Chanel is urging a federal court to reject The RealReal’s attempt to revive antitrust counterclaims in a dispute that continues to test the boundaries between trademark enforcement and luxury resale competition. In a memorandum filed in the U.S. District Court for the Southern District of New York on May 15, Chanel argued that The RealReal’s bid to file amended counterclaims is “futile,” contending that the resale giant still fails to plausibly allege anticompetitive conduct, monopoly power, or harm to competition.
The Case in Brief: Chanel’s opposition memo marks the latest development in litigation that began in 2018, when the luxury goods brand sued The RealReal (“TRR”) over alleged trademark infringement, counterfeiting, false advertising, and unfair competition arising from the resale platform’s alleged marketing and sale of “counterfeit” Chanel products.
The reseller later responded with antitrust counterclaims, accusing Chanel of attempting to suppress competition in the secondary luxury market through coordinated conduct involving retailers, publishers, landlords, and consumer messaging. Many of those claims were dismissed earlier this year, with the court finding that several allegations were time-barred and that TRR failed to sufficiently plead harm to competition.
TRR is now seeking to amend its previously-dismissed counterclaims by adding allegations that Chanel pressured landlords into denying it retail space, monitored customers suspected of reselling Chanel goods, and engaged in “sham litigation” against TRR and other resellers.
>> Chanel’s Core Argument: In its new filing, Chanel pushes back against TRR’s proposed claims, arguing that the revised pleading is ultimately “more of the same.” TRR still “fails to allege any harm to competition at all,” per Chanel and instead, alleges only injury experienced by TRR itself. According to Chanel, that distinction is fatal to the resale platform’s antitrust claims because the Sherman Act requires harm to competition in the broader marketplace, not simply harm to a single competitor.
The filing further characterizes TRR’s amended counterclaims as a “meritless attempt to deflect from TRR’s continued unlawful conduct and delay Chanel’s pursuit of its claims.”
>> The Market Definition Fight: At the same time, the filing attacks TRR’s proposed market definition for “top-tier investment-grade handbags and hold-value handbags,” which Chanel characterizes as an artificially narrow and “gerrymandered” effort to inflate Chanel’s alleged market power.
Still yet, Chanel invokes the Noerr-Pennington doctrine in response to TRR’s claim that it is engaging in “sham litigation” in order to suppress competition in the luxury resale market, arguing that its lawsuit cannot plausibly be considered objectively baseless because several of its trademark and false advertising claims already survived dismissal.
THE BIGGER PICTURE: The lawsuit continues to raise broader questions about how far luxury brands can go in shaping resale markets for their products. As resale becomes an increasingly important segment of the luxury industry, the outcome in this case may help define where trademark enforcement ends and potentially exclusionary conduct begins.
The case is Chanel, Inc., v. The RealReal, Inc., 1:18-cv-10626 (SDNY).
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