This article is authored by Ananya Navin Dipali, a third-year B.B.A. LL.B. (Hon’s) student at the National Law University, Jodhpur.

Introduction

In 2023, Pop Mart launched the Monsters Inc. Series, popularly known as Labubu, designed by artist Kasing Lung. What began as a quirky line of plush toy collectibles quickly evolved into a cultural sensation, captivating netizens, collectors, stars, and influencers alike. With its rapid growth in the market, it was only a matter of time before counterfeit versions popped up, and with them their emotional baggage of legal disputes.

This time, the main character is 7-Eleven, a brand known for its convenience store chains, with approximately 80,000 outlets worldwide. Particularly in Asia, 7-Eleven is not only known for its 24/7 retail model but also for its collaborations with popular characters, artists, and lifestyle brands. Through these expanding collaborations, 7-Eleven has positioned itself as a trend setter at the intersection of retail and pop culture.

In its ambition to establish a global presence, 7-Eleven has adopted a franchisor-franchisee model, which has proven highly effective. However, recent incidents suggest that some franchisees have gone rogue, merchandising popular characters without IP compliance.

In this blog, the author aims to analyze the suit filed by Pop Mart against 7-Eleven franchisees and its impact on Global IP protection.

The LABUBU Fever

Labubu was first launched in 2015 by Pop Mart, a Chinese toy company that creates character-based entertainment worldwide. Pop Mart uses the “blind box” format to generate a sense of scarcity to sell their most popular in-house IPs. Labubu is one such IP product based on Nordic folklore.

Labubus gained popularity by early 2024 when various celebrities were seen with them, and widespread influencer marketing contributed to their increasing appeal. By 2025, Pop Mart had released more than 300 Labubu figurines, priced according to their exclusivity. Pop Mart further partnered with various brands, from luxury labels like Pronounce to popular household names like Coca-Cola, to expand its reach to diverse target segments.

Labubu has a highly distinctive visual identity that sets it apart in the plush toy market, which is protected thanks to the Pop Mart’s rights over unregistered trade dress in the design and appearance of its plush toys. This doll features an “ugly-cute” image that appeals to the current generation’s desire to challenge traditional aesthetic standards. Moreover, Labubu’s have evolved from being just a collectible toy; they now symbolise the social status of their owners under a consumerist-based economy.

Suit Against 7-Eleven

A video surfaced on various social media platforms wherein an influencer was showcasing how she acquired a Labubu doll from a 7-Eleven franchise. This doll looked strikingly similar to the authentic version, triggering a counterfeit crisis at Pop Mart’s offices. After checking the authenticity of the video, Pop Mart discovered that certain 7-Eleven franchisees were selling Labubu dolls that bore only minor differences from the originals but were at less than half the price. These fake labubu’s have even acquired a new slang term – Lafufu’s – pun intended.

Following this, Pop Mart filed a suit in the California District Court alleging Trademark Counterfeiting, False designation of Origin, Unfair Competition, and Copyright infringement. Pop Mart, through an official announcement, clarified that it neither distributes nor authorizes the sale of its products through 7-Eleven stores.

The products discovered at the 7-Eleven franchise are those of inferior quality but are virtually identical copies of Pop Marts’ trademarks, trade dress, and product packaging design.

 

The plaintiffs allege that 7-Eleven failed to exercise adequate control over its franchisees and even supported them in selling counterfeit dolls. Due to this, the plaintiffs argue that 7-Eleven turned a blind eye towards its franchisees’ trademark infringement, even if it had the power to intervene.

Pop Mart is making a case against 7-Eleven to hold them vicariously liable for the trademark infringement committed by their franchisee under Section 1114 of the Lanham Act. Pop Mart alleges that 7-Eleven and its stores have an apparent partnership; hence, the act of the 7-Eleven stores binds 7-Eleven. Further, Pop Mart is of the opinion that 7-Eleven received direct financial benefit from the acts of infringement by the franchisees.

However, it must be noted that on a prima facie analysis of the complaint, it seems unlikely that 7-Eleven deliberately contributed to the trademark infringement committed by its franchisees. Yet, the ratio decidendi in Hard Rock café Licensing Corp v. Concession Services, Inc. cannot be ignored. The court extended contributory liability beyond traditional manufacturer-distributor relationships to a flea market operator, applying the Inwood test and holding defendants liable for “willful blindness” when they ignored clear evidence that counterfeit merchandise was being sold. The principle derived is that entities exercising control over third-party operations cannot turn a blind eye to infringing acts. Applying this reasoning, if 7-Eleven had knowledge—or reason to know—of counterfeit Labubu dolls being sold by its franchisees and failed to take preventive action, it could similarly face contributory liability.

Legal Aspect

Pop Mart has sued 7-Eleven, primarily on two broad categories: trademark infringement and Copyright infringement. Trademark infringement is governed by the Lanham Act, wherein Section 1114 enumerates the elements required to allege infringement, including the unauthorized use of registered marks in commerce in a manner likely to cause confusion, mistake, or deception among consumers.

