Chanel emerged as the victor in a groundbreaking case against luxury vintage reseller, What Goes Around Comes Around (WGACA). Following a month-long trial, a jury ruled in favor of Chanel, stating that WGACA had violated the first sale doctrine practices and knowingly or unknowingly sold counterfeit Chanel products. This legal battle marked the first time a secondary market reseller had faced off against Chanel in court.
The case, which was initiated in 2018, involved several court decisions leading up to the trial. The jury was tasked with determining whether WGACA was guilty of trademark infringement and whether they had knowledge of the unauthenticated goods they sold. As expected, the case will now move to an appeals court for further consideration.
Seth Weisser, CEO of WGACA, expressed disappointment with the verdict but made it clear that the case was far from over. He mentioned that post-verdict motions were yet to be heard and that WGACA would explore all of their legal options. Weisser defended WGACA’s authenticity process, asserting that they had never sold counterfeit products. He argued that the jury’s verdict was not about selling counterfeits but rather about WGACA selling items that were voided in Chanel’s database. According to Weisser, WGACA relies on Chanel’s database to determine the status of serial numbers and stands by their authenticity guarantee.
Despite the ruling, Weisser clarified that the case would not impact WGACA’s ability to continue offering authentic Chanel products. He assured customers that they could still find Chanel products on their platforms, although they had already made changes to their hashtag usage on social media. However, the trial proved to be a costly endeavor for WGACA due to Chanel’s substantial legal resources. During the trial, Chanel’s lawyer claimed that WGACA had sold $90 million worth of pre-owned Chanel products between 2016 and 2022, highlighting the scale of their business. While WGACA strongly disagreed with this figure, they acknowledged that Chanel products accounted for 15% of their overall business.
At the center of the case were 50 missing serial numbers, which Chanel asserted had been stolen in the early 1990s. WGACA unknowingly possessed one of these bags, which appeared to be genuine. WGACA argued that they had no access to Chanel’s internal serial number tracking system and, therefore, could not have known the bags were fake. In addition to this, Chanel accused WGACA of exceeding the first sale doctrine by utilizing the Chanel name, logos, and hashtags in their marketing efforts. Legal and fashion experts closely followed the trial, noting that its outcome could have significant implications for the entire resale ecosystem.
Julie Zerbo, a lawyer and founder of The Fashion Law, explained that reselling authentic goods and using their name, description, and selling price is legal. However, Chanel alleged that WGACA had gone beyond fair use and attempted to mislead consumers by employing hashtags, Chanel imagery, and pictures of bags that were not for sale. Zerbo highlighted the complexity of the trial, making it challenging to predict its impact on the broader resale market. The court considered various factors, such as customer confusion and the similarity of trademarks and goods.
The case also shed light on the issue of lost serial numbers. Chanel argues that if bags are brought into the market without authorization and without undergoing Chanel’s quality control and authentication processes, the first sale doctrine does not apply. WGACA cannot use the defense that they are merely offering goods for resale without the trademark owner’s authentication.
Chanel expressed gratitude towards the jury for their service and underscored their commitment to protecting consumers and their brand against counterfeiting and false association. The company believes that second-hand platforms can aid in the fight against counterfeiting by operating transparently and collaborating with law enforcement. The next phase of the trial will focus on determining damages.
Links (when applicable):
1. Chanel Official Website
2. The Fashion Law
