Chanel awarded $4million in damages following the sale of counterfeit handbags

Following the unanimous decision last year finding the luxury resale platform What Goes Around Comes Around (WGACA) liable for trade mark infringement, false association, unfair competition and false advertising, the U.S. District Court for the Southern District of New York has awarded Chanel $4 million in statutory damages. 

The judge has also issued a permanent injunction ordering WGACA to refrain from any conduct likely to mislead consumers into believing that there is an affiliation or connection with Chanel. Prohibited activities include, amongst others: any use of hashtags featuring the word CHANEL, using photographs of Chanel runway or marketing campaigns, use of the word CHANEL in discount codes, and using props or display materials at events such as trays and tissue boxes which bear the Chanel trade marks. 

Going forward, WGACA must also include a disclaimer on all web pages advertising Chanel-branded items, or on physical tags where products are sold in brick-and-mortar stores, confirming that they are not affiliated with Chanel and that they have not been authorised by Chanel to sell such items. 

The business must also refrain from selling any counterfeit Chanel items or making any certification / guarantee statements as to the authenticity of any Chanel-branded goods that they sell going forward. 

Alongside the $4million in statutory damages in respect of the sale of counterfeit handbags, WGACA must also pay Chanel £12,739 in net profits from the sale of 51 counterfeit items identified during the proceedings. 

It will be interesting to see whether this decision results in further challenges being raised by brands against the practices of resale businesses; not only in respect of the sale of counterfeits but also wider activities such as marketing and advertising featuring third party registered trade marks without authorisation. 

Marks & Clerk's recent ebook features further discussion on the rise of resale platforms in the fashion sector.