{"id":4598,"date":"2024-09-26T15:21:35","date_gmt":"2024-09-26T15:21:35","guid":{"rendered":"https:\/\/blogs.luc.edu\/ipbytes\/?p=4598"},"modified":"2024-09-26T22:12:21","modified_gmt":"2024-09-26T22:12:21","slug":"dont-tell-chanel-legitimate-resale-or-trademark-infringement","status":"publish","type":"post","link":"https:\/\/blogs.luc.edu\/ipbytes\/dont-tell-chanel-legitimate-resale-or-trademark-infringement\/","title":{"rendered":"Don\u2019t Tell CHANEL: Legitimate Resale or Trademark Infringement?"},"content":{"rendered":"

Anyone interested in fashion or pop culture likely knows that CHANEL<\/a> is one of the largest, well-known, and sought after names in the fashion industry. Words such as timeless, chic, and luxurious are often used to describe the clothes and accessories sold by the French fashion house. Since its beginning in the early 1900s, Chanel has obtained intellectual property<\/a> (\u201cIP\u201d) rights, particularly in its trademarks<\/a>. A trademark can be any word, phrase, symbol, design, or combination thereof that distinguishes your goods and services from that of another. For Chanel, its name and logo<\/a> are both well-known and well recognized trademarks. Unfortunately for the average consumer, Chanel\u2019s goods aren\u2019t as easily accessible as they are recognized, due to the high price tags that the brand is also known for.<\/p>\n

<\/p>\n

Chanel\u2019s prices lead many consumers to look to the resale\/secondhand market.\u00a0 What Goes Around Comes Around (\u201cWGACA<\/a>\u201d) is a well-known reseller of designer goods. As stated on its website, WGACA prides itself on being \u201cthe premier purveyor of the finest luxury vintage accessories and apparel,\u201d which includes Chanel products. However, resellers like WGACA may run into issues with trademark infringement. This post explores some lessons that resellers may want to take with them from Chanel\u2019s lawsuit against WGACA. But, first, let\u2019s explain some basics about trademark infringement.<\/p>\n

<\/p>\n

What is Trademark Infringement? <\/u><\/strong><\/p>\n

Trademark infringement<\/a> refers to the unauthorized use of a trademark on goods and\/or services or in advertising in a way that is likely to cause confusion or mislead consumers about the source or affiliation of the goods and\/or services. To succeed on a claim for trademark infringement, the plaintiff must prove that they own a valid trademark. A valid trademark refers to a mark used in interstate commerce that is distinctive and identifies its source. When an owner registers a trademark with the United States Patent and Trademark Office (\u201c UPSTO\u201d)<\/a>, the trademark is given an automatic legal presumption of validity for infringement suits because registration only happens after the USPTO concludes that the mark is valid.<\/p>\n

Chanel\u2019s name and logo are both registered with the USPTO which means Chanel does not have to prove that its trademarks are valid in a trademark infringement suit. However, it still needs to establish that a defendant\u2019s use of its marks is infringing, such that there is likely confusion as to the source or affiliation of the products. In some cases, even when a plaintiff establishes that a defendant is infringing on their trademark rights, a defendant can prevail if they establish a defense.<\/p>\n

<\/p>\n

Analyzing Chanel\u2019s Trademark Infringement Claim <\/u><\/strong><\/p>\n

In March 2018, Chanel filed suit against WGACA for trademark infringement<\/a>, among other claims, in the United States District Court for the Southern District of New York. Chanel\u2019s trademark claims arose from WGACA\u2019s continued use of Chanel\u2019s trademarks in advertising in connection with the reselling of Chanel branded goods. Chanel argued that the widespread use of its trademarks in WGACA\u2019s advertising made it appear as if it were endorsed by or associated with Chanel. WGACA is not affiliated with Chanel nor is it an authorized retailer of Chanel\u2019s products.<\/p>\n

