Remedial Measures Against Unfair Competition Acts

2025-11-17

In today’s rapidly growing global economy, for businesses seeking to stand out in fierce market competition, intangible assets or intellectual property rights, such as innovative thinking, core technologies, and high-quality products and services, are indispensable factors for success. It is equally crucial to establish a sound market order and prevent disruptive behaviors such as engaging in opportunism, stealing others’ labor achievements, intangible assets, or intellectual property rights, or suppressing competitors and gaining unfair advantages through deceiving consumers.

In light of this, China is steadily enhancing its supervision and crackdown on various unfair competition practices in the market to foster a healthy and fair competitive economic environment. It also provides diversified remedies for market entities affected by infringement. These remedies primarily encompass administrative relief and judicial relief.

For example, in terms of administrative relief, the State Administration for Market Regulation has consistently pursued enforcement against online unfair competition over the past two years. A number of landmark cases have emerged in this special operation. For example, the Market Supervision Administration of Zhenjiang City, Jiangsu Province, imposed administrative penalties on a computer software company for crawling product information from a data source platform without permission and uploading it to a competitor’s platform using its own software; the Market Supervision Administration of Wuxing District, Huzhou City, Zhejiang Province, imposed administrative penalties on a network technology company for organizing employees to conduct false transactions and reviews for online stores through a click farming platform it had set up; the Market Supervision Administration of Liangjiang New Area, Chongqing, imposed administrative penalties on an e-commerce company for unauthorized use of an identifier in its software name which is highly similar to another’s software name with certain fame; etc.[1]

The aforementioned “unfair competition through network,” “assisting in false advertising,” and “confusion conducts” all constitute acts of unfair competition. As the regulatory authority for market entities, the Market Supervision Administration possesses the legal authority to combat and penalize unfair competition practices in the market in order to maintain the normal competition order.

In addition to administrative relief, market entities harmed by unfair competition can also resort to the courts to seek relief for their legitimate rights and interests. For example, the latest batch of guiding cases released by the Supreme People’s Court covers the identification of various types of unfair competition practices in multiple industries, both online and offline, as well as in new business forms such as artificial intelligence and live streaming. For example, a company registering a business name that is similar to the well-known trade name of another company in a closely related industry was found to have committed “commercial use” stipulated by the Anti-Unfair Competition Law; two employees of a company setting up other companies under pseudonyms to steal the employer’s trade secrets, infringe on computer software copyrights, and engage in competition in the same industry, etc., were found to have committed joint infringement and were held to be jointly and severally liable for compensation; a company using suggestive, directional, and disparaging slogans in its marketing activities, fabricating and spreading false information about a competitor, was found to have committed commercial defamation; etc[2].

I. Acts of Unfair Competition

1. Concept

According to China’s Anti-Unfair Competition Law, acts of unfair competition refer to conducts by business operators in production and business activities that violate relevant provisions of the Anti-Unfair Competition Law, disrupt market competition order, and harm the lawful rights and interests of other business operators or consumers.

2. Characteristics[3]

2.1 The subject of the act is a market operator

According to the aforementioned provisions, the perpetrator of unfair competition shall be a market operator. Specifically, this refers to natural persons, legal persons, and unincorporated organizations engaged in the production, operation, or provision of goods or services. This includes various corporate entities, public institutions engaged in profit-making activities, other economic organizations, individual citizens and partnerships participating in the competition in commercial and service industries. It should be noted that civil entities acting as consumers in the market do not fall under the definition of “operators” as stipulated by the Anti-Unfair Competition Law.

2.2 The target of infringement is other operators in the same industry or consumers

The targets harmed by unfair competition acts shall be market entities that may compete with the operator for business opportunities or undermine the operator’s competitive advantages in production and business activities, which typically manifest as other operators producing or operating similar goods or providing similar services, or consumers. Therefore, the subject matter infringed upon by unfair competition acts is the legitimate rights and interests of other operators in the same industry or consumers.

However, if an operator’s act harms the legitimate rights and interests of consumers but does not affect competitive order or competitive relationships, then the provisions of the Anti-Unfair Competition Law do not apply, and instead, the rights and interests of consumers should be protected in accordance with the provisions of the Consumer Protection Law.

2.3 The act has violated the provisions of the Anti-Unfair Competition Law

For an act to be determined as an act of unfair competition, it must have clearly violated specific provisions of the Anti-Unfair Competition Law, disrupted the market order, and obtained unfair competitive advantages. Conversely, if the act does not violate relevant provisions of the Anti-Unfair Competition Law but violates other laws, it generally will not be recognized as an act of unfair competition.

