Amid industrial transformation, some operators target well‑known trademarks. They convert household‑grade products into commercial‑use equipment, affix or replace trademark labels without authorization, and back them with false publicity. What seems to be minor product “tweaks” may in reality undermine the commercial foundation of trademark‑right holders. A trademark‑infringement and unfair‑competition dispute recently concluded by the Qingdao Intellectual Property Tribunal draws clear legal red lines for such grey‑zone operations of “modification + relabelling + false publicity”.

Case Review: Household‑use Machines “Converted” to Commercial‑grade with Unauthorised Labels

The plaintiff is the right‑holder of the “Haier” and “Haier” series registered trademarks. The plaintiff discovered that a Guangdong‑based company, without authorisation, affixed additional “Haier” marks to “Tongshuai” household washing‑machine units and modified them for commercial use. It also modified genuine Haier commercial washing‑machines and affixed “Funia” labels onto them. A Dongguan business department handled promotion for the involved products and collected relevant payments; a Guangzhou‑based company resold the disputed modified products. The plaintiff alleged trademark infringement and unfair competition, and requested the court to order cessation of infringement plus compensation for economic losses.

Court Findings: Resale after Modification Undermines Trademark Identification and Reputation Functions

The court held that the Guangdong‑based company’s acts of affixing extra “Haier” labels to “Tongshuai” household washing‑machines to re‑purpose them commercially, and affixing “Funia” labels onto modified genuine commercial washing‑machines for resale or operation, hampered the proper exercise of the trademark’s source‑identification, quality‑guarantee and reputation‑bearing functions, and therefore constituted trademark infringement. The Dongguan business department promoted the disputed products and collected proceeds, hence it committed joint infringement together with the Guangdong‑based company. The Guangzhou‑based company that resold the modified goods also infringed trademark rights. Furthermore, promotional activities conducted by the Guangdong‑based company and the Dongguan business department would mislead consumers regarding product origin and harm the reputation of the plaintiff’s products, constituting false publicity and commercial denigration.

Taking into account factors including the high reputation of the plaintiff’s trademarks, large‑scale infringement by defendants, the fact that defendants continued infringing even after administrative penalties were imposed, plus reasonable enforcement costs incurred by the plaintiff, the court ordered defendants to cease infringement. The Guangdong‑based company and the Dongguan business department were ordered to pay RMB 6 million in damages; the Guangzhou‑based company was ordered to pay RMB 500,000. The Shandong Higher People’s Court upheld the judgment on appeal.

Judge’s Interpretation: Infringement May Occur Even Without Directly Printing Counterfeit Marks

This is a new‑type dispute over trademark infringement and unfair competition arising in the course of industrial transformation. Although the respondents did not print counterfeit trademarks onto self‑manufactured goods, they modified genuine trademark‑bearing products before resale or operation, coupled with unfair‑competition conduct. Such conduct impairs the normal functions of the plaintiff’s trademarks. It qualifies neither as fair use nor as an application of the trademark‑exhaustion doctrine, and prejudices the lawful interests of the trademark‑right holder and its competitive advantages. This ruling provides timely judicial remedies for right‑holders and demonstrates the positive role of judicial protection in safeguarding new business forms and advancing industrial transformation and upgrading.

Compliance Tips: Product Modification Is Not Mere “Adjustment”; Adding Labels Is Never a Trivial Step

For business operators, fairness and good faith constitute the bottom line. It is improper to free‑ride on others’ goodwill and seize commercial gains by modifying third‑party products, arbitrarily adding or replacing trademark labels, making false statements or engaging in commercial denigration. Changes to product intended use, label replacement and channel placement may each trigger dual risks of trademark infringement and unfair competition. Such behaviour cannot be downplayed as “just minor tweaks” or “merely reselling goods”.

For consumers, modified products carry hidden quality‑and‑safety risks. Avoid purchasing modified products from informal channels; verify product labels and sources and obtain products and services through official channels. Trademark protection safeguards not only brand‑owners’ goodwill but also consumers’ basic right to know “who made the goods and who handled them”.