The Luxury Institute announced key findings from a recent qualitative survey of its Global Luxury Expert Network members, which is comprised of prominent luxury goods and services CEOs, other C-level management, and luxury-focused consultants, as well as additional top-tier luxury executives and industry experts. Survey respondents were enlisted to help gauge the temperature of the luxury goods market, including by predicting whether the current economic slowdown is turning into an economic downturn or a full recession, and how strong it is likely to go either way. The network of individuals was also asked to predict how strongly major regions of the world may be affected when it comes to luxury goods sales generally, and what they expect the severity of the impact to be on key luxury categories – from Fashion & Leather goods to Travel & Luxury, along with what luxury market trends they see emerging in the second half of 2022 and into 2023.

According to the Luxury Institute’s findings, which were first released mid last month, a solid majority, 59 percent of survey participants believe that the current slowdown is likely to lead to a luxury downturn – compared to 41 percent who predict that current conditions will lead to a fully-fledged “luxury recession.” While most participants stated that we are currently living through a “period of unprecedented volatility and uncertainty,” those that view current conditions as likely to result only in a “downturn” point to “the strong cash balances of consumers and enterprises in more developed markets that can help them to withstand negative economic forces and the impact of war.” They also cite “the resilience of affluent consumers, despite stock market losses, as a positive sign.” 

On the other hand, individuals who predict that a recession is, in fact, looming revealed that aggressive interest hikes from central banks will “create white/blue collar unemployment, especially in tech, with strong consumer tightening of spending across all income levels.” Beyond that, the predict that “persistent stock market losses are likely to affect the wallets and psyches of all segments of affluent consumers, except perhaps centi-millionaires and billionaires.” 

Respondents on both sides of the issue agree that regardless of the extent of the downturn, luxury is cyclical and sales will not be able to entirely avoid being affected.

Delving into regional effects, the Luxury Institute found that industry experts predict that if current conditions culminate in an economic downturn (as opposed to a recession), the economically powerful Asia/Pacific region – led by mainland China, which accounted for roughly 21 percent of the global luxury market in 2021, up from about 20 percent in 2020, according to Bain – is “resilient enough, particularly with strong government stimulus, to get past COVID effects and stabilize growth.” Respondents who see a recession on the horizon believe the impact on the luxury market will be particularly strong in Asia/Pacific since China has “a myriad of vulnerabilities, including COVID control, an unstable real estate market, a slowing economy, a dependency on expensive commodity imports, and continuing supply chain issues that affect exports.” 

As for the North American market – which is currently helping luxury groups like LVMH and Kering, and brands, such as Hermès, to makeup for diminished sales in China, downturn-predicting experts stated that they expect to see “a medium impact effect, given America’s relatively stronger economy, including higher energy self-sufficiency and its distance from the [Russia-Ukraine] war.” Meanwhile, those who predict a global recession said that that “many companies are already warning that American consumers are rapidly losing spending power momentum, and they point to the Federal Reserve’s stated commitment to aggressive interest rate increases as shock effects on housing and borrowing, while inflation continues unabated.” Such as confluence of factors will lead to “an inevitable recession” in their eyes. 

In Europe, experts who predict that a downturn is afoot believe the effect on luxury goods sales will fall within “the medium range” in terms of severity, while those who point to a recession expect the impact will be “strong,” noting that “war in the middle of Europe will dramatically increase local energy prices, drive inflation across consumer staples, and have a distinct negative impact on the economic engines of Europe: Germany, France, and U.K.” 

With respect to product/services categories, themselves, regardless of the type of downturn, experts agree that the category “most likely to thrive” is Consumer Technology. While consumers will likely cut back on their consumption of many things in the face of economic uncertainty and turmoil, food, housing, energy and increasingly, technology goods and services, are considered to be “life necessities.” More heavily impacted, according to the majority of respondents, will be the Travel & Leisure category, which despite being “a strong growth category post pandemic,” is likely to experience “a mild or medium downward effect.”

Turning its attention to Fashion & Leather Goods (along with the Automotive category), the Luxury Institute asserts that respondents who predict that a downturn is in the works “feel it will have a stronger negative impact on the these categories while those who predict a recession predict a lighter negative impact.” Fashion & Leather goods are comprised of more affordable luxury (compared to some other luxury categories), but the aspirational buyers will, nonetheless, “likely cut back.” Either way, Fashion & Leather and Automotive are seen as much more vulnerable than the “necessity” categories. At the same time, experts predict that Luxury Watches & Jewelry are seen “more likely to experience a medium level impact” in either scenario due to supply shortages plus their high investment value. 

Finally, Department Stores are seen to be “the most vulnerable category, by far,” according to the Lxuury Institute survey. “This is likely due to historically high overheads, high inventories, and low margins,” it states, with experts also pointing to the fact that “digital multi-brand luxury retailers have proven to be unprofitable even during the best of times.”

