electronic Technology Co., Ltd. (“Dongguan Laimou”) is the registrant of “LaiX” Trademark No. 364397XX and “LAIFEN” Trademark No. 520683XX (“cited trademarks”). In July 2022, Dongguan Laimou petitioned for invalidation of the Trademark at Issue on the grounds of Articles 30, 32 and 44(1) of the Trademark Law (2019 amendment).
At the invalidation stage, the China National Intellectual Property Administration (“CNIPA”) held that the goods covered by the Trademark at Issue were not similar to those of the cited trademarks, that the evidence of prior use and reputation was insufficient, and that it was likewise not proven that the registration had been obtained by improper means; on 31 October 2022, it ruled to maintain the Trademark at Issue (Shang Ping Zi (2023) No. 205566) . The Beijing Intellectual Property Court, finding the contested ruling correct, dismissed Dongguan Laimou’s claims on 18 June 2024 ((2023) Jing 73 Xing Chu No. 17173).
On appeal, the Beijing Higher People’s Court (“Beijing Higher Court”), based on newly submitted evidence, found that Anmoluo had, over four years beginning in 2019, registered more than 200 trademarks across multiple classes of goods and services, including the Trademark at Issue — among them a number of trademarks identical or similar to others’ trademarks of certain repute — and had assigned dozens of those trademarks, including the Trademark at Issue, to third parties; Anmoluo produced no evidence that these Trademarks were needed for normal production and business operations or had been put into actual use; and “LaiX” is a coined word, under which Dongguan Laimou’s brand had already acquired a certain degree of reputation before the filing date of the Trademark at Issue. On 30 October 2024, the Beijing Higher Court vacated the first-instance judgment and the contested ruling, and ordered CNIPA to render a new decision ((2024) Jing Xing Zhong No. 6769).
Zhejiang Laimou applied to the SPC for retrial on the grounds that it had acquired the Trademark at Issue in good faith and had used it. On 7 May 2026, the SPC dismissed the retrial application ((2026) Zui Gao Fa Xing Shen No. 839).
Reasoning and Key Holding
The dispute centered on one question: where a trademark has been acquired by a good-faith assignee and actually used, can that cure the impropriety of the original registration act?
The key holding published in the People’s Court Case Database reads: Where the applicant for the Trademark at issue has, on a large and systematic scale, preemptively registered others’ trademarks of certain repute, such conduct should be found to constitute “obtaining registration by other improper means,” and a trademark so registered shall be declared invalid. Because such conduct seriously harms the public interest, it constitutes an absolute ground for invalidation; even where the trademark is subsequently acquired by a good-faith assignee and actually used, that cannot cure the impropriety of the registration act, and the trademark shall still be declared invalid. The assignee may assert a separate claim against the assignor in accordance with Article 53 of the Trademark Law and other relevant provisions. The reference to “Article 53 of the Trademark Law” in the holding follows the numbering of the 2026 revision, corresponding to Article 47 of the 2019 amendment in force when the conduct occurred.
Analysis and Commentary
As a matter of legal doctrine, the rule’s reasoning is clear and rigorous. Under Article 44(1) of the Trademark Law and Article 24 of the SPC’s Provisions on Several Issues Concerning the Trial of Administrative Cases Involving the Granting and Confirmation of Trademark Rights (Fa Shi [2017] No. 2, as amended in 2020), “other improper means” refers to conduct that disrupts the trademark registration order, harms the public interest, improperly occupies public resources, or seeks illegitimate gain. Because the object infringed is the public interest and the registration order — not any specific private right — the ground is absolute: its legal consequences do not change with a change in the holder of the right. In other words, the “original sin” of the registration act is not “laundered” by a subsequent good-faith transfer.
In this case, the court found that Anmoluo had registered more than 200 trademarks, including the Trademark at Issue, across multiple classes over four years beginning in 2019 (a number of them identical or similar to others’ trademarks of certain repute), had assigned dozens of them to others, and could not show that the trademarks were needed for normal operations or had been put into actual use. Moreover, “LaiX” is a coined word, and Dongguan Laimou’s “LaiX” brand already enjoyed a certain reputation before the filing date; Anmoluo’s application for the identical word element could “hardly be a coincidence”. The squatting bad faith formed a complete evidentiary loop across three dimensions: volume, behavioral pattern, and source of the sign.