2.4 The act is harmful

Unfair competition acts can cause actual damages to the legitimate rights and interests of other operators or consumers. The damages include not only direct economic losses but also potential losses of business opportunities or damage to reputation, thereby disrupting the normal order of market competition.

Additionally, unfair competition acts may also lead to infringement. For example, where a party engages in unfair competition by printing false promotional materials or entering into contracts to print counterfeit trademarks of others, there is a risk of infringement even if the promotional materials have not yet been distributed, the contract has not yet been performed, or the trademark has not yet been printed.

3. Types of unfair competition acts

The current Anti-Unfair Competition Law of China explicitly stipulates the following nine types of unfair competition acts[4]:

3.1 Confusing Conducts

Under the Anti-Unfair Competition Law, business operators shall not commit or aid others in committing confusing conducts that mislead the consumers into believing that their goods are those of another person or that they have a specific connection with another person.

Confusion conducts typically refer to conducts in which a business operator, for the purpose of obtaining unfair benefits, improperly uses the identifier of another person with certain fame on its own goods or services, causing confusion between its goods or services and those of the other person.

Specific confusing conducts include: (1) unauthorized use of a mark that is identical or similar to the name, packaging or decoration of another person’s goods, which has certain fame; (2) unauthorized use of another person’s name (including its abbreviation, or trade name, etc.) or the name of an individual (including his or her pen name, stage name, online username, or translated name, etc.), which has certain fame; (3) unauthorized use of the main part of another person’s domain name, or the website name, webpage, new media account name, application name, or icon of another person, which has certain fame; (4) other confusing conduct that sufficiently misleads others into believing that their goods are those of another person or that they have a specific connection with another person; (5) unauthorized use of another person’s registered trademark or unregistered well-known trademark as a trade name, or setting another person's product name, enterprise name (including its abbreviation or trade name), registered trademark, or unregistered well-known trademark as a search keyword, thereby misleading others into believing that their goods are the goods of another person or that they have a specific connection with another person.

To determine confusion conducts, it is necessary to determine whether the object of confusion is a mark “with a certain degree of fame,” whether permission from others was obtained when using the relevant mark, and whether the accused conduct would lead the relevant public to mistakenly believe that the accused goods (or service) is the goods (or service) of others or that there is a specific connection between the accused party and others.

Specifically, there are three types of “marks”: trademarks, entity marks, and network marks. When determining whether a mark “has obtained a certain degree of fame,” two criteria should be met: (1) The mark should possess a certain level of market recognition. This requires a comprehensive assessment of factors such as the relevant public’s awareness within China at the time of the accused infringement, the duration, geographic scope, volume of the sales, and target consumer of the product; the duration, intensity, and geographic scope of promotion; and the extent of protection received by the mark; (2) The mark should possess distinctive features that can distinguish the source of goods or has acquired such distinctive features through use. “Specific connection” mainly refers to relationships such as commercial alliances, licensing agreements, commercial naming rights, or advertising endorsements with others.

3.2 Commercial Bribery

Under the Anti-Unfair Competition Law, business operators shall not use property or other means to bribe relevant parties involved in transactions in order to obtain transaction opportunities or competitive advantages.

The relevant parties involved in transactions include (1) any personnel of the transaction counterparty; (2) any entity or individual entrusted by the transaction counterparty to handle relevant affairs; and (3) any entity or individual who uses its/his/her powers or influence to affect the transaction.

In addition, the law adopts the principle of presumed fault in determining whether commercial bribery committed by a staff member of a business operator constitutes an unfair competition act. That is, bribery by a business operator’s staff member is generally deemed the business operator’s act. However, if the business operator can prove that the staff member’s act is unrelated to the business operator’s pursuit of transaction opportunities or competitive advantages, then it does not constitute unfair competition through commercial bribery.

3.3 False or Misleading Commercial Advertising

Under the Anti-Unfair Competition Law, business operators shall not make false or misleading commercial advertising about their goods, nor shall they aid other business operators in making false or misleading commercial promotions through means such as organizing fake transactions or false reviews.

This type of unfair competition act mainly falls into two categories: (1) business operators making false or misleading commercial advertising about the performance, functionality, quality, sales status, consumer reviews, or honors received by their products, thereby deceiving or misleading consumers; (2) business operators aiding other operators in making false or misleading commercial advertising through means such as organizing fake transactions or false reviews.