In the complaint, Chanel alleged trademark infringement based on WGACA\u2019s unauthorized use of Chanel\u2019s trademarks on its website and advertising. For example, WGACA prominently and continuously featured Chanel\u2019s name and products on its website, in its retail stores, and on its social media in connection with the resale of Chanel products. However, some of these products were determined to be counterfeits. As a matter of trademark law, a counterfeit mark<\/a> is a mark which is identical or nearly identical to a registered trademark. Consumers often refer to goods with such counterfeit marks as counterfeit products. Despite counterfeit Chanel products being circulated, WGACA claimed to sell \u201cauthentic\u201d Chanel items and provided consumers with a \u201cguarantee of authenticity.\u201d Chanel claimed that only their employees and those of authorized retailers have been properly trained in authenticating their products. Although there are many factors that courts use to assess trademark infringement, this post focuses on WGACA\u2019s defenses.<\/p>\n

<\/p>\n

Defenses Raised by WGACA<\/u><\/strong><\/p>\n

First Sale Doctrine Defense<\/em><\/strong><\/p>\n

WGACA argued that the first sale doctrine<\/a>, an affirmative defense, allows them to resell Chanel\u2019s products, both online and in its retail stores. The first sale doctrine holds that once a trademark holder makes an initial sale of the item bearing the trademark, they no longer have the exclusive right to control the subsequent sales or dispositions of that item. This doctrine is what allows resellers, like WGACA, to conduct business. Once a customer buys a Chanel product from a Chanel store or authorized seller, the buyer can then sell it online or to their friend. This same principle applies to large resellers. So long as resellers are selling a legitimate product that was legally purchased, they have the right to resell the item that includes the owner\u2019s trademark. However, resellers must be careful not to use the mark beyond including it on the product it is reselling. The first sale doctrine does not allow resellers a right to use the mark in a way that implies an affiliation or endorsement by the original seller\/trademark owner. For example, use of the mark in advertisements would not be a use covered by the first sale doctrine. This is because advertisements use the marks beyond being featured on the products available for resale.<\/p>\n

In this case, WGACA\u2019s attempted use of this defense failed due to WGACA\u2019s extensive use of Chanel\u2019s trademarks on its website and advertisement. As explained above, the first sale doctrine does not cover these activities. Such activities can still be trademark infringement because consumers may be misled to believe that the unauthorized reseller is associated with the trademark owner.<\/p>\n

<\/p>\n

Nominative Fair Use Defense <\/em><\/strong><\/p>\n

WGACA attempted to argue that it wasn\u2019t infringing on Chanel\u2019s trademarks because it was merely using the trademark name \u201cChanel\u201d in advertising to refer to and identify Chanel\u2019s products. Basically, WGACA was trying to rely on a defense known as nominative fair use<\/a>. The nominative fair use defense may be used when an alleged infringer uses the plaintiff\u2019s trademark to refer to the plaintiff or its products or to compare it to the defendant\u2019s own product. In determining whether this defense will succeed, the Southern District of New York looked at three factors:<\/p>\n

    \n
  1. Whether the use of Chanel\u2019s mark is necessary to describe both Chanel\u2019s product or service and the defendant\u2019s product or service, that is, whether the product or service is not readily identifiable without use of the mark;<\/li>\n
  2. Whether WGACA uses only so much of the Chanel\u2019s mark as is necessary to identify the product or service; and<\/li>\n
  3. Whether WGACA did anything that would, in conjunction with the mark, suggest sponsorship or endorsement by Chanel, that is, whether the defendant\u2019s conduct or language reflects the true or accurate relationship between Chanel\u2019s and WGACA\u2019s products or services.<\/li>\n<\/ol>\n

    If all three factors favor WGACA, the seller, they can use Chanel\u2019s trademark to advertise that they sell that brand\u2019s merchandise without getting into legal trouble for trademark infringement. Let\u2019s consider how. For example, a reseller might say that there are \u201cChanel bags for sale.\u201d\u00a0 This satisfies the first factor because they are just using the trademark to reference the type of products they are selling. In this case, it may have been necessary for WGACA to use Chanel\u2019s name in listing the items that they offer for sale. However, WGACA went further with its use of Chanel\u2019s trademarks and overstepped here.<\/p>\n

