Chanel made waves in November 2018 when it filed a striking lawsuit against luxury resale platform The RealReal, accusing the company of attempting to “deceive consumers into falsely believing that Chanel has authenticated” the secondhand goods it was offering or that The RealReal had some kind of “affiliation” with the French luxury brand. In its suit, filed in the U.S. District Court for the Southern District of New York, Chanel alleged that The RealReal engaged in trademark infringement, false advertising, unfair competition, and false association, while also allegedly selling counterfeit Chanel products.
In response to the suit, The RealReal – which markets itself as a leading authority in authenticated luxury resale – has pushed back, arguing that Chanel’s claims are an improper effort to control the secondary market for its products. The RealReal contends that it uses Chanel’s trademarks purely to identify the goods it resells (a practice it claims qualifies as nominative fair use) and maintains that it does not suggest any sponsorship or endorsement by Chanel.
The lawsuit – one of a couple of particularly-closely-watches cases that Chanel has filed against resellers in recent years – highlights the tension between brand owners and third-party sellers in the fast-growing luxury resale market. Among other things, the case stands to offer guidance on the scope of the fair use defense to trademark infringement, as well as on how resellers may lawfully describe the authenticity of secondhand goods without running afoul of false advertising laws. It may also shed light on the boundaries of a brand’s control over its products post-sale.
Given the significance of the case in the evolving luxury resale landscape, we have compiled a timeline of notable filings and rulings to help you track its developments …
Judge Gabriel Gorenstein called on the parties to move the case along, stating that “for nearly two years now, there has been a stay of discovery during which the parties have reported to the court that they are engaged in settlement discussions.” Following repeated stays in discovery, the case is now “one of the oldest … on the court’s docket,” per Judge Gorenstein, who said he will not order discovery to proceed immediately but also warned counsel for the luxury brand and the resale giant that he is “not likely to continue the stay much longer without strong evidence that settlement is imminent.”
Chanel and The RealReal submitted a joint motion to stay proceedings, citing scheduled mediation for early September. The parties stated the stay would conserve resources and focus efforts on resolution. Judge Gabriel Gorenstein approved the stay the same day.
In the wake of the court putting the proceedings back in play, the parties submitted a joint letter to the court outlining continued disagreements over how the case should proceed following the failed mediation, particularly concerning the scope and timing of discovery related to TRR’s antitrust counterclaims. According to the December 13 letter, in which Chanel and TRR assert their respective proposals for how the case should go from here, TRR suggests a discovery schedule that would entail “substantially complet[ing] document production by March 14, 2022” and that would run until October 1, 2022, the closing date of expert discovery. In connection with its proposed way forward, TRR asserts that despite Chanel’s claims to the contrary, its antitrust counterclaims require only “limited additional discovery,” and the parties “should be able to complete all fact discovery in five months.”
The parties alerted the court that, despite three full days of mediation (Sept. 20, Sept. 24, and Nov. 8, 2021), they were “unable to reach a resolution.” They agreed the stay should be lifted but disagreed on how the case should proceed, especially with regard to discovery tied to TRR’s amended claims.
In an order dated April 5, Judge Gabriel Gorenstein signed off on Chanel and TRR’s joint stipulation to stay proceedings in the case for three months pending mediation with the aim of getting the parties to settle their ever-escalating legal differences out of court and without the need for a trial.
TRR filed a memorandum of law in Opposition to Chanel’s motion to dismiss, arguing that its counterclaims plausibly alleged both actual and attempted monopolization under Section 2 of the Sherman Act. TRR identified two relevant markets: the sale of top-tier investment-grade handbags and the sale of hold-value handbags. Within these markets, TRR contended that Chanel possessed monopoly power and market power sufficient to support claims of both actual monopolization and a dangerous probability of achieving monopoly power. TRR alleged that Chanel had acted alone to dominate these markets and had engaged in anticompetitive conduct specifically aimed at excluding rivals, thereby harming overall market competition. TRR also asserted that Chanel had demonstrated a specific intent to monopolize.
Beyond Section 2, TRR maintained that its antitrust counterclaims under Section 1 of the Sherman Act and the Donnelly Act were well-pleaded. TRR further contended that it had adequately alleged tortious interference by Chanel with both existing retailer contracts and prospective relationships with publishers. It argued that all counterclaims were timely and that Chanel’s motion to strike the “unclean hands” affirmative defense should be denied.
Chanel moved to dismiss TRR’s antitrust counterclaims and to strike TRR’s “unclean hands” affirmative defense. It argued that TRR’s counterclaims are barred by the statute of limitations and are facially implausible. Chanel asserted that TRR’s antitrust allegations fail because they contradict TRR’s own description of a competitive market in which Chanel is just one of many luxury brands. Chanel contends that TRR improperly defines the relevant antitrust market, cannot show Chanel has monopoly power, and fails to allege any exclusionary conduct or harm to overall market competition.
