Look beyond the headline-making trademark dispute that pitted Louis Vuitton against Molly Tea in China, and a legal battle over the tea company’s brand is playing out in New York. In the Southern District of New York, Shenzhen Molly Tea Food and Beverage Management Co. is locked in a trademark and contract lawsuit with its New York business partners, making for a less viral but potentially consequential fight over who owns and controls the brand in the U.S. market.
The stateside case got its start in May 2026, when Shenzhen Molly Tea accused its licensee, MHL NY LLC, of breaching a 2023 licensing agreement governing three New York City stores, operating unauthorized locations, and infringing its trademarks. In the latest round of the case, a federal judge denied Shenzhen Molly Tea’s second bid for a preliminary injunction while leaving intact an earlier order that bars MHL NY from using the MOLLY TEA marks while the case is pending.
A Fight Over Stateside Rights
At the center of the ongoing clash is a question of trademark ownership. Shenzhen Molly Tea holds two U.S. federal registrations for MOLLY TEA and also claims common-law rights in the brand name and related trade dress – including distinctive storefront designs, lighting, color schemes, interior layouts, and design of employee uniforms – based on use by its licensees and affiliates.
In its defense, MHL NY disputes Shenzhen Molly Tea’s ownership of the marks, arguing that a separate entity, Molly Tea NYC Inc. – which operates the original Flushing store – was the first to use the marks in the U.S.
That distinction could prove consequential. In August, SDNY Judge John P. Cronan denied MHL NY’s bid to reconsider an earlier injunction that prohibits MHL NY from using the MOLLY TEA marks because it failed to raise its ownership challenge during the original injunction proceedings. However, the court acknowledged that MHL NY had raised a potentially viable challenge to Shenzhen Molly Tea’s ownership of the U.S. marks.
While trademark registration provides evidence of ownership, Judge Cronan noted that trademark rights generally depend on priority of use. But being first to use a mark does not necessarily establish ownership. Under the Lanham Act’s related-company doctrine, one company’s use of a mark can establish rights for another party if the latter exercises the necessary quality control over the mark’s use. The court pointed to evidence that Molly Tea NYC worked with Shenzhen Molly Tea but did not decide whether the New York operator’s use could be attributed to Shenzhen Molly Tea for the purpose of establishing ownership over the MOLLY TEA marks.
A Second Injunction Bid Falls Short
On October 9, Judge Cronan denied a second motion for a preliminary injunction sought by Shenzhen Molly Tea and its fellow plaintiffs, including Mollytea Shops, a Shenzhen Molly Tea affiliate and minority shareholder in the parties’ U.S. joint ventures. This time, the dispute centered on control of the three New York outposts. Mollytea Shops had moved to dissolve the entities operating the stores and sought to assume control of their operations, but MHL NY refused to relinquish control, prompting Shenzhen Molly Tea and co. to seek a second injunction.
In the bid for an additional injunction, Shenzhen Molly Tea accused MHL NY of breaching the joint ventures’ shareholder agreements by operating unauthorized stores, disclosing confidential information and trade secrets, and engaging in competing business activities. Shenzhen Molly Tea argued that these alleged breaches entitled Mollytea Shops to take over their operations of the stores.
At the October 9 hearing, the court found that Shenzhen Molly Tea had failed to establish a clear or substantial likelihood of success on the merits. But not a total loss, the recent ruling leaves intact the preliminary injunction issued on June 23, meaning MHL NY remains subject to the existing restrictions on its use of the MOLLY TEA marks.
THE STRATEGY: The New York case highlights a risk for brands expanding through local partners: a licensing dispute can become a fight over who owns the brand itself. Trademark registrations alone may not settle that question. Licensing agreements, quality-control provisions, and records establishing who first used a mark, and under whose control, can become critical evidence in an ownership dispute. For local operators, evidence of first use may provide leverage, particularly where the purported brand owner cannot establish that it benefited from the operator’s use of the mark.
The case is Shenzhen Molly Tea Food & Beverage Management Co., Ltd. v. MHL NY LLC, 1:26-cv-04051 (S.D.N.Y.).
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