After a nearly one-month trial, Chanel has won its case against luxury reseller What Goes Around Comes Around. The jury voted in favour of Chanel unanimously on all four counts. They ruled in favour of Chanel for its trademark infringement, false association and unfair competition claims, as well as its false advertising claim.
Chanel accused WGACA of selling counterfeit bags and non-genuine Chanel items that were not made for sale by the brand, such as display-only items. Also up for debate was whether or not WGACA had implied affiliation with Chanel via advertising and marketing materials.
The trial could determine the future of secondhand stores’ responsibility to brands when it comes to how they appear in marketing materials as well as the sale of counterfeit goods.
Weisser maintains that WGACA has never sold counterfeit items. “WGACA has always had a rigorous authentication process and has never in the history of the company sold a non-genuine or counterfeit product. Today’s verdict was not about not selling a counterfeit, it was about WGACA selling items which were voided in Chanel’s database. Without any access to this database the resale industry would not know the status of these serial numbers. We continue to stand by our 100 per cent authenticity guarantee.”
Chanel, though, is adamant that the litigation is indeed a fight against counterfeits. “Chanel is committed to protecting its brand and consumers against counterfeits of its intellectual property that are harmful to the brand,” a Chanel spokesperson said in a statement to Vogue Business when the trial commenced. In today’s statement, a spokeswoman said: “Secondhand platforms, when they operate with transparency about the Chanel-branded items they sell and cooperate with law enforcement and Chanel can help in the fight against counterfeiting.”
The ruling is expected to have implications on its vetting and authentication processes, making it more costly for luxury secondhand retailers to operate, says Zach Briers, intellectual property partner at Munger, Tolles and Olson. “To avoid the same results as WGACA, secondhand platforms will need to increase their authentication and verification efforts, and more carefully review their use of third-party trademarks in their advertising materials and social campaigns,” he says.
Chanel may have won this round, but the Chanel/WGACA dispute is far from over. Next, the trial will assess damages. “We look forward to the next phase of the trial,” the Chanel spokeswoman said. WGACA is also gearing up to continue the fight: “We look forward to the post-verdict motions as we explore our legal options,” Weisser said.
What is vintage?
On 1 February, Justice Lewis Stanton raised the question of the definition of “vintage”, ultimately deciding that there isn’t a legal definition.
This case could help determine that definition as one with a high burden of proof, Lakha says. An item being made in a Chanel facility isn’t enough to render it ‘authenticated’ or ‘vintage’, she says. “The court found that the item has to bear a Chanel serial number and be put into its system. Based on the fact that so many brands are now manufactured and white labelled in the same facilities, items being registered in a brand's system is the only real way to show authentication.”
The bag’s serial number is what gives it its resale value, she argues.
“This ruling shows that vintage is defined through the method a brand can authenticate its items. Therefore, profiting on non-point of sale items bearing the Chanel logo could be seen as false advertising due to the fact that those items were never really authenticated,” Lakha says.
“Selling those Chanel point-of-sale items without the manufacturing, or quality control that Chanel provides would be no different than someone asking an artist to replicate a Chanel item or design for a fraction of the price.”