Chanel, Reseller Squabble Over How to Police a Market Full of Superfakes

In a case that underscores the challenges luxury brands face in policing the booming resale market, Chanel and What Comes Around Goes Around (“WGACA”) are at an “impasse” over which party bears the responsibility for identifying counterfeit or otherwise infringing goods in order to ensure that they are not offered up to unknowing consumers in the resale market. That is the question currently before Judge Louis Stanton of the U.S. District Court for the Southern District of New York, as the parties face off in the latest round of a long-running trademark-centric lawsuit. 

Some Background: The lawsuit between Chanel and WGACA got its start in March 2018, with Chanel accusing the reseller of infringing its trademarks, selling counterfeit goods, and misleading consumers into believing there is an affiliation between the two companies. In February 2024, a jury sided with Chanel, awarding the company $4 million and finding WGACA liable for willful trademark infringement, false association, unfair competition, and false advertising. 

As part of the second phase of the proceedings, Chanel is seeking a sweeping injunction to permanently bar WGACA from using its trademarks in connection with its unauthorized advertising and sale of CHANEL-branded, among other things.

The court gave a sneak peek at what the injunction will look like in a proposed injunction that it provided to the parties late last year. As first reported by TFL, the court proposed an array of restrictions and/or requirements, including barring WGACA from “using any of the CHANEL trademarks … to advertise or promote WGACA’s general business” and from “making any advertising claims, representations, or statements [about] the genuineness of any CHANEL-branded items” unless it has records to support such authentication claims. 

The Crux of the Conflict: Superfakes & Chanel’s Database

As of now, the most contentious element of the proposed injunction comes by way of the last 13 words of a provision that prohibits WGACA from “advertising, offering for sale, or selling any CHANEL-branded items that have not been authorized for sale by Chanel, including, but not limited to, point-of-sale items and retail props, after notification by Chanel that such items have not been authorized for sale.”

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