Business Question 

“120W” fast charger that delivers a fraction of its rated power; noodles labeled “hand-pulled” that are, in fact, machine-made — this kind of wordplay has not been uncommon in recent years, and is the origin of the public discussion around so-called “misleading trademarks” that leverage wording or presentation to distort consumer perception.

For genuinely honest businesses, this is not just a consumer-protection issue — it bears directly on the fairness of the competitive landscape: when some operators gain an unfair market advantage through misleading trademark use, companies that compete honestly end up at a disadvantage. The central judgment we want to discuss in this installment is this: the focus of regulation is shifting from whether a mark can be registered to how that mark is actually being used — and what that shift means both for how companies use their own trademarks, and for how they assess whether a competitor's conduct amounts to unfair competition.

  Legal Update 

The provisions most directly relevant to regulating misleading trademark use fall into two categories — the filing stage and the use stage — which together form a complete chain of regulation.

At the filing stage, Article 54 provides that where an applicant for trademark registration commits any of several types of malicious filing — applying for a sign while knowing it violates Article 15 or the first paragraph of Article 16, filing in violation of Article 19, or intentionally filing in violation of Articles 21, 22, or 24 — and this causes an adverse effect, the department responsible for trademark law enforcement shall issue a warning and may, in addition, impose a fine of up to RMB 100,000.

At the use stage, Article 56 provides that where a registered trademark is used in a manner that misleads the public, the department responsible for trademark law enforcement shall order rectification within a prescribed time limit; where the amount of illegal turnover is RMB 50,000 or more, a fine of up to five times the amount of illegal turnover may be imposed; where there is no illegal turnover or it is less than RMB 50,000, a fine of up to RMB 250,000 may be imposed; and where the violator fails to rectify within the time limit, the trademark administration department under the State Council shall cancel the registered trademark.

Article 54 addresses marks that should never have been registered in the first place; Article 56 addresses marks whose registration was not itself the problem, but whose manner of use is. Together, the two provisions form a complete regulatory loop spanning filing through use. Article 64 carries forward the existing prohibition on misusing the term “well-known trademark”: producers and traders may not use the words “well-known trademark” on goods or in advertising and other commercial activities, and a violation is subject to a rectification order and a fine of up to RMB 100,000.

This set of rules did not emerge out of nowhere. According to facts publicly disclosed at a State Council Information Office press conference held on April 23, 2026, the China National Intellectual Property Administration has, since 2023, rejected a cumulative total of 1.273 million trademark applications found likely to mislead consumers, and has declared 3,351 already-registered marks invalid on its own initiative for involving serious misleading use. In other words, the new Articles 54 and 56 essentially elevate an enforcement approach that had gradually taken shape in administrative practice over the past several years into formal statutory provisions.

  Practical Analysis 

The division of Articles 54 and 56 between the filing and use stages reflects, in our view, a judgment by the legislature: scrutiny at the filing stage alone is not enough to stamp out misleading use.

A trademark can be entirely compliant at the filing stage — distinctive, lawful, free of any defect — and a company can still, at the stage of actual use, create a misleading impression of a product's quality, origin, or function through the wording of its marketing copy or the design of its packaging. That kind of misleading impression is not a problem with the trademark itself, but with how the trademark is used. Had the law only erected defenses at the filing stage, this category of misleading conduct at the use stage would have remained a regulatory blind spot.

A number of recent, publicly reported cases illustrate what this problem actually looks like in practice. Looking at the publicly disclosed cases, the misleading representations tend to fall into four categories: first, misrepresentation of manufacturing process, such as “hand-pulled” or “hand-made” labels that do not match an actual mechanized production process; second, misrepresentation of quantity or specification, such as a “majority-filled bag” product naming convention that misleads consumers about the actual amount of product inside; third, misrepresentation of ingredient composition, commonly seen in meat and dairy product descriptions — for example, a mark using the word “formula” was rejected at the filing stage for being likely to mislead consumers about the product's ingredients; and fourth, misrepresentation of origin, breed, or quality, such as labels claiming free-range or native breeds. These four categories span both rejection at the filing stage and invalidation after registration, mapping neatly onto the two different stages regulated by Articles 54 and 56 respectively.