“False commercial advertising” refers to the act of business operators providing untrue information about products during commercial advertising, thereby deceiving or misleading the relevant public. The determination of “misleading” is made based on a comprehensive assessment of factors including daily life experience, the ordinary level of attention exercised by the relevant public, the actual occurrence of misunderstanding, and the actual circumstances of the advertised subject.

3.4 Infringement of Trade Secrets

Under the Anti-Unfair Competition Law, business operators shall not engage in acts that infringe upon trade secrets.

Prohibited acts of trade secret infringement include: (1)obtaining a trade secret of a rights holder by theft, bribery, fraud, coercion, electronic intrusion, or other unfair means; (2) disclosing, using, or allowing others to use a rights holder’s trade secret obtained by the aforementioned means; (3) disclosing, using, or allowing others to use a trade secret in their possession, in violation of confidentiality obligations or the rights holder's requirements for maintaining the confidentiality of the trade secret; (4) instigating, tempting, or assisting others in violating confidentiality obligations or the rights holder’s requirements for maintaining the confidentiality of a trade secret, thereby obtaining, disclosing, using, or allowing others to use the rights holder’s trade secret.

Trade secrets refer to technical information, operational information and other commercial information that is not known to the public, possesses commercial value, and has been subject to confidentiality measures taken by the rights holder. Thus, trade secrets comprise three essential elements: (1) confidentiality, meaning that the commercial information is not generally known or readily accessible to persons within the relevant field; (2) value, meaning that the commercial information can generate economic benefits or competitive advantages for the infringer or the rights holder through its current or future use; (3) confidentiality measures, meaning that the rights holder has implemented reasonable protective measures that are commensurate with the commercial value and specific circumstances of the commercial information.[5]

According to the regulations, entities that infringe trade secrets include not only business operators but also other natural persons, legal persons, and unincorporated organizations. Moreover, if a third party knows or should have known that an employee or a former employee of the rights holder of a trade secret, or any other entity or individual, has committed an act of trade secret infringement, but still obtains, discloses, uses, or permits others to use such trade secret, it shall be deemed as an infringement of trade secrets.

3.5 Unfair Prize Sales

Under the Anti-Unfair Competition Law, business operators shall not engage in unfair prize sales activities.

Unfair prize sales activities refer to: (1) defining unclear types of prizes, redemption conditions, amounts of prize money, prizes in kind, or other information regarding prize sales, thereby affecting prize redemption; (2) changing, after the commencement of a prize sales activity, the types of prizes, redemption conditions, amounts of prize money, prizes in kind or other information regarding prize sales, without justifiable reasons; (3) conducting prize sales through deceptive means, such as falsely claiming prizes or deliberately allowing pre-selected individuals to win prizes; (4) conducting prize sales through prize draws, where the highest prize money exceeds CNY 50,000.

3.6 Commercial Defamation

Under the Anti-Unfair Competition Law, business operators shall not engage in commercial defamation.

Commercial defamation refers to the act of business operators fabricating, disseminating, or inducing others to fabricate and disseminate false or misleading information, thereby damaging the commercial good will or product reputation of other business operators.

Commercial defamation must be directed at specific other business operators. That is, where a party alleges that a business operator has committed commercial defamation in violation of the Unfair Competition Law, it bears the burden of proving that it is the specific target of such defamatory act.

Additionally, when false information consists of a positive fact fabricated by the defendant, the court typically shifts the burden of proof to the defendant. For example, if the defendant alleges that the plaintiff committed an illegal act during product sales, it is inappropriate to require the plaintiff to prove the absence of such act. Instead, the defendant should prove that the plaintiff engaged in an illegal act during product sales. Otherwise, the defendant shall bear the adverse consequences of failing to meet the burden of proof.

3.7 Online Unfair Competition

Under the Anti-Unfair Competition Law, business operators utilizing the internet in production and business activities shall not engage in unfair competition through the use of data, algorithms, technologies, platform rules, or other means.

Specifically, business operators shall not engage in the following acts that impede or disrupt the normal operation of network products or services legally provided by other business operators by affecting user choices or other means: (1) without authorization, inserting a link into or forcing redirects from a network product or service legally provided by another business operator; (2) misleading, deceiving, or forcing users to modify, close, or uninstall a network product or service legally provided by another business operator; (3) implementing in bad faith incompatibility with a network product or service legally provided by another business operator; (4) obtaining or using data legally held by another business operator by fraud, coercion, circumvention, destruction of technical management measures, or other unfair means; (5) abusing platform rules to directly conduct or instruct others to conduct fraudulent transactions, false reviews, or malicious returns against another business operator; (6) any other act that impedes or disrupts the normal operation of a network product or service legally provided by another business operator.