Section 1116 (d)(1)(B)(ii) states that a counterfeit mark should be either ‘identical’ or ‘substantially indistinguishable’ from the real product. From this phrase, courts have developed what is often referred to as the substantial similarity test, where the focus lies on whether an average purchaser, exercising ordinary caution, would be able to distinguish between the genuine and the counterfeit product.

In Louis Vuitton Malletier S.A. v. Lee, the court emphasized that even minor variations do not prevent a finding of counterfeiting if the overall commercial impression remains virtually indistinguishable. Similarly, in Coach, Inc. v. Ocean Point Gifts, the court held that small details in stitching or design differences were insufficient to escape liability, as the average consumer would still likely mistake the counterfeit for the authentic good.

To prove that 7-Eleven was guilty of trademark infringement Pop Mart must prove that 7-Eleven franchisees had access to their work and that protectable expressive elements are objectively and subjectively similar.

Given that Lafufus mimics Labubu’s unique “ugly-cute” expression with only minor variations, Pop Mart argues that these Lafufus meet the substantial similarity test, hence are liable under the Lanham Act.

Relief and Damages

Pop Mart, among other reliefs, is seeking injunctive relief, which essentially would prevent 7-Eleven and its franchisees from producing and selling any more counterfeit Labubu dolls.

Furthermore, Pop Mart is seeking punitive damages and seeks to be adequately compensated for 7-Eleven’s infringement. In its claim, Pop Mart further seeks reimbursement for the attorney’s fees incurred during the ongoing proceedings.

Past Lessons

The suit against 7-Eleven is not the only instance where Pop Mart has aggressively defended its Copyrights. In 2024, Pop Mart filed a lawsuit against an online store operated by XX Product Factory on the 1688.com platform.

The online store had been selling copyrighted Labubu artwork (specifically the Sports Series), without authorization, constituting an infringement under the Copyright Law of the People’s Republic of China. Pop Mart, in its prayer, sought injunctive relief along with compensation for economic losses, amounting to 50,000 RMB.

The Court held that the evidence submitted demonstrated that the defendants had infringed Pop Mart’s copyrighted Labubu design and found them liable for violating Pop Mart’s distribution and communication rights.

A similar pattern emerges in the current case, where 7-Eleven is accused of distributing counterfeit Labubus with only minor visual differences, illustrating Pop Mart’s consistent and proactive enforcement of its Intellectual Property Rights.

And that’s not all, Pop Mart has registered more than 70 copyright infringement cases related to Labubus globally. It has also submitted an international trademark application under the Madrid system. In Pop Mart’s ongoing endeavor to protect its intellectual property, it is placing special focus on key markets such as the United States, the United Kingdom, the European Union, and Southeast Asia. This global enforcement strategy reflects the brand’s rising cultural significance and its commitment towards building a robust IP portfolio across various jurisdictions.

Such efforts mirror broader trends in the fashion and luxury industry, where counterfeit cases have taken hold and forced companies and designers to remain constantly on their feet to safeguard their brands. Luxury labels such as Louis Vuitton and Gucci have waged long-standing battles against knockoffs, with Louis Vuitton famously filing thousands of lawsuits worldwide to curb counterfeit bags. Nike has pursued litigation against unauthorized manufacturers of imitation sneakers, while Hermès is engaged in a high-profile case in the U.S. against creators of “MetaBirkins,” alleging trademark infringement in the digital art and NFT space. Even Adidas has repeatedly taken legal action to defend its iconic three-stripe design from copycat products.

These instances illustrate how Pop Mart’s fight against Lafufus fits into a much larger global struggle where brands from all industries are vehemently trying new ways to protect their beloved IP products from the rising practice of counterfeits.

Conclusion

The case of Pop Mart and 7-Eleven operates on multiple levels. From a company-specific point of view, this case highlights the dynamics between franchisors and franchisees. The dispute illustrates how insufficient oversight can lead to allegations of vicarious liability, exposing the entire brand to significant legal and financial risk.

On a broader scale, this case reflects on the growing importance of having a robust international framework for intellectual property protection. While agreements such as the Madrid System, the Patent Cooperation Treaty, and the Lisbon Agreement provide foundational protection, their enforcement, awareness, and other mechanisms remain limited, leaving gaps for counterfeit suits, copyright, and trademark infringement cases to take root across various jurisdictions.

Ultimately, this case represents more than a bilateral dispute; it illustrates the structural vulnerabilities of the franchisor-franchisee model of management. On a global scale, the limitation of international IP protections and the growing need for brands to adopt proactive compliance mechanisms to ensure their operations do not cause significant harm to them.

As the proceedings unfold in the California Court, this case will serve as a precedent for global franchises on intellectual property compliance and protection.