Twitter has landed a win in the first round of the case that it is waging against Elon Musk in the wake of the Tesla and SpaceX chief executive attempting to back out of a $44 billion agreement to acquire the social media platform. Between the high-profile nature of the case and the claims that Musk’s legal team is waging in an attempt to get him out of the deal that the parties reached in April, the lawsuit – which was filed in the Delaware Chancery Court on July 12 – draws something of a neat line to a similarly-closely-watched, deal-centric case that landed before the Delaware court in September 2020: the since-settled one that Tiffany & Co. filed against LVMH when it sought to walk away from a $16.2 billion deal to acquire the famed jewelry brand. 

For a bit of background, Twitter sued Musk earlier this month for allegedly failing to uphold his end of a $44 billion deal to buy the social media platform. “Musk apparently believes that he – unlike every other party subject to Delaware contract law – is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away,” the San Francisco-based social media company asserted in its complaint. The basis for Musk’s move to pull the plug on the deal? Twitter allegedly “materially” breached the parties’ agreement by making “false and misleading representations” about the number of spam accounts on the platform, with such alleged misrepresentations amounting to a “material adverse event.” 

Beyond that, Musk has argued that between the time of signing off on the binding merger agreement and the deal’s closing (slated for October 24, 2022 at the latest subject to a potential 6-month extension), Twitter engaged in activities that fall outside of the ordinary course of business and that are not in line with the Jack Dorsey-founded company’s past practice, namely, by ousting two high-level executives and one-third of its talent acquisition team. (Twitter has argued that it was able to negotiate the “past practices” term out of the parties’ deal agreement – more about that in a minute.)

In short: Musk is arguing, among other things, that he should be able to walk away from the deal without being penalized because: (1) Twitter’s “false and misleading representations” about the number of spam accounts, which Musk says he relied on in entering into that deal, give rise to a “material adverse effect” (“MAE”); and (2) Twitter has failed to comply with the “ordinary course” covenant in the merger agreement by terminating certain employees, slowing hiring, and failing to retain key personnel. (Musk also claims that Twitter breached information-sharing and cooperation covenants related to information about the number of bots.)

If these arguments sound familiar it may be because they were central to the case that Tiffany & Co. levied against LVMH when the French luxury goods group tried to walk away from their deal – albeit the MAE and “ordinary course” claims in that case stemmed from the impact of the COVID-19 pandemic. (After reaching a deal in November 2019 to acquire Tiffany & Co. for $135 per share, Bernard Arnault-run LVMH attempted to formally back out almost a year later, arguing that Tiffany had failed to “follow an ordinary course of business, notably in distributing substantial dividends when the company was loss making,” and also claiming that “the operation and organization of [Tiffany] are not substantially intact” and that the company was in the midst of suffering from a “durationally significant downturn,” thereby, invoking the MAE clause in the parties’ merger agreement, which they signed-off on ahead of the onset of COVID.)

While the Tiffany v. LVMH suit did not play out in court for long (the parties salvaged the deal for a renegotiated $131.5 per share), Brian JM Quinn, a professor at Boston College Law School, who focuses on corporate law, M&A, and transaction structuring, told TFL this week that had LVMH fought to get out of the deal, instead of renegotiating and settling the suit, it “may have had a reasonable chance of winning on the ordinary course argument given that AB Stable won on the same argument.” (In deciding AB Stable v. MAPS Hotels and Resorts One in December 2021, the Delaware Supreme Court upheld the Court of Chancery’s finding that the seller breached the ordinary course covenant in the merger agreement when it made significant business changes in response to the COVID-19 pandemic without either securing the buyer’s consent or providing it with notice.)

The outcome in AB Stable could – on its face – seems meaningful for Musk, as the ordinary course claim is the one where he “might have some purchase,” per Quinn. However, this is still not likely to be a homerun for Musk, not least because Twitter alleges that while a draft version of the merger contract included a covenant that required Twitter to get Musk’s consent before firing employees at the level of VP and above, that term was ultimately negotiated out of the final agreement, thereby, making it difficult for Musk to successfully argue now that the company breached their deal by firing executives without his consent. 

Additionally, Quinn says that Musk is similarly facing an uphill battle in taking issue with Twitter’s failure to retain employees between signing the merger contract and closing the deal. The kicker here is that, according to Twitter, it sought Musk’s consent – on two separate occasions – to establish an employee retention program to beat some of the traditional turnover that follows from mergers, but he allegedly rejected the idea. And finally, Musk is likely to have little luck in gaining traction for his claim that Twitter is not operating “consistent[ly] with past practice,” as Twitter argues that it negotiated this term out of the parties’ final agreement. As such, Quinn contends that Twitter need only “run the business,” and it need not do so in a way that “looks exactly like what they did in the past,” especially in the face of a downturn in the economy, which would not, for example, require it to employ “the same number of people as in they have in the past.” 