Additionally, the Interim Provisions on Anti-Unfair Competition in the Internet Sector, effective on September 1, 2024, explicitly defines new manifestations of traditional unfair competition acts such as confusing acts and false advertising in the online environment. For example, fabricating business-related data such as transaction amounts, sales volumes, or reservation figures; employing deceptive marketing tactics like falsely claiming stock availability, fabricating reservations, or staging fake sell-outs; inducing users to give specified positive reviews, likes, or targeted votes through cashback, red envelopes, coupons, or other means. The Provisions further details the specific manifestations of conduct by business operators that obstruct or disrupt the normal operation of network products or services lawfully provided by other business operators. For example, deliberately engaging in large-scale, high-frequency transactions with other business operators within a short period, or giving positive reviews, resulting in other business operators being subject to penalties such as search ranking demotion, credit downgrade, product delisting, link disconnection, or service termination; or maliciously purchasing goods in bulk without payment, returning goods, or refusing delivery.

3.8 Unfair Competition by Platform Operators

Under the Anti-Unfair Competition Law, platform operators shall not compel or indirectly compel business operators on their platforms to sell goods at prices below cost in accordance with their pricing rules, thereby disrupting market competition order.

Additionally, the aforementioned Interim Provisions on Anti-Unfair Competition in the Internet Sector also enumerates conducts where platform operators unreasonably set deposit deductions, cut subsidies, discounts, and traffic resources through service agreements, trading rules, and other means.

3.9 Abuse of Dominant Position by Large Enterprises

Under the Anti-Unfair Competition Law, large enterprises shall not abuse their dominant position in terms of capital, technology, trading channels, or industry influence to impose manifestly unreasonable transaction terms, such as payment periods, methods, conditions, and liability for breach of contract, upon small and medium-sized enterprises (SMEs), nor shall they delay payment for goods, projects, services, or other accounts owed to SMEs.

II. Remedies for Unfair Competition

When market entities encounter infringement of their rights and interests through unfair competition acts in the course of market transactions, they may pursue remedies and solutions through the following means.

1. Private remedies such as negotiation, mediation, and sending lawyer’s letters

In the ever-changing business world, cooperation and competition among enterprises are inseparable. When an enterprise is harmed by unfair competition, pursuing administrative or judicial remedies often proves time-consuming and costly. Moreover, public trials may potentially bring negative impacts to the reputation and image of the enterprise. In today’s fast-paced economic environment, business information evolves rapidly. Therefore, reaching mutually satisfactory resolutions through private negotiations or third-party mediation can help achieve a win-win outcome.

Alternatively, before pursuing public remedies, enterprises can also send lawyer’s letters to warn against the violators and demand voluntary cessation of unfair competition and elimination of adverse effects.

2. Administrative remedies such as administrative reporting and investigation

Pursuant to the Anti-Unfair Competition Law, departments of people’s governments at or above the county level that perform industrial and commercial administrative management duties (i.e., market supervision and administration bureaus at or above the county level) may, in accordance with the law, order business operators to cease illegal acts, impose administrative penalties such as confiscation of illegal gains, fines, and revocation of business licenses for various unfair competition acts committed during transactions.

As seen in the administrative penalty decision No. Jing Feng Shi Jian Chu Fa [2023] 195 published by the State Administration for Market Regulation, the Fengtai District Market Supervision Administration Bureau of Beijing Municipality, acting upon a report filed by Huawei Device Co., Ltd., investigated Information Port (Beijing) Technology Co., Ltd. for using the “Huawei Mall” product webpage and selling Huawei mobile phones on the Pinduoduo e-commerce platform without permission from Huawei Device Co., Ltd. The bureau determined that the act of Information Port (Beijing) Technology Co., Ltd. constituted a confusing conduct (i.e., unauthorized use of the main part of another person’s domain name, or the website name, webpage, etc., which has certain fame). Pursuant to Article 18(i) of the Anti-Unfair Competition Law, the bureau made an administrative penalty decision ordering Information Port (Beijing) Technology Co., Ltd. to make corrections and imposing a fine.[6]

Therefore, when a business operator’s legitimate rights and interests are infringed upon by unfair competition acts, it can also promptly report such violations to the regulatory authorities and seek administrative intervention to crack down on market-disrupting activities, so that state organs can strengthen market oversight and purify the business environment.

