I. Case Background and Core Dispute

In September 2023, JD Auto Service launched a marketing campaign centered around the slogan “Zhenhu Price”, claiming to offer prices “5% lower than competitors,” promoted across WeChat, Douyin, its app, and other channels. Shanghai Lantu Information Technology Co., Ltd. (parent company of Tuhu Auto Service) argued that the campaign amounted to commercial disparagement and false advertising.

In January 2024, Tuhu formally filed a lawsuit. On July 21, 2025, after both first and second instance hearings, the Shanghai Intellectual Property Court ruled in favor of Tuhu: JD Auto Service was found liable for unfair competition, ordered to cease infringement, pay RMB 5 million in damages, and publish corrective statements.

The central issue was whether JD Auto Service’s “Zhenhu Price” campaign violated the Anti-Unfair Competition Law of the People’s Republic of China (hereinafter “AUCL”), and how its illegality should be determined.

II. Legal Basis and Element Analysis

(1) False Advertising (AUCL, Article 8)

·         Subjective Element: JD Auto Service, as a business operator, had the motive to promote its services. It knew or should have known that claiming “5% lower than competitors” could mislead consumers. Although the term “competitors” was not specified, the “Zhenhu” wording clearly targeted Tuhu, showing deliberate intent.

·         Objective Element: The promotional content was inconsistent with facts. Evidence showed some JD products did not meet the “5% lower” promise, nor did JD provide prominent “refund if higher” disclaimers. For instance, in promotional videos on JD Auto’s official channel, consumers could not verify the price benchmark (specific products, time frames), leaving the impression that “JD is always cheaper.”

·         Causation and Damage: The misleading claims diverted potential customers away from Tuhu. Based on sales data, consumer feedback, and expert reports, the court found JD’s false advertising distorted consumer decision-making and harmed Tuhu’s market interests.

(2) Commercial Disparagement (AUCL, Article 11)

·         Subjective Element: The phrase “Zhenhu Price” (phonetically implying “shocking Tuhu’s price”) showed clear intent to target Tuhu. The court cited wordplay, overlapping market positioning, and the timing of JD’s campaign launch (coinciding with Tuhu’s IPO date) as evidence of malicious intent.

·         Objective Element: JD disseminated content with strong misleading effects. Marketing materials included imagery such as “tiger claws crushed” and anthropomorphic tiger figures being suppressed—suggesting Tuhu’s brand being undermined. The court dismissed JD’s defense that it was “just a name,” ruling such usage within the competitive context amounted to disparagement.

·         Causation and Damage: The disparagement harmed Tuhu’s brand reputation. Evidence from media reports and consumer surveys showed JD benefited (traffic gains) while Tuhu bore reputational repair costs, thus establishing damage.

(3) Application of the General Clause (AUCL, Article 2)

The court further held that JD’s actions not only violated specific provisions but also the fundamental principles of voluntariness, equality, fairness, and good faith in market transactions. Its conduct—false pricing promises combined with disparaging publicity—disrupted the order of competition in the auto service market.

III. Judgment and Enforcement

(1) First instance judgment

1.    Cease Infringement: JD must stop using “Zhenhu Price” and remove all related online/offline materials. JD had already taken down the campaign prior to judgment.

2.    Damages: JD was ordered to pay RMB 5 million in compensation. The amount reflected Tuhu’s actual losses, JD’s illegal gains, and punitive considerations under AUCL Article 17.

3.    Corrective Statements: JD must issue statements for 10 consecutive days across its official accounts (WeChat, Douyin, Weibo, app). However, Tuhu argued JD’s statements did not fully admit wrongdoing, potentially leading to enforcement disputes.

JD filed an appeal against the first instance judgment. But the second instance court rejected JD's claims and maintained the first instance judgment.

(2) Enforcement

·         Content of Statements: JD’s public notices must strike a balance between legal compliance and avoiding further harm. Statements that downplay or obscure the illegality may be deemed non-compliant.

·         Compensation Level: Though RMB 5 million is relatively high, the court likely considered JD’s scale, the duration of infringement, and its market impact—aligning with the trend of punitive damages.

IV. Insights and Industry Implications

(1) Compliance Lessons for Businesses

1.    Boundaries of Marketing: Companies should avoid aggressive or misleading claims. Even substituting characters (e.g., JD’s later “Zhengu Price”) carries risks if still suggestive of rivals. Promotional content must be factual, verifiable, and specify clear benchmarks.

2.    Brand Naming Risks: Event names or slogans that evoke competitor brands may constitute indirect unfair competition. Although “Zhenhu Price” did not infringe Tuhu’s trademark, it indirectly harmed its interests.

3.    Price Comparison Advertising: Such ads must specify the target, benchmarks, and conditions. For example, a valid claim would need clear scope (e.g., “selected products”) and timeframe to avoid misleading consumers.

(2) Broader Industry Impact

1.    Shift in Competition Dynamics: The ruling encourages the auto service market to move from price wars to value-based competition. JD responded with initiatives like “RMB 5 billion service subsidies” and “365 worry-free purchase” to rebuild trust; Tuhu focused on brand protection and self-regulation.

2.    Judicial Deterrence: The RMB 5 million award reflects stronger deterrence by specialized IP courts. This case may trigger more disputes and encourage businesses to strengthen compliance and IP strategies.

3.    Digital Marketing Challenges: Given the speed and reach of social media, businesses must adopt a three-tier review system (truthfulness, legality, prominence) for advertising content to avoid liability.

(3) Judicial Significance

1.    Clarifying Price Comparison Standards: The court set a precedent that price claims must be specific, benchmarks verifiable, and content truthful.

2.    Strengthening Brand Protection: Indirect exploitation of competitor elements (e.g., puns, imagery) may be recognized as unfair competition if targeting and harm are evident.

3.    Promoting Rule of Law in Industry: The judgment compels firms to rethink competition strategies, focusing on innovation (e.g., Tuhu’s digital platforms) and service quality rather than undercutting rivals through disparagement.

V. Conclusion

The “Zhenhu Price” case stands as a landmark in China’s anti-unfair competition practice. The ruling safeguarded fair competition and offered clear compliance guidance for enterprises.

In today’s digital marketing era, businesses must balance innovation with compliance, creating genuine value through technology and services rather than resorting to misleading claims or disparagement. Only by adhering to these principles can industries achieve sustainable growth while safeguarding consumer rights.

This case also reflects China’s increasingly internationalized IP protection regime, offering valuable lessons for global markets.