Read together with these provisions, what the new Law signals is not simply that both filing and use will now be policed in parallel, but something more fundamental: the center of gravity for trademark compliance is shifting from whether a sign can be registered to how that mark is actually being used in the market. In the past, many companies assumed that once a trademark was successfully registered, decisions about how to market it and how to combine wording on packaging belonged squarely to the marketing and brand teams, with little bearing on trademark compliance. Under the new Law, even a trademark that was registered entirely lawfully can, on its own, become the subject of an administrative penalty based purely on how it is used — a shift in mindset companies need to internalize.

  Practical Impact 

The practical significance of this shift for companies is not simply an added burden of self-scrutiny — more importantly, the toolkit available for brand protection has, as a result, grown richer as well, and the three available paths are each suited to a different kind of problem: an administrative complaint is best suited to addressing the misleading use itself and the public-interest and market-order concerns it raises; trademark invalidation is best suited to addressing a registered mark that is itself deceptive or misleading; and an unfair competition action is best suited to addressing the competitive harm and any specific damages claim arising from it.

In the past, a company that discovered a competitor engaging in exaggerated marketing or misleading trademark use had little choice but to pursue an unfair competition action — a comparatively costly and slow-moving option. Article 56, read together with the complaint and reporting rights under Article 70 — under which any entity or individual may lodge a complaint or report with the department responsible for trademark administration or enforcement regarding misleading use of a registered trademark — means an administrative complaint is becoming an avenue of relief independent of civil litigation, one that can be initiated faster and at lower cost. For a brand owner, this type of case need not be framed from the outset as a damages-driven lawsuit; in some instances, clearing the misleading use through an administrative procedure first better serves the company's actual commercial objective — particularly where the company's core goal is to stop market confusion and misleading conduct quickly, rather than to pursue a specific monetary recovery.

At the same time, the extension of regulatory focus into the use stage also means, as a practical matter, that a company's own marketing language, packaging copy, and product specification claims will face closer scrutiny than before. This is not a problem that requires a company to tear down its existing process and start over — more precisely, it means that gray areas previously treated as ordinary “marketing language” now carry an added layer of exposure to direct administrative review.

  GreRoyalt Observation 

In handling matters that sit at the intersection of trademark and unfair competition law, we have noticed that companies assessing whether a competitor's marketing conduct is unlawful tend, by habit, to think only in terms of trademark infringement or unfair competition — and often overlook that the administrative penalty system itself already provides a fairly direct path for regulating this kind of conduct. The publicly disclosed cases cited in this installment make that point well: the China National Intellectual Property Administration is already resolving a substantial volume of disputes that might otherwise have proceeded as civil litigation, through proactive investigation and invalidation on its own initiative.

We have also increasingly observed, in our own matters, that the same set of facts often implicates trademark law, unfair competition law, and administrative regulation all at once — and what companies genuinely tend to overlook is not the evidence itself, but the choice of path. Many cases are not actually short on evidence; rather, which path the existing evidence is best suited to support often goes unevaluated at the outset, leading companies to default into whichever path happens to come to mind first, rather than the one that is actually optimal.

  Points to Consider 

?  For trademarks or packaging content that include claims about process, ingredients, function, origin, or quantity, is there a risk that these claims do not match the actual product and could be found misleading?

?  Upon discovering a competitor engaging in similar misleading use, has the company evaluated all three available paths — administrative complaint, invalidation, and unfair competition litigation — rather than defaulting to civil litigation alone?

?  For a given set of facts involving suspected misleading conduct, has the company systematically compared how the available paths differ in stopping the misleading conduct, clearing a registration obstacle, securing damages, or creating market deterrence — rather than choosing one on instinct?

In the next installment: “Brand Protection Is No Longer Just About Filing: How the New Trademark Law Reshapes the Value of Professional Agency Services” — examining the comprehensive overhaul of trademark agency oversight, and the new responsibilities companies bear in selecting and managing their trademark agencies.

This article is provided for general informational purposes only and does not constitute legal advice for any specific matter. Please consult qualified counsel regarding your particular circumstances.