    The court explained that the Chanel items listed by WGACA would be readily identifiable without the use of the hashtag #WCAGACHANEL and continued use of Chanel\u2019s trademark. Thus, the court determined that WGACA was using more of Chanel\u2019s trademarks than was necessary to identify the products. In other words, it took more than necessary, in violation of the second factor.<\/p>\n

    Next, WGACA argued it didn\u2019t declare any affiliation with Chanel. They were wrong. However, the court analyzed this under the third factor and focused on the hashtag WGACA used and its combination of their name and Chanel\u2019s. It explained that such a hashtag may be taken as suggesting sponsorship or affiliation. Finally, the court held WGACA\u2019s authenticity guarantee and the use of the hashtag improperly suggested sponsorship or endorsement by Chanel; again, in violation of the third factor. So, the court ultimately rejected WGACA\u2019s nominative fair use argument based on its prominent and excessive use of Chanel\u2019s trademarks in its marketing.<\/p>\n

    In sum, WCAGA created the misleading impression that the two companies were affiliated which goes beyond the scope of nominative fair use.<\/p>\n

    <\/p>\n

    What Does This Mean for Resellers? <\/u><\/strong><\/p>\n

    The outcome provides some guidance for resellers who may be dangerously close to crossing the line from legitimate resale to trademark infringement.<\/p>\n

    Resellers, such as WGACA, need to be more cautious in advertising their second-hand products and services. While using big brand names may be a good marketing strategy to draw customers in, resellers need to make sure they aren\u2019t being misleading by suggesting an association with or endorsement by those brands.<\/p>\n

    One step resellers can take to minimize their risks for similar lawsuits could be to limit the use of other brands\u2019 trademarks. For example, resellers could merely list the goods they resell and avoid using others\u2019 trademarks in their advertisements. If they do use others\u2019 trademarks, they should take precautionary steps and act in accordance with the nominative fair use defense. In particular, they should not use others\u2019 trademarks in their hashtags, especially not in combination with their own name. Additionally, resellers may want to be more cautious with authenticity guarantees. Making claims about the authenticity of products from other brands may suggest an affiliation between the brand and the reseller. Resellers may want to take this case as a cautionary tale about what may be coming their way if they are too liberal with other brands\u2019 trademarks.<\/p>\n

    <\/p>\n

    \"\"<\/p>\n

    Callie Wershing<\/em>
    \nAssistant Blogger<\/em>
    \nLoyola University Chicago School of Law, J.D. 2025<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

    Anyone interested in fashion or pop culture likely knows that CHANEL is one of the largest, well-known, and sought after names in the fashion industry. Words such as timeless, chic, and luxurious are often used to describe the clothes and accessories sold by the French fashion house. Since its beginning in the early 1900s, Chanel has obtained intellectual property (\u201cIP\u201d) rights, particularly in its trademarks. … Continue reading Don\u2019t Tell CHANEL: Legitimate Resale or Trademark Infringement?<\/span><\/a><\/p>\n","protected":false},"author":69,"featured_media":4599,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-4598","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-trademarks"],"_links":{"self":[{"href":"https:\/\/blogs.luc.edu\/ipbytes\/wp-json\/wp\/v2\/posts\/4598","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.luc.edu\/ipbytes\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.luc.edu\/ipbytes\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/ipbytes\/wp-json\/wp\/v2\/users\/69"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/ipbytes\/wp-json\/wp\/v2\/comments?post=4598"}],"version-history":[{"count":7,"href":"https:\/\/blogs.luc.edu\/ipbytes\/wp-json\/wp\/v2\/posts\/4598\/revisions"}],"predecessor-version":[{"id":4614,"href":"https:\/\/blogs.luc.edu\/ipbytes\/wp-json\/wp\/v2\/posts\/4598\/revisions\/4614"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/ipbytes\/wp-json\/wp\/v2\/media\/4599"}],"wp:attachment":[{"href":"https:\/\/blogs.luc.edu\/ipbytes\/wp-json\/wp\/v2\/media?parent=4598"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.luc.edu\/ipbytes\/wp-json\/wp\/v2\/categories?post=4598"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.luc.edu\/ipbytes\/wp-json\/wp\/v2\/tags?post=4598"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}