Trademark Infringement in the Era of Luxury Resale

This blog explores the Southern District of New York Court’s decision in Chanel v. What Goes Around Comes Around (“WGACA”) revolving around trademark infringement, its application of the Lanham Act, and potential effects on the luxury resale market.  

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‍ ‍ ©Eric Pouhier, CC BY-SA 2.5, via Wikimedia commons

Luxury resale shops offer consumers a taste of high fashion at a much more affordable price. Gabriella Land, High-End Hand-Me-Downs?: How Resale is Reshaping Luxury Markets, Michigan Journal of Economics (Apr. 3, 2025), https://sites.lsa.umich.edu/mje/2025/04/03/high-end-hand-me-downs-how-resale-is-reshaping-luxury-markets/. At resale shops, people can buy high-fashion products at lower prices while keeping what is arguably the most important aspect of the product, the brand’s logo. Id. However, after the U.S. District Court for the Southern District of New York released its ruling in Chanel v. What Goes Around Comes Around (“WGACA”) in early 2024, resale shops must now think twice before reselling counterfeits or other secondhand goods of well-known brands that tout the brands’ logos. Olivia Dinkins, Chanel vs. What Goes Around Comes Around: Unraveling the Threads of Trademark Battles in the World of Luxury Resale, Brooklyn Sports & Ent. L. Blog (July 17, 2024), https://sports-entertainment.brooklaw.edu/fashion/chanel-vs-what-goes-around-comes-around-unraveling-the-threads-of-trademark-battles-in-the-world-of-luxury-resale/.  

Chanel has been a powerhouse in the fashion world since it was founded by Coco Chanel in 1909. Chanel Inc. v. WGACA, LLC, 2022 U.S. Dist. LEXIS 55880, at*4 (S.D.N.Y. Sept. 14, 2018).  Chanel’s luxury apparel and accessories are classic, recognizable, and for many, unattainable. Id. Chanel’s signature looks are clearly stamped with the recognizable “CC” and “CHANEL” logos, dating back to 1956. Id.  In their initial claim in 2018 against WGACA, Chanel alleged WGACA violated the Lanham Act by committing trademark infringement. Dinkins, supra. Under the Lanham Act, using any counterfeit of a trademark holder’s goods in a way that is likely to confuse consumers is a civil infringement of their trademark rights. Trademark Act of 1946, 15 U.S.C.S. § 1114(1)(a)(b). Infringers can also be held liable through civil action if they reproduce, counterfeit, or apply a registered mark to any packaging, advertisements, labels, or prints in connection with the sale and distribution of goods that would likely confuse the consumer. Id. 

The Lanham Act establishes that if a business infringes on another company’s trademark, the business has accomplished this by failing to clearly distinguish their brand and their products from those of another trademark holder. Id. The act specifically imposes civil liability on anyone who, for commercial purposes, uses a product with a registered mark in connection with the sale of goods in a way that would create confusion amongst the consumers. Id. 

In Chanel v. WGACA, Chanel successfully argued that WGACA infringed on its trademark rights by falsely implying an association between WGACA and Chanel through WGACA’s improper use of Chanel’s logos in advertisements and store promotions and by reselling  counterfeit Chanel goods. Carly Ryan, Chanel’s Legal Victory Sends a Clear Message: Authenticity Isn’t Just a Luxury – It’s the Law, The National Law Review (July 17, 2025), https://natlawreview.com/article/chanels-legal-victory-sends-clear-message-authenticity-isnt-just-luxury-its-law. WGACA’s original argument in their motion to dismiss Chanel’s claim rested in part on the First Sale Doctrine which protects a reseller if they are reselling a trademarked good under the original holder’s trademark. Chanel,  2022 U.S. Dist. LEXIS 55880, at *9.The court did not find that WGACA was protected under the first sale doctrine. Id. While resale companies are not prevented from reselling authentic products under the Lanham Act, it does require that the resale of authentic items does not create confusion amongst the consumers as to whether there is a connection between the resale company and the company of the product’s origin. Ryan, supra. Here, Chanel demonstrated that WGACA was selling products that were deemed inauthentic because they did not meet Chanel’s quality control standards. Id.  

While Chanel was the original manufacturer of the disputed goods in this case, each of their high-quality products is created with a unique serial number to ensure the product’s legitimacy. Chanel, 2022 U.S. Dist. LEXIS 55880, at *4, *5. In 2012, roughly 30,000 of these serial numbers were stolen from Chanel’s systems. Id. Chanel argued that the disputed items that WGACA sold were not authentic. Ryan, supra. Many of these products had serial codes that were amongst the group that was stolen in 2012. Chanel, 2022 U.S. Dist. LEXIS 55880, at *8. When WGACA sold counterfeit Chanel products with stolen serial numbers, it created confusion in the marketplace as to the association between WGACA and Chanel and implied that these products were made by Chanel. Id. at *19. The court ruled in favor of Chanel, awarding them $4 million in statutory damages. Ryan, supra. The issue Chanel v. WGACA now poses for the high-fashion resale community is how stores will ensure that their resale of products distinguishes between their own company and the original fashion house from which the products originated. If advertising a product through their company sites or selling a product with a distinguishable brand logo could lead to a trademark infringement lawsuit, how can these resale stores walk the thin line between themselves and these established fashion houses?  

Further, the court found that while WGACA has a right to resell luxury goods, these goods must be authentic and genuine. Andrea Calvaruso, What Comes Around…How Chanel’s Win May Help Brands Protect their Rights in the Resale Market, Kelly Drye (February 15, 2024), https://www.kelleydrye.com/viewpoints/client-advisories/what-comes-around-how-chanels-win-may-help-brands-protect-their-rights-in-the-resale-market. After the ruling in Chanel v. WGACA, resale businesses will likely face greater scrutiny concerning the luxury products they resell. Accordingly, resale brands must take precaution by implementing more rigorous testing to ensure their goods are genuine. Id.  

Coco Chanel said, "If you want to be original, be ready to be copied.” Sharon Urias, Practitioner Insights Commentary, Comparing trademark issues in very different industries: fashion, cannabis, high-tech, 2022 WL 17086346, (2022). The Lanham Act might beg to differ.