The seemingly bad news for Musk is that the “ordinary course” claim – which “seems to fall apart once you add additional facts to the picture,” per Quinn – is still a stronger claim that the MAE argument, which centers on Twitter’s routine disclosures to the U.S. Securities and Exchange Commission (“SEC”) about the number of bot accounts on its platform. (In its SEC filings, Twitter estimates that less than 5 percent of Twitter accounts are “false or spam” accounts, but also states a sentence later that “in making this determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated.”) 

Ann Lipton, a business and securities professor at Tulane, stated on Twitter this week that there simply is “no evidence of an MAE” – or an event or series of events that has caused a significant or material deterioration in the financial health of the target or in the stability of the target’s business between the signing of the agreement and the closing. According to Lipton, it is “not clear how spam accounts would evidence that Twitter made any false statements (it always warned its estimates could be wrong), and [Musk] has not articulated why the information [that] he has is not sufficient to close” to deal. 

LVMH and Tiffany famously found their way back to the negotiating table and closed the deal (complete with a 2 percent discount for LVMH and formalized assurances for Tiffany that if LVMH tried to renege again, it would not have any walkaway rights, and thus, the price that would be used by the court for determining damages would be the original $135 per share price”) – making for the largest luxury deal to date, beating out LVMH’s acquisition of Dior for $13.1 billion in 2017. As for whether that will happen for Twitter and Musk is yet to be seen. 

The potential outcomes in the event that the parties do not renegotiate the deal for a lower price and subsequently settle the suit are twofold: (1) the court orders specific performance and  force Musk to buy Twitter for the agreed-upon price, or (2) the parties reach a settlement in connection with the deal (as distinct from a settlement of the lawsuit) in furtherance of which the two parties agree to get their separate ways and Musk pays some sum of money. That sum would be something larger than the $1 billion termination fee set out in the merger agreement but less than $44 billion. 

On the heels of facing complaints from more than one company following its name change last year, Meta Platforms, Inc. has landed on the receiving end of a newly-filed lawsuit, with a small virtual reality-focused company accusing the social media behemoth formerly known as Facebook, Inc. of “brazenly violat[ing] fundamental intellectual property rights enshrined in U.S. law to obliterate” a business that has been using the Meta name for more than ten years. In the lawsuit that it filed in a New York federal court on Tuesday, experiential and immersive technologies company Meta claims that in opting to rebrand to “Meta” last fall, Facebook, Inc. “astoundingly … ignored [its] federal registrations for the META mark,” and the company has since “saturate[d] the marketplace with its infringing META mark,” leaving Meta with little chance to survive. 

According to its complaint, New York-based Meta alleges that it got its start in 2010 under the watch of founder Justin “JB” Bolognino, who “had the foresight to adopt the name ‘Meta,’ long before immersive and experiential technologies, and the still-developing ‘metaverse’ were known by the general public.” In furtherance of its business, Meta says that it designs and develops “immersive and experiential technologies and products” for some of “the most influential individuals, businesses, and institutions, as well as other creators” in the realm of “immersive and experiential technologies.” Beyond that, Meta offers goods/services to the general consuming public, who attend events such as Coachella, South by Southwest, and Cannes Lions, where it has staged experiential and immersive experiences. 

Against this background and in light of its “efforts since 2010, and its significant marketplace success,” Meta claims that its name has come to act as an indicator of the source of its “high-quality, ethical, and reputable goods and services” in the minds of consumers. At the same time, Meta asserts that it has received U.S. trademark registrations for the “Meta” wordmark for use on goods/services that include “social media strategy and marketing consultancy,” and “entertainment, namely, production of … events using digital, virtual and augmented reality filmmaking and interactive displays.” 

While these registrations should have served as a red flag for Facebook, Inc.’s due diligence team ahead of its name change last year, Meta alleges that Facebook, Inc. “ignored Meta’s federal registrations for the META mark that expressly identify services ‘using digital, virtual and augmented reality.’” (Meta refers to Meta Platforms as “Facebook” in its complaint, as “otherwise, it would be impossible to easily read and distinguish between the parties.”) With “actual knowledge of Meta” – and its trademark rights – and “apparently believing that it could trample the rights of this small business with impunity,” Meta claims that “corporate goliath” Facebook, Inc. announced its name change in October 2021 and has since “deployed its almost limitless resources to saturate the marketplace with its infringing META mark.” 

Meta Lawsuit

In addition to co-opting its name, Meta argues that Facebook, Inc. is steadily encroaching into its territory, with the social media titan offering up creator-centric products and services that are “identical” to Meta’s and that “clear[ly] target creator communities associated with the [AR, VR, and XR] industry.” Facebook, Inc.’s “infringing conduct is engulfing the entire industry,” per Meta, as it “hosts more and more experiences with, and for, businesses and individuals across the globe,” including at Coachella and South by Southwest, where Meta has hosted its own “immersive experiences,” while also “targeting the identical consumer base as Meta, and the identical businesses and creator communities.” 

