The Guangzhou Intellectual Property Court (Appeal Court) upheld both findings on second instance. The agency's status as a professional intermediary made it especially culpable.

Why This Case Matters for Foreign Companies

Foreign brands operating in or exporting to China face a specific and persistent problem: trademark squatting by local competitors. A company may discover that its well-known foreign brand name has been registered by someone else in China—the world's largest consumer market—often years before the brand ever entered that market.

Historically, foreign brand owners had two main tools:

    1. Invalidation proceedings before CNIPA to cancel the squatted mark

    2. Civil infringement litigation seeking compensation

Both were available. Both had limitations. Invalidation takes time and requires proving bad faith. Civil suits could recover damages from the squatter, but the squatter might be judgment-proof—a shell company with no assets.

This case changes the calculus by adding a third party to target: the trademark agency.

In China, trademark registration must go through a licensed agency. That agency is supposed to verify the legitimacy of its client's application. The court in this case found that the agency should have known its client was building a portfolio of marks that imitated an established competitor's brand. Accepting that business anyway—particularly for 15 years—crossed the line from neutral service provider to accessory to wrongful conduct.

For foreign brand owners, this matters practically. If a trademark agency can be held liable alongside the squatter, enforcement options expand. Agencies are typically more established, with registered offices, professional licenses, and reputational exposure. Suing the agency may produce a more collectible judgment—or, at minimum, apply real commercial pressure.

The Broader Pattern: Courts Getting Tougher on Bad-Faith Registration

The 2025 SPC model cases reflect a deliberate signal. The court specifically highlighted that this squatter had been caught before—prior CNIPA decisions and court judgments had already confirmed the infringing nature of the marks—yet the company continued filing more applications. The SPC framed this as aggravating conduct that warranted not just trademark law remedies but also Anti-Unfair Competition Law liability.

This aligns with a broader trend in Chinese IP jurisprudence: courts are increasingly willing to treat systematic, repeat bad-faith registration as unfair competition rather than a mere trademark matter. That shift matters because it can affect the scope of damages available and the types of remedies the court will order.

What Foreign Companies Should Do Now

1. Conduct a China Trademark Audit—Immediately

If you sell products or services in China, or plan to, your trademarks must be registered there—regardless of whether you have a physical presence. China operates on a first-to-file principle for most trademark categories, meaning the first person to register a mark in a given class generally gets priority.

Register in your core classes (your actual business), adjacent classes (products you might expand into), and defensively in classes where bad-faith squatters commonly operate.

2. Monitor New Filings in Your Space

Set up watching services through CNIPA databases or commercial providers. When a competitor files a mark similar to yours, you have a limited window to oppose before registration is granted. Waiting until the mark is registered means facing invalidation proceedings instead of opposition—which takes longer and costs more.

3. Build a Documentation File

Chinese courts increasingly award damages that reflect the actual harm or the infringer's illicit gains. To maximize compensation, you need evidence of your brand's reputation in China: market surveys, advertising spend data, sales figures, social media following, and media coverage. Don't wait until a lawsuit to compile this.

4. Consider Naming the Agency in Your Suit

If you are filing a civil action against a trademark squatter, evaluate whether the agency involved acted in bad faith. Courts have now explicitly recognized agency liability. Including the agency as a defendant—or as a third party—may improve your recovery and signal to the market that facilitating squatting carries real costs.

5. Use Administrative Channels in Parallel

CNIPA invalidation proceedings and civil litigation can run simultaneously. Administrative decisions establishing bad faith (e.g., marks invalidated for copying) create a strong evidentiary foundation for subsequent civil suits on unfair competition grounds.

Business Implications

China remains the world's most valuable consumer market and a critical supply chain hub. Foreign brands that skip China trademark registration—or fail to monitor and enforce their marks there—risk watching years of brand equity erode through squatting, counterfeiting, and parasitic imitation.

The good news is that China's IP enforcement environment is genuinely improving. Damages awards are rising. Courts are expanding the scope of liability to reach not just squatters but also the professional intermediaries that enable them. The Lan Mei case illustrates that Chinese courts are willing to apply Anti-Unfair Competition Law to punish deliberate, repeat misconduct that trademark invalidation alone cannot stop.

For foreign brand owners, the message is clear: proactive registration and consistent enforcement are non-negotiable. The legal tools exist. The courts are using them. The only question is whether you are.

If your brand has been targeted by trademark squatters in China, or if you want to build a defensible IP portfolio before entering the Chinese market, contact BORSAM IP for a strategic consultation. We help foreign companies navigate Chinese trademark prosecution, enforcement litigation, and anti-unfair competition claims.