Zhejiang Laimou’s retrial argument — good-faith acquisition coupled with actual use — has considerable equitable appeal: a genuine operating business paid for a trademark, invested resources in using it, and ultimately lost the Trademark altogether. Legally, however, the argument had almost no chance from the moment the retrial application was filed, because it pitted “derivative acquisition of a right” against “an absolute ground of invalidity attaching to the registration act” — two propositions that simply do not operate on the same plane. The SPC’s holding makes the point plainly: the good-faith assignee’s loss is remediable through a claim against the assignor under Article 47 of the Trademark Law (2019 amendment; carried forward in Article 53 of the 2026 revision) and related provisions — not through the preservation of a registration that should never have existed.
What stands out most in this case is the same party’s markedly different evidentiary strategy at different stages. At the invalidation and first-instance stages, Dongguan Laimou followed the conventional “relative grounds” path — arguing similarity of goods, prior rights, and prior use with a certain degree of influence. That path places the burden of proof on the claimant itself: proving its own reputation, proving similarity of goods, and proving that the applicant had access to its marks. CNIPA and the first-instance court found the evidence insufficient on precisely those points.
On appeal, Dongguan Laimou shifted its evidentiary focus from establishing the fame of its own marks to exposing the applicant’s bad faith. The newly submitted evidence — Anmoluo’s trademark application and assignment records — bore directly on the absolute ground under Article 44(1): more than 200 registrations, a four-year span, dozens of outward assignments, and no genuine intent to use. Together with CNIPA and SPC policy documents on combating bad-faith registrations, this evidence completed the picture of a mass squatter registering and reselling trademarks for profit. Once the case came to be assessed under the absolute ground, similarity of goods and the reach of the cited trademarks’ reputation were no longer decisive.
In squatting cases, where the squatter exhibits a pattern of mass registration and mass assignment, Article 44(1) is often a sharper weapon than Articles 30 and 32 — it is not confined by the scope of similar goods, nor does it depend on the strength of proof of prior rights. Investigating the applicant’s “registration profile” first, and only then choosing the principal statutory ground, should become standard practice in invalidation petitions.
Practical Implications
In trademark grant-and-confirmation proceedings, background investigation of the applicant and evidentiary preparation are critical. Looking back, Dongguan Laimou had in fact invoked Article 44(1) from the outset of its invalidation petition, but it failed to adduce sufficient evidence of Anmoluo’s bad-faith registration pattern; the reversal came only after it supplemented the record on appeal with Anmoluo’s application and assignment lists. Had a systematic investigation of the applicant’s “registration profile” been completed before the petition was filed, with the evidentiary work on Article 44(1) done thoroughly in one pass, the case might well — with a fair degree of probability — have been resolved at the administrative stage. From the invalidation petition in July 2022 to the retrial ruling in May 2026, the nearly four years of administrative and judicial proceedings consumed not only the parties but also administrative and judicial resources.
For rights holders (the victims of squatting), we recommend searching trademark databases for the applicant’s full registration record, assignment history, and affiliated entities; where a mass-squatting pattern emerges, Article 44(1) should be made the principal ground, with relative grounds in a supporting role. The first-instance defeat teaches that evidence filed at the administrative stage alone may not suffice — key evidence can still be supplemented during administrative litigation (particularly on appeal) — but rather than pinning hopes on late-stage remedies, the better course is to do the evidentiary work in full when the invalidation petition is filed. As a coined word, “LaiX” should have enjoyed strong distinctiveness, yet Dongguan Laimou evidently had not laid out defensive registrations in Class 8 and other related classes in advance. The cost of cross-class defensive registration for a core Trademark is far lower than nearly four years of invalidation proceedings.
For assignees (trademark buyers), pre-assignment due diligence should examine the original applicant’s total registration volume, registration patterns, and any prior findings of bad-faith registration — not merely the status of the trademark itself. A trademark with “original sin” at its source is a liability at any price. In addition, the transaction documents should contain robust warranty provisions: the assignor should represent and warrant that “no ground exists for the trademark to be declared invalid”, with agreed refund and indemnity mechanisms in the event of invalidation. The court in this case pointed squarely to that remedial path (Trademark Law Article 47 / Article 53), and contractual arrangements will directly determine how easy or difficult recovery turns out to be.
Conclusion
This case restates, in the plainest terms, a simple principle: the legitimacy of a trademark right begins with the legitimacy of the registration act, and no amount of good faith or investment downstream can “endorse” bad faith upstream. For squatters, this is a warning; for parties to trademark transactions, it is a clarion call to move due diligence forward; and for brand owners, the best defense is always to complete one’s own filing layout before the squatters arrive.