In the luxury sector, the growing spread of circular economy models and upcycling practices raises complex questions regarding the relationship between sustainability and trademark protection. The reuse of second-hand products responds to an increasingly environmentally conscious demand; however, where reworked goods continue to display the original distinctive signs, the issue arises as to whether such activities fall within the scope of the exhaustion doctrine or instead constitute trademark use capable of affecting the functions of the mark.<\/p>\n\n\n\n
A recent decision by the Chinese courts in Louis Vuitton Malletier v. Shenzhen Bangtu Cultural Media Co., Ltd.<\/em> directly addresses this issue, offering a detailed analysis of the limits of trademark exhaustion and the protection of trademark functions.<\/p>\n\n\n\n The dispute was first heard by the Hangzhou Intermediate People\u2019s Court (Civil Judgment No. 1248\/2023) and subsequently upheld on appeal by the Zhejiang High People\u2019s Court, issued on 11 November 2025.<\/p>\n\n\n\n The business model at issue was based on the purchase of authentic second-hand luxury handbags, their dismantling, and their subsequent reassembly into new products marketed online through official accounts and stores across various e-commerce platforms. The defendant, Shenzhen Bangtu, also operating under the brand \u201cShapeshift,\u201d claimed to draw inspiration from principles of reuse and environmental sustainability. The bags were disinfected, disassembled, cut, and reconstructed into new designs, sometimes echoing the original models of the maison. The final products were marketed as \u201cremade\u201d or \u201crecycled second-hand luxury bags,\u201d emphasizing the reuse of materials sourced from pre-owned luxury handbags.<\/p>\n\n\n\n The core issue did not concern recycling per se, but rather the manner in which the reassembled goods were presented and commercialized. The most visible parts prominently displayed Louis Vuitton\u2019s monogram signs registered for goods in Class 18. Although the defendant had registered the \u201cShapeshift\u201d mark, it was affixed only to secondary elements and was barely perceptible from the outside. The overall impression of the product was therefore strongly associated with the Louis Vuitton trademark.<\/p>\n\n\n\n Bangtu argued that the use of the signs was merely decorative and did not constitute trademark use, as the Louis Vuitton mark covered only a limited portion of the reconstructed bags. It further invoked the exhaustion doctrine, asserting that the materials originated from authentic bags lawfully placed on the market with the trademark owner\u2019s consent, and relied on the environmental objectives of the circular economy.<\/p>\n\n\n\n The courts rejected these arguments, structuring their reasoning along three principal lines: qualification of the conduct as trademark use, assessment of likelihood of confusion, and delimitation of the scope of the exhaustion doctrine.<\/p>\n\n\n\n With respect to trademark use, the courts referred to Article 48 of the Chinese Trademark Law, which defines use as including the affixing of a mark to goods and its use in commercial activities for the purpose of identifying their origin. The prominent and repeated display of the Louis Vuitton signs on the exterior of the bags was deemed capable of performing a distinctive function, irrespective of the surface area occupied. Even assuming the materials were authentic \u2014 a circumstance that could no longer be verified with certainty after dismantling \u2014 the unauthorized use of the signs constituted trademark use within the meaning of the law.<\/p>\n\n\n\n As to likelihood of confusion, the Court adopted an expansive approach, emphasizing that the assessment cannot be limited to the moment of purchase. It endorsed reasoning akin to post-sale confusion: the risk may arise when the product is used in public. The reconstructed bags circulated with the Louis Vuitton monogram clearly visible, while the defendant\u2019s own mark remained marginal. Third parties could therefore attribute the origin of the product to the maison or assume the existence of an economic link. Marketing the items as \u201crecycled from second-hand luxury bags\u201d was also considered capable of taking unfair advantage of the reputation and goodwill associated with the claimant\u2019s mark.<\/p>\n\n\n\n The core of the decision lies in its analysis of exhaustion. The courts reaffirmed that the exhaustion doctrine permits the free circulation of authentic goods placed on the market with the rights holder\u2019s consent, but does not legitimize the substantial transformation of those goods into new products that continue to bear the original trademark. In this case, dismantling and reconstruction had altered the form, structure, and overall appearance of the handbags. The outcome constituted a new product distinct from the original, albeit incorporating parts of it. Exhaustion applies to the product as placed on the market, not to a different entity that reuses components while retaining the distinctive signs.<\/p>\n\n\n\n The reasoning also addresses the reputational dimension of the mark. Affixing Louis Vuitton\u2019s signs to products neither manufactured nor subject to the maison\u2019s quality control exposes the trademark owner to a concrete risk of reputational harm. In the luxury sector, a trademark embodies a promise of quality and stylistic consistency, as well as control over production processes. Association with independently reassembled products may alter that perception.<\/p>\n\n\n\n Finally, the Court stressed that the promotion of resource reuse must be balanced against the effective protection of intellectual property rights. Compliant upcycling practices would require the removal or covering of the original logos and the clear identification of the new producer.<\/p>\n\n\n\n The Court ordered the defendant to cease the sale of the infringing products, destroy remaining inventory, publish a corrective statement, and pay damages of RMB 1.05 million (approximately USD 145,000). The decision is final.<\/p>\n\n\n\n The ruling fits within a broader international context in which luxury brands are increasingly challenging unauthorized customization and upcycling practices. The message from the Chinese courts is clear: circular economy objectives cannot come at the expense of trademark protection. The boundary between legitimate reuse and infringement is assessed on the basis of the concrete impact on trademark functions and consumer expectations, rather than on the operator\u2019s stated environmental purposes.<\/p>\n","protected":false},"excerpt":{"rendered":" In the luxury sector, the growing spread of circular economy models and upcycling practices raises complex questions regarding the relationship between sustainability and trademark protection. The reuse of second-hand products responds to an increasingly environmentally conscious demand; however, where reworked goods continue to display the original distinctive signs, the issue arises as to whether such […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[169],"tags":[210,223,208,222],"class_list":["post-1748","post","type-post","status-publish","format-standard","hentry","category-trademarks","tag-china","tag-luxury","tag-trademark","tag-upcycling"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.osservatorio-ip.it\/en\/wp-json\/wp\/v2\/posts\/1748","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.osservatorio-ip.it\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.osservatorio-ip.it\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.osservatorio-ip.it\/en\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.osservatorio-ip.it\/en\/wp-json\/wp\/v2\/comments?post=1748"}],"version-history":[{"count":1,"href":"https:\/\/www.osservatorio-ip.it\/en\/wp-json\/wp\/v2\/posts\/1748\/revisions"}],"predecessor-version":[{"id":1749,"href":"https:\/\/www.osservatorio-ip.it\/en\/wp-json\/wp\/v2\/posts\/1748\/revisions\/1749"}],"wp:attachment":[{"href":"https:\/\/www.osservatorio-ip.it\/en\/wp-json\/wp\/v2\/media?parent=1748"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.osservatorio-ip.it\/en\/wp-json\/wp\/v2\/categories?post=1748"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.osservatorio-ip.it\/en\/wp-json\/wp\/v2\/tags?post=1748"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}