A group of Estée Lauder-owned companies has filed a trademark infringement lawsuit against Walmart, alleging that the retail titan sold counterfeit and otherwise infringing versions of its beauty and fragrance products through its online marketplace. In the newly-filed suit, the cosmetics brands allege that Walmart and its e-commerce subsidiary facilitated the sale of non-genuine products bearing the trademarks of Estée Lauder, Clinique, La Mer, Le Labo, Aveda, and Tom Ford. The case joins a growing number of disputes applying established marketplace liability precedent to increasingly integrated e-commerce platforms.
In the complaint that it filed in the U.S. District Court for the Central District of California on February 9, the Estée Lauder Companies-owned brands (collectively, “ELC brands”) maintain that it purchased cosmetics products from Walmart.com and determined that they were not genuine items. The allegedly infringing products include skincare and fragrance items that make use of its trademark-protected brand names and in some cases, resemble well-known offerings, such as Estée Lauder’s Advanced Night Repair serum, Le Labo’s Santal 33 fragrance, La Mer’s moisturizers, and fragrances sold under the Tom Ford brand.
The ELC brands assert that they have not authorized Walmart or the relevant marketplace sellers to use their trademarks in connection with these goods and argue that the sale of non-genuine products is likely to cause consumer confusion regarding the source, sponsorship, or approval of the products.
A Case Over “Counterfeit” Cosmetics
At the heart of the trademark infringement, false designation of origin, trade dress infringement, and related unfair competition claims at play is Walmart.com’s third-party marketplace model. Like other major retailers, Walmart operates an online platform where outside sellers can list products alongside goods sold directly by Walmart. Distinguishing the case at hand from others, the ELC brands argue, is Walmart’s involvement in the marketplace, which it claims extends beyond merely hosting listings.
Specifically (and in furtherance of its bid to establish direct and/or vicarious trademark liability), the ELC brands allege that Walmart “selects” and “partners” with marketplace sellers and controls key aspects of the transaction process for goods sold on its marketplace, including checkout, payment processing, customer service, fulfillment services, and returns. Consumers purchasing items through the marketplace may return products to Walmart stores, and customer service interactions are handled through Walmart’s systems. The ELC brands contend that this level of integration could lead consumers to believe they are purchasing directly from Walmart, even when a third-party seller is involved.
Beyond that, the brands further allege that Walmart uses its search functionality and listing infrastructure to promote products bearing the ELC brands’ trademarks, thereby driving traffic to allegedly infringing goods and generating revenue and profits that “they would have not realized but for the defendants’ contributory infringement.”
In short: The ELC brands claim that Walmart’s operational control over its marketplace makes it legally responsible for trademark infringement occurring through third-party sellers.
Marketplace Model Under the Microscope
At its core, the case is about who bears responsibility when alleged counterfeits are sold on a major U.S. retail platform? Hardly novel territory, the newly-filed suit fits within an established body of case law addressing when an online marketplace may be liable for infringing goods sold by third parties. Courts, including the Second Circuit in Tiffany (NJ) Inc. v. eBay Inc. (applying the Supreme Court’s framework in Inwood Laboratories, Inc. v. Ives Laboratories, Inc.), have held that marketplaces may be contributorily liable if they have specific knowledge of particular infringing listings or sellers and continue to provide services without taking appropriate action.
More recent cases have examined not only knowledge-based contributory liability under Inwood, but also whether a platform’s operational involvement in the transaction – including control over listings, payment processing, fulfillment, customer service, and returns – may support theories of direct or vicarious trademark liability. In particular, courts have considered whether such integration reflects sufficient “use in commerce” or a degree of control and financial interest consistent with vicarious liability principles.
Here, the ELC brands emphasize Walmart’s alleged control over checkout and payment processing, its handling of returns (including in-store returns), and its provision of fulfillment and customer service. With that in mind, the case is likely to turn on a fact-intensive assessment of Walmart’s level of control and whether that involvement is sufficient under existing precedent to support direct, contributory, or vicarious trademark liability.
As major retailers continue expanding hybrid models that combine first-party sales with third-party marketplace offerings, disputes like this one highlight the ongoing tensions between brand protection efforts and the operational structure of large e-commerce platforms.
The case is Estée Lauder Inc. et al., v. Walmart Inc. et al., 2:26-cv-01341 (C.D. Cal.).
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