Pop Mart Sues 7-Eleven for Unauthorized Sales of Labubu Toys in the US: A Case Study on China's IP Protection Strategies
Unauthorized Sales of LABUBU Toys by 7-Eleven
By Kan Luo, Sina Finance
On July 18th, Pop Mart, a Chinese toy brand, filed a lawsuit against 7-Eleven Inc and its California-based convenience stores in the US District Court for alleged trademark infringement and unfair competition. The complaint alleges that 7-Eleven sold unauthorized versions of Labubu toys, which is a series of products owned by Pop Mart, without permission.
According to King & Wood's partner Wang Jun, an expert on US intellectual property law, the lawsuit covers both traditional trademark and copyright protection frameworks. The complaint focuses on "trade dress" (商业外观), a unique visual symbol that can be protected under US law. Trade dress refers to the overall visual identity of a product, including packaging, shape, color, display, and design. If the court finds that the trade dress is distinctive and non-functional, it can be protected similarly to trademarks.
"For example, when consumers see a big 'M' they think of McDonald's," Wang Jun said. "This is market-assigned secondary meaning." This provides a stronger legal weapon for protecting toys and creative products in cross-border copying risks.
The lawsuit also targets the retailers who sold the infringing products, as well as 7-Eleven's headquarters. Wang Jun noted that under US law, trademark infringement does not require subjective bad faith. If the headquarters knew or should have known about the infringement by its retail partners, it can be held liable for direct or contributory liability.
The complaint provides evidence, including receipts and photos, showing 7-Eleven's high level of knowledge about the infringing sales. Additionally, from the contractual structure between 7-Eleven and its retail partners, it is clear that 7-Eleven has significant operational control and oversight in areas such as procurement, inventory management, and sales systems. Therefore, if 7-Eleven knew or should have known about the infringement but did nothing to stop it, it cannot claim ignorance or lack of responsibility.
Furthermore, social media platforms have already seen numerous users publicly complaining about 7-Eleven's sales of counterfeit products. These factors all contribute to the direct and contributory liability standards.
(Video screenshot of a user returning a fake Labubu toy at 7-Eleven)
Wang Jun noted that the lawsuit's strategy is not only based on sufficient evidence but also complies with existing US legal precedents. For example, in the Hard Rock Cafe Licensing Corp. v. Concession Services, Inc. case, Hard Rock Cafe sued a music festival operator for selling counterfeit Hard Rock merchandise without proper management, which was deemed contributory liability.
Wang Jun further pointed out that aside from litigation, companies can use "soft" legal means such as sending cease-and-desist letters or filing complaints on platforms. However, the effectiveness of these methods depends on whether the other party cooperates and the brand's market influence.
According to Wang Xiaosi, a partner at King & Wood's Beijing office, Pop Mart has already achieved significant sales in the US market, with brand recognition and user loyalty both significantly enhanced. In this context, protecting its market share and pricing power is necessary to prevent counterfeiters from diluting its brand value through "channel chaos" and low-priced sales.
Wang Xiaosi said, "In the US legal environment, Pop Mart's decision to directly sue 7-Eleven in court not only strengthens its market presence in North America but also helps establish its reputation as a brand that dares to take on litigation and refuses to compromise."
(Comparison of original Labubu packaging and 7-Eleven's sold fake products)
As for the future direction of this case, both lawyers believe that it is unlikely to reach a final judgment. On the one hand, Pop Mart has already achieved significant sales in the US market, with a certain level of brand recognition and consumer loyalty. According to data cited in the complaint, Labubu's huge success has led to Pop Mart's revenue exceeding $1.8 billion in 2024. In the first five months of 2025, new product series have added over $43 million in revenue.
On the other hand, from the perspective of the defendant, 7-Eleven as a well-established convenience store chain has a strong brand image management requirement and the ability to assess risks and adjust strategies. After Pop Mart provided evidence of obvious infringement, if 7-Eleven believes that the lawsuit is likely to fail, it may choose to settle the case in an earlier stage, avoiding further reputation risk and economic losses.
What's more noteworthy is that this case provides a lesson for Chinese companies going global. Many Chinese companies often have a "wait-and-see" approach when faced with intellectual property infringement or online exposure, lacking a comprehensive legal strategy from the outset. Wang Jun noted that early completion of trademark registration can build a stronger defensive system and provide higher compensation claims.
She explained that in the US, trademark rights can be claimed based on "first use" under existing law - even if not registered, actual sales evidence can be used to pursue infringement. However, compared to China, where there is a more pronounced risk of "trademark snatching," this does not mean that companies can relax their vigilance. Registration's significance extends beyond securing rights to preventing infringement and litigation costs. Pop Mart's ability to claim punitive damages is largely due to its early completion of trademark registration, making it difficult for the defendant to argue that it was unaware of the infringement.
Source: Sina Finance