After a six-year long battle, Chanel won its lawsuit against What Goes Around Comes Around ("WGACA"), a pre-owned luxury brand reseller (see Chanel, Inc. v What Goes Around Comes Around, LLC et al., 1:18-cv-02253 (SDNY)). This decision provides guidance on the risks associated with reselling third-party goods and practices relating to the use of luxury brand owners' trademarks, advertising and marketing practices, and the importance of proper authentication.
In 2018, Chanel brought a lawsuit against WGACA, claiming trademark infringement, unfair competition, false advertising, and sale of counterfeit products. While WGACA argued against such claims – noting that any use of Chanel's trademarks were merely to market the products as belonging to Chanel, and that WGACA has never sold a non-genuine product – in 2024, the District Court in New York decided in favour of Chanel, awarding the luxury giant $4 million of statutory damages.
Following this favourable jury verdict in February 2024, Chanel lodged a phase 2 trial brief with the court, identifying the equitable remedies it is entitled to, based on the findings of the jury – namely, Chanel has argued for the disgorgement of WGACA's profits, as well as a permanent injunction to stop WGACA from continuing use of Chanel's trademarks in a way that confuses consumers. Chanel asserts that WGACA's profits from its sale of Chanel-branded products is nearly $60 million, and further argues that WGACA has received an additional nearly $35 million in "opportunity benefits" given WGACA's association with the luxury brand.
In December 2024, the court prepared a proposal for injunctive relief, ensuring that WGACA will not be able to use Chanel's trademarks or any confusingly similar marks in a way that causes consumer confusion. Notably, in its proposal, the court stated that: (a) WGACA must not use Chanel's trademarks or any confusingly similar marks, as well any copies of Chanel campaigns or the name, image, or likeness of Gabrielle "Coco" Chanel, in connection with its advertising and sale of Chanel-branded items "other than to identify a particular item currently for sale as made and sold by Chanel, or to the extent the specific item currently for sale itself bears CHANEL marks", (b) WGACA must prominently and clearly display the following disclaimer on any webpage, social media post, or physical tag: "THIS ITEM HAS NOT BEEN AUTHENTICATED BY CHANEL.", (c) WGACA cannot advertise or sell any Chanel-branded items which have been (i) modified and materially altered or (ii) refurbished without fully disclosing the nature of the refurbishment, and (d) WGACA cannot certify or make claims asserting to the genuineness of any Chanel-branded item where WGACA has no records to support such authentication claims. Both parties have since filed responses to the court's proposal.
This case is significant in the world of third-party luxury resellers and speaks to the high stakes such resellers can encounter when using famous and well-known trademarks to promote a resold good. Further, it should encourage resellers to carefully consider their authentication processes and provides some much-needed guidance on best practices when reselling luxury items.
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