Amid increasingly fierce market competition, some enterprises abandon efforts to build independent brands and instead seek improper gains through unfair competition tactics such as registering similar trademarks and free-riding on others’ brand goodwill. However, a judgment ordering 3,000,000 yuan in compensation has sounded a stern warning against such practices.
In December 2025, the People’s Court of Pingshan District, Shenzhen concluded a high-profile unfair competition dispute. The defendant, B Precision Equipment Co., Ltd., held a legally registered "GS" trademark but was found guilty of unfair competition due to bad-faith trademark squatting and goodwill free-riding. The court ordered the defendant to cease infringement and compensate the plaintiff 3,000,000 yuan.
The judgment has now taken effect.
Dispute over the "GS" Mark
The plaintiff, A Technology Co., Ltd., is the exclusive distributor of Estonia-based GS Company in China. It has long used the "GS" mark to sell tempered glass stress measuring instruments since 2015.
The defendant, B Precision Equipment Co., Ltd., is a competitor in the same industry. It once purchased instruments from Company A and obtained registration of the "GS" trademark (Class 9) in 2022.
Upon discovery, Company A sued B Precision Equipment Co., Ltd. for unfair competition on the grounds of bad-faith trademark squatting and reputation free-riding.
Systematic and Concealed Brand Free-Riding
After trial, the court found that:
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The defendant’s infringement was systematic and concealed. It falsely claimed to be an "Asian distributor" on its website, advertised that it acted as an agent for the "GS" brand, stated in sales contracts that its products were "instruments of GS Company sold in China", and adopted model naming and parameter comparison similar to GS Company.
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The defendant had purchased instruments from Company A and was fully aware that the "GS" mark belonged to others, yet still applied for and registered the "GS" trademark in 2022. After squatting the trademark, it even sued others for infringement as the trademark owner, further confirming its subjective malice.
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Since the plaintiff failed to prove its actual losses or the defendant’s illegal profits, the court fully supported the 3,000,000 yuan compensation claim by comprehensively considering the popularity of the mark, the degree of subjective fault, the nature of infringement, and reasonable rights protection expenses.
The judgment has now entered into force.
Judge’s Tips and Compliance Suggestions
A judge from Pingshan Court noted that the core enlightenment of this case is: holding a registered trademark does not exempt one from infringement liability.
Many operators mistakenly believe that trademark registration justifies "legal" use. However, the law clearly stipulates that acts of bad-faith squatting and reputation free-riding still constitute unfair competition. This case affirms the principle that prior rights of unregistered trademarks with certain influence can oppose later registered trademarks, preventing bad-faith squatters from plundering others’ reputation through loopholes in the system.
Conclusion
The "GS" case sets a warning for brand free-riding practices. The essence of business competition lies in products and services, not opportunistic free-riding. The law always favors those who act in good faith. Neither loopholes in the registration system nor the disguise of a "legal coat" can cover up the nature of malicious reputation free-riding.
