Upcycling fashion and trade mark infringement in China and in the UK

Background:

The defendant, Shenzhen Bangtu Cultural Media Co., Ltd. (“Bangtu”), operated a business which reconstructed bags using second-hand luxury handbags. According to the defendant, its business model involved disinfecting, dismantling, cutting, redesigning, and reassembling used luxury bags into new products. Bangtu sold these “reconstructed” handbags through multiple online platforms.

Although the redesigned bags differed in shape and overall appearance from Louis Vuitton’s original products, they continued to display the LV monogram and Toile patterns in prominent positions. Bangtu’s own branding appeared only on internal components or  hardware. Louis Vuitton Malletier brought proceedings alleging trade mark infringement and unfair competition, arguing that the defendant was trading on the reputation of its marks. Bangtu countered that the LV trade marks were used only decoratively, that its own trade mark was present, and that Louis Vuitton’s trade mark rights had been exhausted because the materials originated from genuine second-hand products.

Findings:

The court rejected the defendant’s arguments and found infringement. It emphasised that the assessment of consumer confusion should not be confined to the point of sale or to direct purchasers. Given the high degree of recognition and distinctiveness of Louis Vuitton’s marks, the continued visibility of those trade marks on the exterior of the reconstructed bags was likely to create post-sale confusion, leading observers to believe the products originated from, or were endorsed by, Louis Vuitton.

The court further clarified the application of the trade mark exhaustion doctrine. While trade mark rights are generally exhausted once genuine goods are placed on the market with the trade mark owner’s consent, this principle does not apply where goods are materially altered and placed back into commerce as new products. In this case, the dismantling and reconstruction of the handbags substantially changed their form, appearance, and production standards, severing the link between the original goods and the reconstructed products. As a result, the defendant could not rely on exhaustion, even though the materials had originally come from genuine Louis Vuitton bags.

Crucially, the court noted that trade mark rights may “revive” where post-sale modifications undermine the trade mark’s source-identifying and quality-assurance functions. By retaining Louis Vuitton’s trade marks without authorisation and failing to prominently distinguish its own branding, the defendant impaired Louis Vuitton’s ability to control the quality and reputation associated with its trade marks.

The court ordered the defendant to cease sales, destroy remaining inventory, publish a corrective statement, and pay damages of approximately RMB 1.05 million (about £ 111,180).

While acknowledging that the recycling and reuse of goods aligns with environmental policy goals, the court made clear that sustainability initiatives must operate within the framework of intellectual property law. Businesses engaging in upcycling or refurbishment must ensure that original trade marks are removed or obscured and that their own branding is clearly and prominently displayed, so consumers can readily identify the true source of the goods.

The position in the UK

The UK adopts a broadly similar approach, sourced from the Trade Marks Act 1994 (the “TMA”). While rights are generally exhausted once goods are placed on the market in the UK with the consent of the trade mark proprietor, that defence is limited. Exhaustion permits further commercialisation of genuine goods, but only in the condition in which they were put on the market. Under section 12 of the TMA, rights holders may object to further dealings in those goods where there are “legitimate reasons” to do so, in particular where the condition of the goods has been changed or impaired, or where the use of the mark damages its functions.

A useful illustration of this principle can be seen in AGA Rangemaster Group Ltd v UK Innovations Group Ltd  [2024] EWHC 1727 (IPEC). In that case, the defendant acquired second-hand AGA cookers, refurbished them and installed an electric control system, before reselling them. The court accepted that resale of genuine goods, even where repaired or modified, is not inherently infringing. However, it found infringement on the facts because the defendant’s branding and marketing (including references such as “eControl AGA”) could suggest a commercial link with the brand owner. Evidence included the use of the AGA trade mark in product names, advertising and online listings in a manner which did not sufficiently distinguish the defendant’s business, and which was liable to lead consumers to believe the products were authorised or supplied by AGA.

The modifications were also material, involving significant technical alteration to the cookers’ operation and performance. The court held that these changes meant the goods were no longer in the condition in which they had originally been placed on the market.

The defence of exhaustion was therefore defeated because the alterations, combined with the manner of presentation, undermined the trade mark’s ability to guarantee origin and quality. The continued use of the AGA trade mark was not necessary to describe the goods and went beyond what was permissible to inform consumers of their origin as refurbished products.

Set against the Louis Vuitton decision in China, a number of parallels emerge in the courts’ interpretation of the exhaustion doctrine. In both cases:

• the goods originated as genuine branded products;

• they were materially altered before re-sale; and

• the original trade marks remained visible in a way that risked misleading consumers, including beyond the point of sale.

Both courts emphasised that exhaustion does not apply where goods are effectively reintroduced to the market as new or different products, and that trade mark rights may be invoked where the mark’s origin and quality functions are undermined.

However, there are some differences in emphasis. The Chinese court placed particular weight on post-sale confusion and the continued visual prominence of the Louis Vuitton trade marks on the reconstructed handbags. By contrast, the UK court in AGA Rangemaster focused more closely on how the goods were presented and marketed, and less so on post-sale use of the AGA trade mark.

Both courts placed emphasis on consumer perception. Use of a trade mark on modified goods may still infringe where it affects the mark’s function as a badge of origin, as confirmed in Arsenal Football Club plc v Reed [2002] ECR I-10273 (Case C-206/01). In addition, where trade marks enjoy a reputation, section 10(3) provides broader protection against use which takes unfair advantage of that reputation (L'Oréal SA v Bellure NV C-487/07, [2009] ECR I-05185).