Nike lost its Spanish trademark battle, but may have won the war in the Chinese courts.

Cidesport won the right in 1999 to use the Nike name on apparel in Spain, and had been planning to sell goods made in China using the brand name. Nike can use its swoosh and name on shoes in Spain, because Cidesport does not make or sell footwear.

Nike took legal action against the Spanish company in the Chinese courts, arguing that its trademark protection in China extends to the manufacture of product in the country. The Spanish company argued that, as its products were not sold in China, it did not infringe Nike’s China-registered trademark. Cidesport had commissioned a factory in eastern China to manufacture a men’s ski jacket, with the Nike label and packaging.

However, the court ruled that the simple manufacturing of the goods in China had breached Nike’s China-registered trademark.

“The protection of the brand [in China] covers not only final consumption, but also the manufacturing of it,” said Tao Xinliang, of Shanghai University.

Chinese customs will impound about 300 shipments destined for the Spanish market. The product will be destroyed if Cidesport loses an appeal.