After weeks of battling in a New York federal court, Chanel on Tuesday won its trademark infringement case against What Goes Around Comes Around.
The jury voted unanimously on all four counts in favor of the luxury fashion house.
Jurors decided that $4 million should be awarded for statutory damages in accordance with the Lanham Act. That counterfeiting law provides for a national system of trademark registration and protects the owner of a federally registered mark against the use of similar marks if such use is likely to result in consumer confusion, or if the dilution of a famous mark is likely to occur. In addition, non-statutory damages will be decided by Justice Louis Stanton after both sides submit briefs. Chanel is expected to file the first brief, which is due in 30 days.
A Chanel spokesperson issued a statement Tuesday afternoon, expressing “its deep gratitude” to the jury for their service during the nearly monthlong trial.
The statement read, “Chanel welcomes the ruling, which demonstrates Chanel’s unwavering commitment to protecting consumers and its brand against all false association, trademark infringement and counterfeiting, and false advertising. Such infringements hurt consumers and harm the Chanel good will and brand, because they are likely to confuse the public as to the nature of the Chanel-branded items they are purchasing.
“Secondhand platforms, when they operate with transparency about the Chanel-branded items they sell and cooperate with law enforcement and Chanel, can help in the fight against counterfeiting,” the Chanel statement continued.
But both Chanel and WGACA representatives have indicated there is more to come. The Chanel statement concluded with “we look forward to the next phase of the trial, which relates to damages.”
What Goes Around Comes Around cofounder Seth Weisser, who was in the courtroom daily, told WWD after Tuesday’s decision, “We are incredibly disappointed with today’s verdict. The case is not over. The court has yet to hear post-verdict motions. We will have further comment after the case is final. We will look forward to post-verdict motions, as we explore our legal options.”
He later disputed the counterfeit charges, adding, “WGACA has always had a rigorous authentication process and has never in the history of the company sold a non-genuine or counterfeit product. Today’s verdict was not about not selling a counterfeit. It was about WGACA selling items which were voided in Chanel’s database. Without any access to this database the resale industry would not know the status of these serial numbers. We continue to stand by our 100 percent authenticity guarantee.”
Chanel first filed a lawsuit against the New York-based resale company in March 2018. The years-long dispute finally went to trial last month, with both sides disputing trademark infringement, false advertising, an implication by WGACA of an alliance that did not exist, claims of counterfeit goods sold by WGACA and other issues.
Before turning over the case to the jurors Monday afternoon, Justice Stanton, who was presiding over the case, spent more than 45 minutes walking them through the charges and offering his instructions. Chanel’s four claims against WGACA were trademark infringement and unfair competition based on a false association; trademark infringement based on the sale of infringing Chanel branded products and use of various hashtags; sale of counterfeit Chanel branded products, and false advertising. In addition to featuring the Chanel name and the luxury brand’s interlocking “Cs,” WGACA periodically featured images of Coco Chanel in its advertising.
Throughout the trial, some key evidence was repeatedly referred to, such as 13 handbags that carried serial numbers that were among the 30,000-plus ones that were stolen from the Renato Corti factory in Italy in 2012. Another handbag that was sold by WGACA carried a serial number that did not correlate with the description of that same number in Chanel’s in-house Orli software system, which tracks the production, quality control and distribution of its handbags. Other contested evidence were 51 handbags that carried serial numbers that had been voided by Chanel following the 2012 theft from the factory. Both sides also clashed about 779 nonfashion Chanel items such as trays, mirrors and tissue boxes that WGACA sold and Chanel’s legal team insisted were “props” or display materials that were never authorized to be sold.
During the proceedings, one of the lawyers working on behalf of Chanel, Sheppard Mullin Richter and Hamilton partner Theodore Max, said WGACA sold $90 million worth of pre-owned Chanel products between 2016 and 2022.
The case was being closely watched due to the potential legal precedence it could set about the burgeoning resale market. It also brought to the surface other nebulous factors tied to pre-owned goods, namely the lack of a legal definition for “vintage” and the often misuse of the word “counterfeit.”
Unexpectedly, the defense made its closing argument Friday afternoon before the plaintiff did. Yale Galanter of Galanter Law in Miami reiterated his opening remarks, stating, “This is a case about David and Goliath,” and suggested that the $17 billion luxury brand with “thousands” of stores didn’t like that WGACA, a three-store operation, was growing and wanted to make a statement by going after the reseller. He also claimed that Chanel contacted Dillard’s, Gap, Banana Republic and Van Maur (all of which had fragrance and beauty deals with Chanel) “and told them to stop doing business with WGACA.”
Galanter said WGACA had shared its sales numbers, order numbers and stock keeping unit numbers with Chanel during the legal proceedings and that had led to Chanel discovering some of its own discrepancies in relation to some of its serial numbers. The attorney suggested that “not a single person who would walk into this courthouse” would be confused about any association between the two companies, and how Chanel customers are “sophisticated.” He also referenced a transcript from a key witness, Joyce Green, managing director of Chanel France. When asked if she had come in contact with any information from a customer or retailer being confused since November 2020, Green had replied, “Nothing like that, no.”
The testimony of another central witness for Chanel, its executive operations director Joseph Bravo, who traveled to New York for three court appearances, was also dissected by both sides. In his final appearance, Bravo recanted his prior testimony that had falsely claimed that a zipper on a Chanel handbag imprinted with the zipper manufacturer’s name Lampo was not genuine.
Bravo also suggested that the bag’s shape was irregular, and that the zipper slider, font size of a Chanel logo, the color of the bag and the stitching were not right. Galanter reminded the jury how Bravo had declined to measure the bag (with a wooden ruler), preferring to do so by eye.
Conversely, during Chanel’s closing argument, Dylan Price, a partner at Sheppard Mullin Richter & Hampton, alleged repeatedly that WGACA had sold counterfeit bags. He also told the jury that the issue at hand is the “likelihood of confusion.”