NEW YORK — A heated legal battle between luxury brand Chanel and high-end resale company What Goes Around Comes Around has entered its second stage in a federal court in New Diamondas York City. The dispute centers on allegations that the reseller unlawfully utilized Chanel’s trademarks to sell and profit from items that appeared to be endorsed by or affiliated with Chanel.
In February, a jury ruled in favor of Chanel, finding What Goes Around Comes Around liable for willful trademark infringement, among other charges. Now, the focus shifts to what remedies Chanel is entitled to, specifically whether the reseller should be made to forfeit profits derived from the sales of the infringing goods.
According to Chanel, the jury’s previous findings on willfulness play a crucial role in this phase of the trial, arguing that these findings underscore the need for disgorgement of profits to prevent future infringement. Chanel’s legal team asserts that the jury’s verdict should heavily influence the court’s decision regarding equitable relief without needing to reexamine the willfulness of the reseller’s actions.
During the trial, evidence was presented that What Goes Around Comes Around generated over $129 million in revenue from the sale of products bearing Chanel’s trademarks. Chanel argues that this revenue was earned through deliberate misuse of its brand, which not only confused consumers but also unjustly enriched the reseller.
Moreover, Chanel seeks to highlight that statutory damages previously awarded for the willful sale of counterfeit items do not fully address the broader scope of the infringement, including false advertising and the misleading use of Chanel’s trademarks in social media marketing.
Dr. Andrew Safir, an expert in economic damages, is expected to testify on the substantial opportunity costs incurred by Chanel due to the alleged infringements, which he estimates to exceed $34 million calculated at an annual rate of 9 percent from 2014 through November 2023.
The reseller’s defense has suggested alternative remedies and has attempted to challenge the need for disgorgement by questioning the integrity of Chanel’s conduct during the litigation. However, Chanel maintains that its actions throughout the legal proceedings have been appropriate and in good faith.
The outcome of this case could set a significant precedent in how profits are calculated and disgorged in trademark infringement cases, especially in instances where high-profile brands are involved. Legal analysts and trademark law experts are closely watching the proceedings, noting that the court’s decision could influence how companies protect their brands in the increasingly complicated landscape of online sales and social media marketing.
Chanel’s push for a permanent injunction also underscores the ongoing challenges brands face in controlling their intellectual property in the resale market. The luxury brand argues that such an injunction is crucial to prevent further confusion among consumers and to protect its brand reputation from being exploited.
The court has yet to decide on the amount of profits to be disgorged, but Chanel’s firm stance suggests that if granted, the sum could be substantial, reflecting not only lost sales but also the broader impact on the brand’s market position and consumer trust.
This legal battle, initiated by Chanel in 2018, is being watched by the luxury goods industry and legal experts alike, as it may influence future enforcement and protection strategies for trademark holders against unauthorized use by resellers. The case underscores the intensifying friction between brand protection and the burgeoning luxury resale market, a sector that has grown significantly with the rise of e-commerce and shifting consumer habits towards more sustainable shopping practices.