Vintage clothing trademark problems – Chanel v. WGACA

A trademark is a symbol that a manufacturer uses to distinguish the products it sells from the products sold by other companies. The purpose of trademark law is to prevent consumer confusion. A trademark owner is given the right to exclude other companies from using its trademark to prevent consumers from being tricked into purchasing inferior quality products. A trademark owner has the exclusive right to sell products with their trademark. If someone other than the owner of a trademark uses that trademark in commerce that is known as trademark infringement. A trademark owner must diligently enforce their trademark rights or risk loosing them. When a trademark owner learns that their trademark is being infringed, the trademark owner can sue for an injunction to stop trademark infringement and get a judgement for damages related to the trademark infringement.

But, a trademark owner’s exclusive right to us a trademark has limits. One limit to the rights granted by trademark law in the Untied States is the “exhaustion” doctrine also known as the first sale doctrine. The first sale doctrine of trademark law allows people that purchased products from the trademark owner to resell those products. The resale of genuine trademarked products, even if not authorized, does not constitute trademark infringement.

In the luxury goods industry the first sale doctrine is a hot topic. Following fashion trends is extremely expensive and few people actually have enough cash to purchase new luxury clothing every time a new fashion trend emerges. Many fashion conscious people will purchase a luxury item and then resell it when they grow tired of it. A whole industry has developed around the resale of luxury goods. Vintage companies specialize in connecting sellers of luxury clothing and accessories with consumers that would like to purchase second hand luxury products.

One company that is very successful in the vintage clothing resale industry is What Comes Around Goes Around. What Comes Around Goes Around operates a website which sells luxury products it has purchased from consumers. It is more sophisticated than an auction website and guarantees that the goods it sells are authentic. The curated collection created by What Comes Around Goes Around is intended to give consumers confidence they are purchasing authentic merchandise and that the products are fashionable today. Occasionally, the company has been accused of selling counterfeit goods, but the company makes an effort to only sell high quality authentic luxury brands.

Chanel is a high quality luxury brand that does not like What Comes Around Goes Around’s business model. Chanel diligently polices the use of the Chanel trademark. Chanel has recently filed a trademark infringement lawsuit in New York Federal Court against What Comes Around Goes Around. Chanel, Inc. v. What Comes Around Goes Around LLC et al, 1:18-cv-02253 (S.D.NY Mar 14, 2018).

In it’s lawsuit Chanel alleges that, What Comes Around Goes Around’s use of the Chanel logo in advertising and marketing material constitutes trademark infringement because it creates a connection in the minds of consumers between the retailer and the luxury product manufacturer. In addition, What Comes Around Goes Around offers promotional products with the Chanel logo which Chanel produced but never actually sold.

Frequently trademark infringement lawsuits are settled before the court actually has a trial. In this case there is a strong chance that a trial will be held because both parties have so much at stake. Chanel is unlikely to agree to a settlement which would allow What Comes Around Goes Around to continue selling Chanel products, and What Comes Around Goes Around is unlikely to settle if they are not allowed to continue selling Chanel products because that is the heart of their business. It is a case worth watching.

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