NYC Reseller, What Goes Around Comes Around, Loses Lawsuit Over Counterfeit Claims
A lengthy legal battle between luxury fashion powerhouse Chanel and New York vintage boutique What Goes Around Comes Around (WGACA) has reached a climax this week. On Tuesday, a court ruled fully in favor of Chanel, awarding the brand $4 million in damages over WGACA’s unauthorized use of Chanel trademarks. The core issue under dispute: whether WGACA created consumer confusion around the authenticity of secondhand Chanel goods sold in its stores and online.
While resellers have rights to sell genuine pre-owned products without permission, brands can contest false affiliation. For nearly six years, Chanel alleged WGACA’s marketing tactics and authentication claims generated the misleading impression there was an official partnership between the luxury label and resale company. Ultimately, the court has sided wholly with Chanel.
Background on the Lawsuit
Chanel first filed suit against What Goes Around Comes Around in 2018, targeting the prominent NYC vintage store’s ability to authenticate and sell secondhand Chanel items without permission. As with lawsuits launched against resellers like The RealReal, Chanel rejects the premise anyone except the brand itself can genuinely verify real versus counterfeit goods. Beyond authentication matters, Chanel also took issue with WGACA’s social media use of quotes by house founder Coco Chanel and promotional codes containing her name. Together, Chanel argued these tactics fostered consumer confusion around whether the brands were affiliated.
What Goes Around Comes Around contended the quotes merely reflected statements in the public domain unable to be copyrighted. However, consumer confusion is the central issue in such cases rather than IP infringement. On January 31st expert testimony asserting survey evidence of genuine confusion tilted the case in Chanel’s favor.
Evidence of Consumer Confusion
Chanel enlisted McCarthy Institute director David Franklyn as an expert witness to demonstrate WGACA generated misconception about its ties to Chanel. In a 200+ person survey about luxury shopping, 23% answered the question “What does WGACA do?” by saying the company makes handbags. Additionally, 57% believed Chanel at least “permits” or outright “approves” WGACA selling secondhand bags.
However, when shown an image of a Chanel bag sold by What Goes Around Comes Around, 93% correctly identified Chanel as the manufacturer. WGACA argued this statistic indicates an overall understanding it simply resells Chanel goods rather than makes them. Yet the court ultimately weighed the first two statistics as conclusively showing dangerously high confusion.
Takeaways for Secondary Marketers
The precedent set by the Chanel case serves as a warning for resellers they face grave risks allowing any consumer confusion to emerge around relationships with brands. While authentic pre-owned sales remain legal, affirmative marketing creating perceivable affiliation opens companies to liability. Consequently, resellers would be prudent to enact clear messaging explaining their independent secondhand dealer status and inability to 100% authenticate goods. Ultimately the safest path lies in rebutting any whiff of endorsement by brands zealously protecting their trademarks.