Louis Vuitton's Trademark Victory Triggers Backlash in China
A legal win against a tea chain leads to significant revenue decline.
1Trademark Dispute Over Logo
Louis Vuitton initiated legal action against Chinese milk tea chain Molly Tea in May 2025. The French luxury house claimed the tea brand's four-petaled logo infringed on seven of its registered trademarks. In June 2026, a Chinese court ruled in favor of Louis Vuitton, ordering the tea company to pay $1.5 million in damages.
2Public Backlash and Sentiment
The legal victory sparked significant negative sentiment across China. State-owned media, including the Beijing Daily, questioned the validity of the claim, citing the design's roots in traditional Chinese aesthetics. Social media platforms like Weibo saw massive engagement, with trending topics accusing the luxury giant of attempting to monopolize ancient cultural patterns.
3Financial Impact on LVMH
LVMH reported that revenue in its fashion and leather goods division dropped to €8.25 billion in the third quarter of 2026. Excluding currency fluctuations, organic sales fell by 5%. Analysts suggest the Molly Tea controversy specifically accounted for a 2 to 3 percentage point decline in this overall quarterly performance figure.
4Management Assessment of Losses
CFO Cecile Cabanis acknowledged during the October 12 earnings call that the dispute likely had a negative impact early in the quarter. While she noted the difficulty of precisely sizing the fallout, the company confirmed that the controversy contributed to broader challenges within the Asian market, which represents 27% of total revenue.
5Broader Market Deceleration
Beyond the specific controversy, LVMH faced a cooling luxury market in China. Spending by Chinese customers on the group's fashion and leather goods brands fell by mid-teens percentages during the third quarter. This decline occurred both domestically and abroad, marking a sharp reversal from the 4% organic sales growth seen previously.
6Regional Performance Disparities
The performance in Asia, excluding Japan, shifted from 4% growth in the second quarter to a 5% decline in the third. This trend contrasts significantly with the United States, where LVMH recorded 5% sales growth during the same period. The Chinese clientele remains the primary driver of this global organic sales deceleration.
7Future Investment Strategy
Despite the negative publicity and financial drag, LVMH maintains its commitment to the Chinese market. CFO Cecile Cabanis explicitly stated that the company is not stopping its investments due to the Molly Tea topic. The brand continues to navigate a complex environment where consumer sentiment and legal protections often collide.
8Strategic Implications for Luxury
This case highlights the risks luxury brands face when enforcing intellectual property in culturally sensitive markets. The intersection of legal victory and brand reputation damage demonstrates that trademark protection can carry hidden costs. Companies must balance aggressive legal strategies with the potential for long-term alienation of their most critical consumer bases.
Original article: Fortune — Louis Vuitton's Trademark Victory Triggers Backlash in China