Chanel Wins Jury Verdict in Recent Trademark Lawsuit

By Natasha Patel, Staff Writer

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Earlier this year, coveted French luxury fashion house, Chanel, won its lawsuit against retailer What Goes Around Comes Around (“WGACA”) in federal court.[1] The defendant in this matter, WGACA, is a designer reseller that has stores in Manhattan, Los Angeles, Miami, and the Hamptons.[2] In addition, WGACA also maintains and operates an e-commerce website.[3] Retailers such as WGACA and The RealReal authenticate luxury items sold on their platforms.[4] These services provide the buyer with ease of mind that their product is authentic. However, not all luxury brands, including Chanel, are in favor of second-hand marketplaces.[5]

Chanel first filed a complaint against WGACA back in 2018, alleging trademark infringement, unfair competition, false advertising, and the sale of counterfeit goods.[6] WGACA carries various brands, but claims to have “the world’s largest collection of vintage Chanel.”[7] However, Chanel argued that WGACA’s practices, such as these claims, deceived consumers into believing that the retailer had a relationship with Chanel.[8] Besides selling unauthorized Chanel branded goods, WGACA also allegedly sold counterfeit items and used false advertising claims.[9]

Section 1114 of the Lanham Act imposes civil liability on those who reproduce, counterfeit, copy, or imitate registered trademarks to avoid confusion among consumers.[10] However, courts have used the “Polaroid factors” to determine whether a counterfeit trademark presents a likelihood of confusion for there to be infringement.[11] Those factors include: (1) strength of the mark; (2) proximity of goods; (3) similarity of marks; (4) any evidence of actual confusion; (5) marketing channels used; (6) type of goods and degree of care likely to be exercised by purchaser; (7) defendants’ intent in selecting mark; and (8) likelihood of expansion of product lines.[12]

However, under 17 U.S.C. § 109, or the First Sale Doctrine, the purchaser of copywritten or trademarked material has the right to sell, display, or dispose of the material.[13] Under this doctrine, the owner of the copyright or trademark no longer has the right to control the future distribution or resale of the product.[14] This essentially allows resale marketplaces, such as WGACA, to operate legally.

In this matter, Chanel argued that WGACA’s use of Chanel’s trademark, images of founder Coco Chanel, the hashtag “#WGACACCHANEL,” use of Chanel runway shows, and prior Chanel advertising created a false association with Chanel.[15] In doing so, this led to the likelihood of confusion.[16] Chanel’s legal team and David Franklyn, expert witness in the matter and director of the McCarthy Institute for IP and Technology Law, conducted a survey and concluded that confusion among consumers existed.[17] The survey found that 47% of surveyed consumers believed that Chanel was associated with WGACA and 73% believed that WGACA was either an affiliate, partner, collaborator, or authorized reseller of Chanel.[18]

Trademark protection is essential for luxury brands such as Chanel to ensure their reputation among consumers. Not only has this case provided continued protection, but it has also set a precedent for issues regarding secondary markets for luxury goods.[19] In this case, the jury ultimately agreed with Chanel on all four counts and awarded statutory damages of $4 million.[20]



[3] Id.


[5] Id.



[8] Id.

[9] Id.


[11] Id.

[12] Id.




[16] Id.

[17] Id.

[18] Id.



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