Michael Kors Holdings brought suit against Costco on Friday, accusing the wholesaler of illegally using pictures of its handbags in Costco ads in order to lure in customers. According to Kors' complaint, which was filed in New York City federal court, Costco is not an authorized retailer of Michael Kors bags (and never has been), and yet, until recently, was running nationwide advertisements falsely suggesting that the designer's handbags are available "starting at $99." Michael Kors, which is known for being an "accessible luxury" brand, sells handbags normally priced between $298 and $1,195.
Michael Kors' complaint further alleges that Costco has been employing a "bait and switch" technique. As a result of the faulty advertising, a consumer is drawn into a Costco store or Costco's website seeking to purchase Michael Kors handbags. However, because no such handbags are available, the customer is left to shop for goods that actually exist in the store or online. According to Kors, "In April Costco sent an email ad touting a selection of handbags for Mother's Day 'starting at $99.99,' several of which were Michael Kors handbags featuring the company's trademarks." Yet, when Kors representatives visited Costco's website and 19 retail stores, they found that none carried its handbags. Michael Kors is seeking an injunction, to stop Costco from advertising its products, and is also seeking lost profits, as well as punitive damages stemming from the alleged false ads.
The lawsuit resembles one that Tiffany & Co brought against Costco in February. In that case, the jeweler accused Costco of using Tiffany's trademarks online and on at least one in-store ring display case.