Given that Facebook, Inc.’s AR, VR, and XR-centric offerings, its consumers, and its channels of trade are “identical to those of Meta – albeit at a much larger scale,” Meta contends that Facebook, Inc.’s adoption of the Meta trademark makes for “a textbook reverse confusion case.” In other words, “Facebook, Inc. (the much larger, junior user) overruns Meta (the smaller, senior user) by virtue of its size, market power, advertising reach, and almost limitless resources,” and thus, “consumers are likely to mistakenly believe that Meta’s products and services emanate from Facebook and that Meta is somehow affiliated or associated with Facebook.” 

Despite its alleged awareness of Meta’s products and services, Facebook, Inc. has “continued to willfully infringe the META mark and inflict significant and irreparable harm on Meta,” according to Meta’s complaint, as “Facebook’s use of its infringing mark is extremely likely to cause consumer confusion with Meta’s use of [its own] META mark,” and in fact, Meta claims that actual confusion has already occurred. (Meta also argues that it is being damaged further by Facebook, Inc.’s infringement, which has caused its business and the META mark to be “inextricably linked with, and eviscerated by, the veil of toxicity that has enshrouded Facebook” – from the social media giant’s “enabl[ing] of terrorist and hate groups” to its alleged “proliferat[ion] of COVID and political misinformation.”) 

Setting out claims of federal trademark infringement and unfair competition, as well as unfair competition under New York state law in the new lawsuit, Meta alleges that Facebook Inc.’s alleged conduct has caused it to “[lose] the value of, and control over, the META mark,” and the “goodwill and reputation” associated with its brand.” As a result, the META mark “no longer exclusively designates Meta as the single source” of products and services, the plaintiff contends. In addition to injunctive relief to immediately and permanently block Facebook, Inc. from continuing to use the Meta trademark and continuing to engage in acts of unfair competition, Meta is seeking damages, including – but not limited to – an award of all of Facebook, Inc.’s profits, in connection with the lawsuit. (For reference, in April, Meta Platforms reported a profit of $7.5 billion for the first quarter of 2022.)

Rising Reverse Confusion Cases

The Meta lawsuit is a striking one, as it is one of the latest – and potentially one of the highest-profile – cases in a string of reverse confusion matters that have recently landed before federal courts in New York (along with other courts), including the lawsuit that SKKN+ owner Beauty Concepts LLC filed against the much-more-famous Kim Kardashian ahead of the launch of her new brand SKKN by Kim, and the case that 8-year-old fashion brand Rhode filed against Hailey Bieber, the widely-known model and wife of musician Justin Bieber, over her recently-launched skincare brand Rhode. (In the latter case, Rhode argues that it took “an immediate hit” after the launch of Bieber’s brand, with search engine query results for the word “rhode” being dominated by the defendant’s brand instead of its own, and awareness for the newer Rhode brand being boosted by Ms. Bieber’s significant social media following and that of “Ms. Bieber’s husband, Justin Bieber, who has promoted ‘rhode’ to his 243 million Instagram followers.”)

As distinct from traditional infringement cases, which involve “forward confusion” (i.e., when a senior trademark user claims that consumers believe that it is the source of the junior user’s goods), “reverse confusion” occurs when a large and well-known junior user saturates the market with its use of the mark so much so that it is wrongly viewed as the source of a lesser-known senior user’s goods.  

“Although courts have recognized the theory of reverse confusion for at least 40 years, the number of lawsuits involving allegations of reverse confusion has increased exponentially,” Loeb & Loeb attorney Tal Dickstein previously wrote, pointing to “the proliferation of information technology and social networking platforms that allow even moderately financed companies to gain national market penetration much more quickly than they could have in the past” as part of the reason for the rise of such suits. “The faster roll-out of new products and services increases the chances that the newcomers’ marks will overlap in the marketplace with similar marks used by smaller, often regional companies, resulting in claims of reverse confusion.” 

The danger with reverse confusion, Dickstein wrote “is not that consumers will believe that the junior user’s products originate with the senior user, but that consumers will mistakenly believe that the smaller senior user’s products were sponsored or approved by the stronger junior user” because the junior user’s brand takes over the market, resulting in a diminishing effect for smaller entities, even if those smaller entities maintain much more robust rights. 

Meta’s lawsuit “illustrates the importance and purpose of the reverse confusion doctrine in protecting the trademark rights of small businesses in this country,” Meta’s lead counsel and Pryor Cashman LLP partner Dyan Finguerra-DuCharme, told TFL. “It is the quintessential case of reverse confusion.” Due to the “broad and egregious conduct it involves,” she says that this is “one of the most significant reverse confusion cases filed since the seminal Big O case” in which the U.S. Court of Appeals for the Tenth Circuit first established the legal doctrine of reverse confusion in 1977. 

