Estée Lauder and a group of its beauty brands can move forward with their trademark case against Walmart after a federal judge rejected the retailer’s bid to dismiss or narrow claims over allegedly counterfeit cosmetics and fragrances sold through Walmart.com. In a newly-issued order, Judge Hernán D. Vera of the U.S. District Court for the Central District of California denied Walmart’s renewed partial motion to dismiss.
The court’s ruling – which allows the brands’ claims to proceed, including allegations involving products beyond the 17 that Estée Lauder says it purchased and tested, comes seven months after Estée Lauder, Le Labo, La Mer, Clinique, Aveda, and Tom Ford –filed suit against Walmart, accusing the retail giant of facilitating the sale of counterfeit goods through its third-party marketplace.
According to the amended complaint that they filed in June, the brands’ protection teams made 17 test purchases from Walmart.com across multiple brands and third-party sellers. Personnel familiar with the genuine goods allegedly inspected the packaging and tested the contents, concluding that the products were not manufactured by or for the plaintiffs and bore counterfeit marks.
The Counterfeit Claims Clear a Hurdle
In its partial dismissal bid, Walmart argued that the brands’ trademark claims fell short, as it did not identify specific defects or characteristics distinguishing the products from genuine goods. But in his September 10 order, Judge Vera disagreed, holding that the brands had identified the products and alleged that inspections and testing showed they were counterfeit and that they “do not need to allege more at the pleading stage.”
The court also found the consumer confusion allegations sufficient: Estée Lauder alleges that consumers are likely to believe the products are genuine, an impression reinforced by Walmart’s representations about how it selects and partners with Marketplace sellers. At the pleading stage, those allegations were enough to state a plausible claim.
Walmart also sought to limit the case to the 17 tested products, arguing that the complaint failed to identify a pattern or common source connecting other allegedly counterfeit goods. The court rejected that argument, pointing to their alleged sale through Walmart.com as the common nexus. “That is enough,” Judge Vera held.
The court similarly declined to limit the potential scope of relief at this stage. And it rejected Walmart’s alternative request for a more definite statement, finding it clear that the brands are pursuing claims over counterfeit goods, rather than genuine products sold through unauthorized channels.
THE BIGGER PICTURE: The case sits within the broader question of when online marketplaces can be held liable for trademark infringement by third-party sellers. Under the traditional contributory liability framework, general awareness that counterfeit goods may be available on a platform is typically not enough. Knowledge of specific infringement, coupled with continued provision of services, can support liability.
The analysis can become more complicated when marketplaces play a larger role in transactions. Courts have considered a platform’s involvement in the sale and distribution of goods when assessing potential liability, rather than treating every marketplace as a passive host for third-party listings.
Estée Lauder alleges that Walmart controls parts of Marketplace transactions, including checkout and payment processing and customer support, and permits third-party Marketplace purchases to be returned to Walmart stores. The September 10 ruling does not decide whether that involvement is enough to establish liability. Walmart’s knowledge of the alleged infringement and its role in the transactions remain issues for the case as it proceeds.
The case is Estée Lauder Inc. et al. v. Walmart Inc. et al., 2:26-cv-01341 (C.D. Cal.).
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