A New York federal judge is urging Chanel and The RealReal to settle the case that first pit the parties against one another back in 2018. In an order on May 5, Judge Gabriel Gorenstein of the U.S. District Court for the Southern District of New York called on the parties to move the case along, stating that “for nearly two years now, there has been a stay of discovery during which the parties have reported to the court that they are engaged in settlement discussions.” Following repeated stays in discovery, the case is now “one of the oldest … on the court’s docket,” per Judge Gorenstein, who said he will not order discovery to proceed immediately but also warned counsel for the luxury brand and the resale giant that he is “not likely to continue the stay much longer without strong evidence that settlement is imminent.”
Against this background, Judge Gorenstein stated in his order, as first reported by TFL, that every update that the parties provide to the court about the status of their mediation of the case (they parties were previously ordered to provide the court with mediation status updates every 21 days) should address “what if any time limits the parties have imposed on themselves to conclude the settlement process and explain in greater detail why the stay of discovery should continue.”
THE CASE IN CONTEXT: The court’s seemingly waning patience comes more than five years after Chanel filed suit against The RealReal, lodging various trademark-centric causes of action against the luxury resale company. Setting out trademark infringement, counterfeiting, false advertising, and unfair competition claims, Chanel alleged that The RealReal’s use of the CHANEL mark on its website, in advertising materials, and in its brick-and-mortar stores to advertise the availability of Chanel products constitutes trademark infringement.
At the same time, Chanel maintains that The RealReal has engaged in “improper business practices” by “represent[ing] to consumers that it ‘ensure[s] that every item on [its site] is 100% the real thing, thanks to our dedicated team of authentication experts,’” and then offering up and selling “at least 7” counterfeit Chanel products.
Still yet, Chanel has taken issue with TRR’s “advertising and marketing practices,” claiming that the reseller “has attempted to deceive consumers into falsely believing that [it] has some kind of approval from or an association or affiliation with Chanel” when no such association exists.
All the while, The RealReal has pushed back against Chanel’s suit, characterizing the case as “nothing more than a thinly-veiled effort to stop consumers from reselling their authentic used goods, and to prevent customers from buying those goods at discounted prices.” In claims of its own, TRR alleged that Chanel has engaged in violations of engaging in an “aggressive campaign” of “exclusionary and anticompetitive conduct” aimed at “monopoliz[ing] the market” – and thus, the supply and price of its goods, both new and pre-owned – to the detriment of its competitors and consumers, alike.
Specifically, TRR contends that Chanel has tried to illegally “stymie competition” that comes from resellers – which “threaten the very core of its business model, [one that] is premised on a limited supply and few access points for consumers” – by entering into “exclusive contracts with high-end retailers” and anticompetitive deals with fashion media outlets.
The RealReal has argued that Chanel has been taking legal action against a number of resellers, including What Goes Around Comes Around, in order to maintain its grip on the market. Yet, Chanel has failed to file suit against Farfetch for offering up pre-owned Chanel products in a similar manner because Chanel made a “significant” investment in the e-commerce platform in February 2018, which further serves as an anticompetitive tactic, per The RealReal.
The case is Chanel, Inc., v. The RealReal, Inc., 1:18-cv-10626 (SDNY).
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