“The facts provide the 2nd Circuit courts with the opportunity, for the first time this decade, to ensure that liability standards, injunctive relief, and damages awards in reverse confusion cases are commensurate with the fundamental purpose of the doctrine to protect the IP rights of small businesses in a contemporary era of corporate consolidation and dominance,” according to Finguerra-DuCharme, who states that “this is especially so in light of the U.S. Supreme Court’s recent Romag decision — which signaled judicial willingness to vehemently safeguard and compensate trademark holders. In this context, it is particularly important for the courts to affirm the strong protections that U.S. law provides for small businesses being bullied or destroyed by corporate behemoths.”  

A rep for Meta did not respond to a request for comment about the lawsuit.

The case is METAx LLC v. Meta Platforms, Inc., 1:22-cv-06125 (SDNY).

Secondary fashion sales are booming, with the global market for pre-owned apparel generating a whopping $40 billion per year, according to Boston Consulting Group, and growing at a rate of 15 percent per annum, as consumers increasingly tap into the online consignment segment, new market entrants rush to meet burgeoning demand, and existing players look to differentiate themselves and their value propositions. Against this background, funding keeps pouring into the secondary market – whether it be funneled into new resale platforms or already-established ones that are looking to expand their operations, including in an international capacity – and all the while, given the increasingly crowded nature of the market, consolidation is starting to come into effect, with existing entities joining forces to grab a bigger share of the market. 

With so much activity underway on the resale and rental space, we have put together a (running) timeline of investments and M&A events to provide a broad overview of which players are raising funds, which are merging together, and what the trajectory of this segment of the market – which only appears to be gaining in steam – looks like more generally … 

July 2022 – Resale Platform Galaxy Raises $7 Million in New Round

Gen-Z-focused pre-owned fashion platform Galaxy has raised $7 million in new funding from investors that include Snapchat, Floodgate, RGH Capital, Turner Novack’s Banana Capital, and Homebrew. Launched in August 2021, the company combines live-shopping and fashion resale in order to “build entertaining and engaging experiences that generate explicit data” – via machine learning – “where users tell us what they like by interacting with our product,” CEO Danny Quick stated in announcing the round. The company says that it will use the newly-raised cash to implement “new, user-friendly features and increased opportunities for creators to feel empowered and earn a living on their own terms, in their own time.”

May 2022 – Carousell to Buy Up Refash

Singapore-based online classifieds giant Carousell has signed off on a deal to acquire secondhand retailer Refash for an undisclosed sum, as the resale market continues to grow in Asia. Carousell said in a statement that 7-year-old Refash, which touts itself as an “online thrift store,” will continue to operate its own brand, as distinct from the Carousell entity, and that the acquisition is expected to “drive a synergistic partnership between the two marketplaces.”

April 2022 – Sneaker Marketplace SoldOut Raises $33 Million

Korean sneaker marketplace SoldOut raised $33 million in a funding round led led by Korea online retail titan Musina and FinTech Dunamu. The nearly 2-year-old resale company will use the funds to fuel its expand into new product categories and build out its customer experience, including by upgrading its platform and opening a second inspection center in Seoul.

March 2022 – Vestiaire Acquires Tradesy

French resale company Vestiaire Collective announced its acquisition of Tradesy, “a U.S. pioneer in the fashion resale industry,” on Tuesday. Terms of the deal were not disclosed, but the companies said in a statement that by joining forces, they will “significantly increase the size and reach of their peer-to-peer marketplaces, to the direct benefit of their sellers and buyers. The combined company will boast a membership community of 23 million, a catalog of 5 million items and a Gross Merchandise Value exceeding $1 billion. Customers of both Vestiaire Collective and Tradesy will significantly benefit from the companies’ alliance.”

December 2021 – Rebag Raises $35 Million in Series E

Rebag has raised $35 million in funding a Series E round, bringing the 6-year-old resale company’s total funding to $103 million. “Following a strong year driven by technological advances and category expansion,” Rebag says that the round – which was led by private equity firm Novator with participation from existing investors, such as General Catalyst – “positions [it] for its next cycle of innovation and accelerated growth,” and that the investment funds will be used to further build upon Comprehensive Luxury Appraisal Index for Resale, its proprietary software aimed at bringing transparency to the luxury resale industry. The company says it will also use the round to scale its tech-enabled brick-and-mortar business. 

December 2021 – Farfetch Acquires LUXCLUSIF

Fashion e-commerce platform Farfetch announced on December 9 that it has acquired resale platform LUXCLUSIF, including the company’s technology platform, for an undisclosed sum. This deal will allow FARFETCH to “significantly accelerate its resale capabilities through the development of key technology and service features such as automated pricing, and faster geographic and category expansion of its resale service, FARFETCH Second Life,” the London-based company stated.

