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The Hangzhou Intermediate People’s Court, in Case (2024) Zhe 01 Min Zhong 10520, has become the first court in China to rule that a virtual car in a video game constitutes “similar goods” to physical automobiles, reversing a first instance decision.

The appellate court found, in its landmark ruling on July 21, 2025, that Tencent Company’s use of a GEORGE PATTON car model in its popular Peace Elite game—authorized by Shanghai Qiaobataifeng Industry Co., Ltd. (Qiaobataifeng)—infringed the Class 12 registered trademarks of Xuanwo Vehicle Technology (Shanghai) Co., Ltd. (Xuanwo). The defendants were ordered to cease trademark infringement and related unfair competition acts, and to pay damages of RMB 1 million (approximately USD 138,000) to Xuanwo.

The court conducted a comprehensive analysis, noting that although virtual and physical cars differ in function, production sectors, sales channels, and consumer base, they share enough similarities to cause consumer confusion. The court’s reasoning hinged on several key factors as follows:

• Function and Intended Purpose: As      an in-game transport tool, it simulates real-world attributes (appearance,      interior design, and driving experience, for example), providing utility      analogous to physical vehicles and creating a conceptual overlap.

  
  

• Sales Channels and Target Consumers: While real cars are sold through dealerships and      automotive stores, and digital games target gamers, a certain potential      exists for consumer overlap. Gamers who interact with virtual GEORGE      PATTON cars in the game may develop brand awareness and experience,      influencing their future automotive purchasing decisions in the real      world.

  
  

• Public Perception and Association: Promotional      materials explicitly presented the GEORGE PATTON brand car as an off-road      vehicle brand alongside established car brands like MASERATI, ASTON      MARTIN, and TESLA. Confusion would be even more likely due to the      reinforced impression of an official collaboration or brand extension.

The court noted that the license agreement between Qiaobataifeng and Tencent covered detailed elements of the car, such as its name, logo, design, and even engine sounds. This approach may create a brand experience capable of capturing gamers’ attention and driving interest in the real world.

It concluded that the defendants’ promotional strategy deliberately exploited the mark’s identity, misleading consumers into believing that Xuanwo had authorized, supported, or collaborated in their use. This, the court held, was very likely to mislead consumers and severed the trademark’s connection to Xuanwo.

This ruling provides critical guidance for brand owners operating in digital environments. Although China is not a case law jurisdiction—which means that courts are not bound to follow prior decisions, even those issued by higher courts—the decision is likely to influence future cases involving virtual goods, prompting closer scrutiny of digital brand expansions and cross-industry license agreements.

On a separate note, virtual goods and services remain ineligible for trademark registration in China. While the verdict is groundbreaking, it could set an influential precedent for future criteria regarding the similarity between physical and virtual goods in the trademark registration process.