Chanel emerged as the winner in a high-profile legal battle against vintage reseller What Goes Around Comes Around (WGACA), with a jury ruling in favor of the luxury brand. The court determined that WGACA had violated first-sale doctrine practices and unknowingly or knowingly sold counterfeit Chanel products. This legal dispute marked the first time that a secondary market reseller had faced Chanel in court, making it a significant milestone.
The case, which was filed in 2018, involved various decisions from the court leading up to the trial. Now, the jury must determine if WGACA is guilty of trademark infringement and had knowledge of inauthentic goods. It is expected that the case will be taken to an appeals court.
After the verdict, WGACA’s CEO and co-founder, Seth Weisser, expressed disappointment but emphasized that the case is not yet over. He stated that WGACA will explore legal options after the final verdict. Weisser maintained that WGACA has always followed a strict authentication process and has never knowingly sold counterfeit products. He emphasized that the authenticity guarantee offered by WGACA remains unchanged, assuring customers that their ability to offer authentic Chanel products will not be affected.
During the trial, Chanel’s attorney revealed that between 2016 and 2022, WGACA had sold $90 million worth of pre-owned Chanel products, averaging $15 million per year. While WGACA disputes the accuracy of this claim, Weisser acknowledged that Chanel products make up 15 percent of their overall business. Chanel ranked third among their top-selling brands, with Louis Vuitton and Gucci taking the top spots. The case revolved around 50 missing serial numbers from the early 1990s, with Chanel discovering the theft 16 years later. WGACA unknowingly possessed one of these bags, which appeared genuine. They argued that without access to Chanel’s internal serial number tracking system, they could not have known the bags were fake.
Chanel also accused WGACA of exceeding first-sale doctrine by incorporating the Chanel name and logos in their marketing efforts, including hashtags on social media. The trial shed light on the impact of the resale ecosystem, which has seen significant growth in the past decade and often competes for the same customers as the primary market. Julie Zerbo, founder of The Fashion Law, explained that reselling authentic goods and using their names and descriptions is legal. However, Chanel alleged that WGACA had gone beyond fair use and attempted to deceive consumers by using Chanel imagery and hashtags. This trial raised important questions about the extent to which a company can utilize a brand’s trademarks and imagery to market authentic goods.
WGACA argued that customer confusion was not an issue, as Chanel’s managing director for France testified that no customers or retailers had expressed confusion about WGACA’s offerings. However, Zerbo clarified that customer confusion is just one aspect considered when determining trademark infringement, with other factors including the similarity of trademarks and goods, as well as the consumers’ level of sophistication.
One remarkable aspect of the case was the discovery of the lost serial numbers. WGACA had unknowingly possessed one of these bags, selling it as a genuine Chanel product. The case helped Chanel solve the mystery of the missing serial numbers. Chanel expressed gratitude to the jury and reiterated its commitment to protecting consumers and its brand against counterfeiting and false association. The next phase of the trial will focus on determining damages.