Founded in 2013, LUXCLUSIF is a B2B service provider with “a successful turnkey solution enabling the acquisition, authentication and sale of second hand luxury goods to – and from – auctions, retailers, e-commerce platforms, and stores worldwide,” the companies said in a statement. “Together, FARFETCH and LUXCLUSIF can leverage these capabilities and positioning to become the global platform for pre-owned luxury for both customers and industry partners.”

November 2021 – eBay Acquires Sneaker Con’s Authentication Arm

eBay announced on November 29 that it has entered into a definitive agreement with Sneaker Con Digital under which it has acquired Sneaker Con’s authentication business, a leading sneaker authenticator with operations in the U.S., U.K, Canada, Australia and Germany. According to a statement from eBay, “The acquisition is an extension of the ongoing collaboration between [itself] and Sneaker Con, which has been critical to powering eBay’s Authenticity Guarantee. The service, which eBay launched in October 2020, offers full vetting and verification of select sneakers bought on the marketplace by a team of Sneaker Con’s industry experts.”

Additionally, the marketplace stated that its “Authenticity Guarantee has significantly changed the way people buy and sell sneakers on [its site], as evidenced by quarter over quarter category growth. In just over a year, more than 1.55 million sneakers have been authenticated globally on eBay.”

November 2021 – Marque Luxury Raises $20 Million

Marque Luxury has secured $20 million in funding through an investment by Provident Capital Partners, the Irvine, California-based reseller announced on November 19, saying that the round “follows a period of tremendous growth for MARQUE Luxury, which has opened numerous re-commerce hubs in the United States and several hubs in Asia during the last year and has aggressive plans for future expansion.” The 4-year old company says it will use the new cash to “drive continued business expansion on an operational scale focused mainly in North America,” to “support its omnichannel strategy and allows [it] to generate business activity in the global market on a business-to-business and business-to-business-to-consumer basis.”

November 2021 – StockX Acquires Scout

In its first acquisition, StockX has bought up Scout, a leading developer of power seller tools that is already serving more than 10,000 sneaker resellers around the world. StockX says that the new technology will enable it to “ramp up inventory” – which is, of course, the lifeblood of resale platforms and the primary driver of consumer demand – thanks to Scout’s “best-in-class automation, inventory management, tracking and integration with marketplaces.” At the same time, StockX states that the move will help its marketplace sellers to “accelerate their businesses,” presumably a bid to attract sellers in an increasingly competitive resale market, where no shortage of other resale players have taken to focusing on pre-owned sneakers and streetwear.

In addition to onboarding Scout’s product, StockX confirmed that it will bring on the company’s team three co-founders and seven employees, who “bring their deep experience as sneaker resellers and developers of inventory,” as aims to scale seller business operations.

Detroit-based StockX, which revealed that it surpassed 6.5 million lifetime buyers and 1 million lifetime sellers in the first half of 2021, has been building out its initially sneaker-focused offerings since its founding in 2016 and expanding internationally. In the wake of its latest funding round, a Series E-1 round that closed in April 2021, the company boasts a valuation of $3.8 billion valuation.

October 2021 – Poshmark Acquires Suede One

In its first-ever buy-side move, Poshmark announced on October 13 that it has acquired Suede One, an authentication platform that “combines machine learning, computer vision and expert human review to virtually authenticate sneakers,” with Suede One’s team joining Poshmark effective immediately. According to Poshmark, the acquisition “will scale [its] authentication capabilities and accelerate momentum in high-growth secondhand categories, especially sneakers and luxury,” and reflects the secondhand marketplace’s focus on “strategic investments that drive continued platform innovation, accelerate growth in high-growth resale categories and enhance the user experience to attract and retain both buyers and sellers.”

Founded in 2020, Suede One “has built impressive capabilities in virtual authentication that will allow us to deliver tangible benefits to our community, scale our authentication services in a meaningful way, and accelerate our momentum in sneakers as well as luxury goods, two of the fastest-growing categories in the resale space,” according to Poshmark founder and CEO Manish Chandra.

In a release on Wednesday, Poshmark detailed Suede One’s process, revealing that “for popular sneakers such as Jordan 1s and Yeezy 350s, Suede One can automatically authenticate the majority of submissions with greater than 99 percent accuracy, based on internal testing. For other sneaker types, human experts review the submission with help from the company’s proprietary authenticator tool.”

September 2021 – Vestiaire Raises $209 Million in Venture Round

French resale company Vestiaire has raised 178 million euros ($209 million) in a September 22 venture round which included participation from two new investors, SoftBank Group Corp and Generation Investment Management, bringing its valuation to $1.7 billion dollars. To date, Vestiaire has raised $663.3 million, per CrunchBase.