3. Judicial remedies such as civil litigation and criminal proceedings

In a society governed by the rule of law, judicial relief is the last line of defense for the protection of rights. Under the Anti-Unfair Competition Law, business operators whose legitimate rights and interests are harmed by unfair competition may file lawsuits to the people’s courts.

For example, Zhejiang Supor Co., Ltd. (“Supor”) filed a lawsuit against Zhejiang Bach Kitchenware Co., Ltd. (“Bach”) for its acts including hosting Weibo topic discussions and holding press conferences on multiple media platforms to explicitly or implicitly suggest that Supor had infringed its patents. After reviewing the case, the Zhejiang High People’s Court determined that Bach had committed commercial defamation by publicizing and disseminating an undetermined state as if it were a determined fact, which had exceeded the scope of legitimate enforcement action and had damaged Supor’s business reputation. The court ultimately upheld the first-instance court’s judgment, ordering Bach to cease the infringement, eliminate the impact, and compensate for the losses.[7]

This case demonstrates the use of civil litigation as a remedy. If the counterparty’s act has constituted a criminal offense, relevant parties may also report it to the public security bureau or the procuratorate to seek criminal sanctions through the courts. For example, in the case of trade secret infringement committed by Zhejiang Zhaomou Co., Ltd., Fang Moujun and five others, the aggrieved company was a leading manufacturer in a specific product industry. The relevant technology underwent years of research and development breakthroughs, bearing significant implications for the company’s vital interests and long-term development. The procuratorate adhered to a comprehensive, chain-wide crackdown on the crime of trade secret infringement, and all parties involved, from the masterminds behind the scenes to those who induced and liaised with others, as well as the technical personnel who stole and leaked the trade secrets, were subject to legal sanctions.[8]

Therefore, if a business operator suffers losses due to another person’s unfair competition acts, it may bring the dispute to court. The court will conduct a neutral trial, ascertain the truth, determine the facts, and apply the law to ultimately render a reasonable and just judgment, thereby safeguarding the legitimate rights and interests of the aggrieved party.

4. Commonly used remedy for online unfair competition — seeking preliminary injunction / behavior preservation

Under the “Internet Plus” economic development model, traffic, value-added services, and advertising are important sources of revenue for businesses operating on internet platforms. However, some unscrupulous entities exploit network technologies to hijack others’ traffic and seize other’s market share for their own commercial gain, thereby depriving others of their rightful market opportunities. To prevent further loss of traffic, aggrieved parties may apply for a temporary injunction to safeguard their rights by providing relevant evidence.

For example, Tencent Technology (Shenzhen) Co., Ltd. (“Tencent”) filed a lawsuit against Wuhan Junnet Internet Technology Co., Ltd. (“Wuhan Junnet”) for using technical means to compete for WeChat users’ attention, thereby increasing its own market transaction opportunities and obtaining a competitive advantage in the market. Tencent also applied to the court for a temporary injunction requesting the court to take behavior preservation measures to avoid further damage. After reviewing the case, the court ultimately determined that Wuhan Junnet’s actions violated the principles of good faith and generally accepted business ethics, and thus constituted unfair competition. The court further ruled that implementing preservation measures would not harm the public interest. Given that Tencent had provided sufficient security, the court issued a temporary injunction against Wuhan Junnet, prohibiting the company form promoting, marketing, and selling its Xiake Group Control Intelligent Marketing System, which is a group control system used to send large volumes of marketing spam messages on the WeChat platform.[9]

III. Prevention and Countermeasures Against Unfair Competition

Business entities participating in market operations should not only innovate in science and technology but also proactively implement protective measures to prevent unfair competition. These include safeguarding trade secrets, protecting technical know-how, and utilizing the patent system effectively to protect technological innovations, thereby avoiding the loss of core competitiveness. While improving the quality of products and services, business operators should also know how to build their own unique brands. Intangible assets such as trademarks, copyrights, and business names should be promptly registered and used in compliance with regulations, establishing a one-to-one correspondence between products/services and their respective brands. In the era of internet economy, in addition to fully utilizing the convenience brought by digital resources, business operators should also oversee the secure operation of their online platforms and strengthen defenses against external cyber threats.

Once potential unfair competition acts by others are detected, it is necessary for business operators to promptly collect and secure evidence, and actively protect their rights by flexibly using the aforementioned remedies. When private remedies prove to be insufficient to safeguard their legitimate rights and interests, business operators should actively seek public remedies through administrative complaints, litigation, and other channels, and take supplementary measures such as property preservation and behavior preservation to minimize their losses.

 

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