Goods from a Chinese Supplier Face an IP Claim: Can the Buyer Seek Recovery?

A foreign buyer receives a patent complaint, trademark demand or marketplace notice about goods sourced from China. The buyer may need to respond where the goods are sold while separately considering a claim against the supplier. A third-party allegation does not by itself establish infringement, a right to a full refund, or the supplier’s responsibility for every resulting expense. The agreed market, the origin of the disputed design, the parties’ knowledge and timely notice all matter.

1. Separate the IP allegation from the claim under the sales contract

First identify the asserted right, its territory, the affected products and batches, the claimant, and any response or court deadline. Preserve the original complaint and attachments. The law governing infringement in the relevant territory and the law governing the supplier’s contractual obligations can be different; an overseas complaint does not automatically determine a Chinese contractual dispute.

Check the contract’s warranty, indemnity, defence-control, liability-limit and dispute-resolution clauses. Then determine whether the United Nations Convention on Contracts for the International Sale of Goods (CISG) applies under Article 1 and whether the parties excluded or varied it under Article 6. The Convention entered into force for China on 1 January 1988, but the relevant States and declarations still need checking. Article 41 directs IP-based third-party claims to the specific rule in Article 42. Do not apply a general quality-defect analysis to every IP complaint.

2. Under CISG Article 42, identify the market contemplated when the contract was made

Article 42 addresses rights or claims based on industrial or other intellectual property of which the seller knew or could not have been unaware when the contract was concluded. Its territorial rule looks first to the law of the State where the goods were to be resold or otherwise used, if both parties contemplated that destination when contracting. In other cases it refers to the law of the State where the buyer has its place of business.

This is not an automatic warranty against every IP claim worldwide. Keep purchase orders, market specifications, destination discussions and packaging instructions showing the intended sales or use territory. Later reselling into an additional market should not be assumed to expand the original Article 42 obligation. Registration or clearance in China alone does not establish freedom to use the product in another territory.

3. Establish who supplied the disputed design and what each side knew

Article 42(2) contains important exceptions: the buyer knew or could not have been unaware of the right or claim when contracting; or the claim results from the seller’s compliance with technical drawings, designs, formulae or other specifications furnished by the buyer.

A supplier saying “you approved the sample” does not by itself resolve those conditions. Trace the feature said to infringe: who selected it, which drawing version controlled, whether the supplier substituted a component, and whether a buyer instruction actually caused the claim. Conversely, a buyer-supplied protected design cannot simply be treated as a problem originating with the factory. Preserve approvals, change requests, component lists and licence documents. Contractual risk allocation must also be reviewed on its own terms and under the applicable validity rules.

4. Notify the supplier promptly and identify the nature of the third-party claim

Under Article 43, a buyer can lose the right to rely on Articles 41 or 42 by failing to give the seller notice specifying the nature of the third-party right or claim within a reasonable time after becoming, or when it ought to have become, aware of it. Do not wait for a final infringement judgment before considering this notice obligation. Send the complaint, relevant right identifiers, affected models and batches, and explain the response sought; preserve delivery and receipt evidence.

Article 43(2) prevents the seller relying on that notice requirement if it knew of the third-party right or claim and its nature. Article 44 allows limited relief where the buyer has a reasonable excuse for the notice failure, including damages other than loss of profit; it does not restore every remedy automatically. These are fact-sensitive exceptions, not reasons to delay. Article 43 should not be confused with the separate inspection and non-conformity notice rules discussed in the inspection and quality-notice guide. Court, platform and limitation deadlines require separate attention.

5. Match the remedy to the breach and substantiate the loss

If the seller is responsible, CISG Article 45 provides the route to the Convention’s remedies. Avoidance under Article 49 requires its own conditions; a complaint alone does not establish a fundamental breach. A licence, redesign, replacement or negotiated return may be worth discussing, but its feasibility, cost and legal effect need agreement or a supporting legal basis.

Under Articles 74 and 77, claimed loss needs a causal and evidential basis, remains subject to the Convention’s foreseeability limit, and requires reasonable mitigation. Do not assume that all royalties, settlement payments, legal expenses or downstream losses are recoverable from the supplier. Review the claim’s merits, involve the supplier where appropriate, and preserve the commercial reasons and alternatives before entering a settlement. A settlement with the claimant does not automatically bind the supplier.

If the relevant issue is governed by the PRC Civil Code, Articles 612–614 address third-party rights, the buyer’s knowledge, and suspension of the corresponding price where there is definite evidence of a third-party right, subject to the seller providing appropriate security. A bare allegation should not be treated as permission to withhold the entire order price. The Civil Code has been in force since 1 January 2021. The applicable framework must be identified before choosing a remedy.

6. Prepare an evidence file that supports a decision

Record	Question it helps answer
Contract, purchase order and market instructions	What rights warranty and destination were agreed?
Original complaint, right identifiers and product mapping	Which right, territory, batch and deadline are involved?
Drawings, samples, component lists and change history	Who supplied or changed the disputed feature?
Notices and proof of receipt	What did the supplier learn, and when?
Cost records, alternatives and mitigation decisions	Which losses can be explained and supported?

For a China-related dispute review, begin with the legal names of the parties, their countries, the contract, the complaint and the earliest deadline. Identify the decision needed: continuing sales, negotiating with the supplier, a return, or a recovery claim. Assessment of infringement abroad may require counsel in that jurisdiction. A China sales-contract review can address the supplier claim, evidence and agreed dispute forum without assuming the overseas IP outcome.

For future orders, see China procurement legal support. For an existing dispute and a defined decision, see independent dispute review or contact Jianxing Pan at panjianxing46@gmail.com. The scope, documents to be reviewed and fees are confirmed before engagement.

Legal sources checked on 26 October 2026: CISG Articles 1, 6, 41–45, 49, 74 and 77; PRC Civil Code Articles 612–614 and 1260; UN treaty status and declarations and UNCITRAL status table. General information; application depends on the contract and facts. Cover: AI-generated conceptual illustration, not a photograph of an actual client, case or shipment.

Jianxing Pan, Attorney and Partner, Beijing Chang’an Law Firm.