September 2021 – Tradesy Raises $67 Million in Series D Round

Resale platform Tradesy has raised $67 million in a September 16 Series D round led by led by Foris Ventures, which is Kleiner Perkins head John Doerr’s family office. To date, the company has raised $200.7 million over a series of eight rounds, according to CrunchBase. 

September 2021 – Grailed Closes $60 Million Series B Round

Men’s fashion and streetwear-centric marketplace Grailed announced the closing of a $60 million Series B funding round on September 16, which was led by fellow resale player GOAT Group and with participation from Groupe Artémis, along with existing investors Thrive Capital and Index Ventures. 

August 2021 – Trove Raises $77.5 Million in Series D

Trove Recommerce, which partners with brands to create online platforms for them to sell used goods, raised $77.5 million in an August 25 Series D round, led by G2 Venture Partners. 

June 2021 – GOAT Raises $195 Million in Series F Funding Round

Online sneaker and apparel marketplace GOAT Group has raised $195 million in a new funding round, which has “more than doubled its valuation to $3.7 billion.” The round for the 6-year-old Los Angeles-based company, which boasts some 30 million customers across 170 countries, was led by Park West Asset Management, funds and accounts advised by T. Rowe Price Associates, Inc., Franklin Templeton, Adage Capital Management and Ulysses Management.

June 2021 – Etsy Acquires Depop for $1.62 Billion

In a quest to target Gen-Z consumers (i.e., those born between the late 1990s and the early 2010s), who are driving both social shopping and largescale pushes in sustainability, Etsy announced that it will acquire burgeoning British shopping app Depop for $1.62 billion. 

May 2021 – Treet Raises $2.8 Million in Seed Round

Reseller Treet – which powers brands to set up their own resale sites where buyers and sellers can list and find items – raised $2.8 million in a May 26 seed round with participation from Bling Capital, Matchstick Ventures, Techstars, BAM Ventures, BBG Ventures, Green Meadow, Interlace Ventures, V1.VC and Alante Capital.

May 2021 – Vinted Raises $303 Million in Series F Round

Vinted raised 250 million euros ($303 million) in a May 12 Series F round, the Vilnius, Lithuania-founded online resale platform announced. According to a release from Vinted, which got its start in 2008 and boasts some 45 million users, the company “operates in over 10 markets, and has become the largest online C2C marketplace in second-hand fashion across Europe,” and will use the funding from the latest EQT Growth-led round – one that values the resale upstart at $4.3 billion – to expand its operations in Europe and “new geographies,” ramp up its hiring, and improve user experience. 

April 2021 – StockX Raises $195 Million in Secondary Market Round

StockX announced the conclusion of a $195 million secondary tender offering on April 8, as well as an additional $60 million in Series E-1 primary shares, boosting the streetwear and sneaker platform’s December 2020 valuation of $2.8 billion by 35 percent, and bringing its total funding to $690 million.

March 2021 – Vestiaire Raises $216 Million in Series H

Kering and American investment firm Tiger Global Management led a March 1 Series H funding round that saw secondhand marketplace Vestiaire Collective bring in $216 million in funding, along with existing investors, including its CEO Max Bittner, Vogue’s parent company Condé Nast, and the Eurazeo Group, among others. The deal gives Paris-based Vestiaire “unicorn status” – i.e., puts a $1 billion-plus value on the privately-held company – and “ideally positions it for its next cycle of accelerated growth.” 

February 2021 – Reflaunt Raises $2.7 Million in Pre-Series A

Second-hand fashion platform Reflaunt raised $2.7 million dollars in a pre-Series A funding round from investors including former Jimmy Choo CEO Pierre Denis and Ganni founder and former CEO Nicolaj Reffstrup, among others, with an aim to “offer a variety of resale models to more leading global brands” and to allow consumers to resell pre-owned products “directly on the brands’ individual e-commerce platforms.” 

January 2021 – GOAT Welcomes “Strategic Investment” from Groupe Artemis

GOAT Group announced on January 19 that it would welcome a “strategic investment” from Groupe Artemis – the controlling shareholder of Kering – as it “continues its expansion in fashion apparel and new categories.” The undisclosed Artemis investment comes on the heels of a Series E round of $100 million announced in September 2020, which valued the company at $1.75 billion. 

Manolo Blahnik has prevailed in a decades-long legal battle over its name in China. Since 2000, the famed footwear brand has been engaged a trademark fight against Chinese businessman Fang Yuzhou, who successfully secured a registration for the “Manolo & Blahnik” trademark for use on footwear in China that year, benefitting from the fact that China issues trademark registrations on a first-to-file (as opposed to a first-to-use) basis, and thereby, standing to significantly limit the operations of the Manolo Blahnik brand in the Chinese market, despite years of existing operations in other markets and major marketing placement, such as in the HBO series, Sex and the City. The win for Blahnik, which comes by way of a June decision from the Supreme People’s Court of China that invalidates Yuzhou’s registration, paves the way for the 50-year-old brand to engage in a major expansion effort on the Chinese mainland, as well as in Taipei and Hong Kong.