Chanel also argued that TRR’s claim of attempted monopolization under the Sherman Act is deficient, lacking allegations of a dangerous probability of monopoly, specific intent, or a viable vertical group boycott conspiracy. On the tortious interference claims, Chanel maintained that TRR fails to plausibly allege interference with any valid contracts or business relations. Finally, Chanel sought to strike TRR’s “unclean hands” defense as legally insufficient and urges the court to dismiss the counterclaims with prejudice.
TRR’s amended answer was officially filed after Judge Gorenstein granted its motion to amend. The filing included new antitrust and tortious interference counterclaims, alleging that Chanel engaged in anticompetitive conduct to monopolize the market for new and pre-owned luxury handbags. TRR accused Chanel of exclusive contracts with retailers (e.g., Saks, Neiman Marcus) and media outlets (e.g., WWD, New York Times, Vogue) to block TRR’s business and advertising.
Chanel has pushed back against TRR’s quest to amend its answer and bring such monopoly-centric claims against it. Following a telephonic conference with Judge Gorenstein in which the judge stated that he is not entirely sure how the addition of TRR’s proposed antitrust and tortious interference counterclaims would not “drastically alter the character of this case,” counsel for Chanel argued in a letter dated January 26 that TRR’s “proposed amendment is certain to prejudicially expand the existing scope of discovery in this case.” And even if it does not, TRR’s proposed claims should be filed in a separate suit (and not as counterclaims in the already-existing case), per Chanel, because they “bear no logical relation – much less an ‘immediate and necessary’ one – to Chanel’s allegations” at the heart of the case.
Chanel opposed TRR’s motion for leave to amend its answer. In a 31-page filing, Chanel argued that TRR’s proposed antitrust counterclaims were untimely, brought in bad faith, and legally insufficient.
TRR sought leave to amend its answer to assert new antitrust and tortious interference counterclaims, citing newly discovered evidence of Chanel’s alleged efforts to suppress competition via retailer and media partnerships and selective trademark enforcement.
TRR filed an answer to Chanel’s complaint, denying the allegations and asserting affirmative defenses, including the First Sale Doctrine.
Judge Vernon Broderick granted in part and denied in part TRR’s motion to dismiss: Defendants motion to dismiss the First Amended Complaint is GRANTED IN PART and DENIED IN PART. Specifically, Defendant’s motion is GRANTED with respect to Counts One (trademark infringement under 15 U.S.C. § 1114(1)(a)), Four (false endorsement and unfair competition under 15 U.S.C. § 1125(a)(1)(A)), Six (violations of GBL section 349), and Seven (violations of GBL section 350). Defendants motion is DENIED with respect to Counts Two (trademark counterfeiting/infringement under 15 U.S.C. § 1114(1)(a)), Three (false advertising under 15 U.S.C. § 1125(a)(1)(B)), and Five (unfair competition under New York common law).
Chanel filed a memorandum of law in opposition to TRR’s to Dismiss First Amended complaint.
TRR moved to dismiss Chanel’s complaint, arguing its resale of authentic goods was protected under the First Sale Doctrine, and that its statements were either truthful, non-actionable puffery, or nominative fair use.
Chanel filed its First Amended complaint, refining its claims of trademark infringement, counterfeiting, false advertising, unfair competition, and state law violations.
The court ordered Chanel to file an amended complaint by February 1, 2019.
TRR moved to dismiss Chanel’s complaint, arguing that Chanel fails to state a claim under the Lanham Act for trademark infringement, counterfeiting, or false endorsement/unfair competition. TRR contends that Chanel has not adequately alleged a likelihood of consumer confusion, emphasizing that TRR’s use of Chanel’s trademarks constitutes nominative fair use. According to TRR, the nominative fair use factors and the Polaroid factors both weigh in TRR’s favor. Furthermore, TRR asserts that Chanel’s claims are barred by the First Sale Doctrine.
Regarding false advertising under the Lanham Act, TRR maintains that its advertising does not imply any affiliation with Chanel, is not literally false, and that Chanel has not alleged any actual injury resulting from the ads. Finally, TRR argues that Chanel’s state law claims are also deficient, as Chanel fails to plausibly allege bad faith or any specific and substantial injury to the public.
Chanel filed suit against The RealReal in the U.S. District Court for the Southern District of New York, alleging it sold counterfeit Chanel products and falsely advertised authentication. The complaint asserted claims for trademark infringement, counterfeiting, false advertising, unfair competition, and violations of New York General Business Law.