Blahnik’s China-centric trademark fight – which has been rife with losses, including the trademark office’s determination the Blahnik failed to present evidence of sufficient sales in the Chinese market prior to 2000 – is hardly a novel one. For decades, well-known consumer-facing companies have suffered a similar fate. Upon building their brands in the West and amassing trademark rights in their names, logos, and other branding elements in markets where they were operating, they look to expand internationally, including in China, where they are met with a common-but-unfortunate reality: a native Chinese entity or individual has beaten them to filing and receiving trademark registrations for the same name as their brand, either in English or in the Chinese transliteration. This is precisely what some of the world’s most well-known brands – from Tesla and Pfizer to Apple, Hermès, Akris, and Supreme, among others – have grappled with. 

China’s trademark system has long-garnered criticism among international rightsholders for this exact reason, for enabling a practice that is largely characterized as trademark-squatting. As Akin Gump attorneys William Leahy and Stephen Kho note, “The structure of China’s trademark system is ripe for abuse by squatters.” This is because China is “a first-to-file jurisdiction for trademark registration, [and] its system does not require evidence of prior use or ownership when filing, leaving registration of popular foreign marks open to third parties” that are not the otherwise rightful owners of such marks, but that are looking to piggyback on – and profit from – the goodwill associated with well-known brands. Moreover, the system has traditionally favored native entities due to their easy access to the China Trademark Office (“CTMO”), which exacerbated China’s laissez-faire attitude towards bad-faith trademark registrations.

Faced with mounting pressure from brand-owners and even from within the CTMO to better address the rampancy of trademark-squatting and bad faith filings, China’s trademark body moved to incorporate squatting-specific language in the national Trademark Law by way of amendments that went into effect this time last year. Among the provisions that came into force on November 1, 2019: a particularly closely-watched one that provides – in Article 4 – that “[a]ny bad faith trademark applications without intent to use shall be refused.” (This provision is bolstered by other additions to the national trademark law, as well as existing provisions in China’s General Principles of the Civil Law and Anti-Unfair Competition Law). 

Since the amendments came into effect, the CTMO has, in fact, started to refuse trademark applications based on Article 4, according to Bird & Bird LLP attorney’s Hank Leung, Dawn Hui, and Ivy Dai, which suggests that the amendments “have improved the CTMO’s practice in examining bad faith applications.” 

Famous Cases on the Trademark Front

In addition to amendments to trademark legislation, a growing number of legal battles are providing a blueprint for brands looking to claim rights in their names and other trademark assets in China. Among the most famous cases to date resulted in a win for Michael Jordan, who, following almost a decade of litigation, won a hard battle against Qiaodan Sports Co., Ltd. China. In a decision dated March 26, 2020, the Supreme People’s Court of China overturned the lower courts’ decisions and ruled in favor of the NBA legend in one of the invalidation proceedings over a trademark registration for “Qiaodan”– a commonly recognized phonetic translation for the name “Jordan” – along with a design that depicted a basketball player in midair attempting a layup, which Qiaodan Sports had held since 2007 for use in connection with its manufacturing, marketing, and sale of clothing.

In a separate case, the Shanghai Pudong People’s Court issued a decision in favor of New Balance in an unfair competition lawsuit against New Barlun Co Ltd., ordering the Chinese athletic company to pay the Boston, Massachusetts-based sportswear giant damages of RMB 10.8 million ($1.5 million at the time) in connection with its unauthorized use of the stylized letter “N” on its shoes. The PPC’s April 2020 decision – which brought an end to New Balance’s 16-year battle against the copycat brand that had enjoyed significant success by imitating New Balance’s stylized “N” logo – followed from years of losses for New Balance in the form of opposition and invalidation proceedings against the registration of the mark by New Barlun. 

Taken together, this growing string of cases – the Manolo case, included – are consistent with larger trends being put forth by Chinese courts in recent years, which have seen them exhibit increasing willingness to protect non-native brand owners’ rights in China after exhibiting significant preference for native entities, and in some cases, to exercise their discretion and award damages above the statutory limits. Ultimately, these cases are part of a still-growing pool of litigation that will see Western brand owners successfully claiming rights in their trademarks in China from infringing parties and trademark squatters.  

Reflecting on the outcome in the newest case, Manolo Blahnik, the brand’s eponymous founder and creative director, said: “We are truly humbled and grateful for the support we have received in China and internationally, both from within the fashion industry and beyond. This generous assistance has been a significant contributing factor to this successful result.”