New York — In a high-stakes clash of luxury and legality, What Goes Around Comes Around (WGACA), a prominent reseller of luxury goods, is challenging a federal court ruling that left the company owing Chanel $4 million in statutory damages for counterfeit activities. This legal battle, which first emerged in 2018, has reached new heights as WGACA seeks to overturn the jury’s decision that found it guilty of willful infringement of Chanel’s trademarks, along with charges of false advertising and unfair competition.
The conflict began when Chanel accused WGACA of selling non-authentic Chanel products and falsely suggesting an affiliation with the Paris-based luxury brand through unauthorized use of Chanel’s trademarks and branding elements. In a dramatic conclusion to the initial phase of the litigation, a jury in New York found WGACA culpable, ruling that 13 Chanel-branded bags sold by the reseller were linked to stolen serial numbers from a Chanel-authorized manufacturer.
Following this verdict, the ensuing $4 million damages award has been described by WGACA as “shockingly excessive,” prompting the company to not only request a new trial but also to challenge the constitutionality of the damages awarded. While WGACA acknowledges the handbags were produced in a Chanel-authorized factory and featured original hardware, it disputes the claim that this constitutes counterfeiting.
Adding another layer to its defense, WGACA has resisted Chanel’s motion for attorney’s fees, arguing the case does not rise to the level of being “exceptional” under the Lanham Act — the primary federal trademark statute of law in the United States. WGACA highlights the purported lack of harm or consumer confusion as factors that mitigate against Chanel’s claims.
As part of its legal strategy, WGACA has submitted detailed requests for formal findings of fact and conclusions of law that are crucial for the appeal process. The company underscored the need for these formal findings following a trial focused on equitable remedies, claiming that such documentation is essential to inform the appeals court about the basis of the original disgorgement ruling.
On Thursday, WGACA officially notified the U.S. District Court for the Southern District of New York of its intention to appeal to the U.S. Court of Appeals for the Second Circuit. This appeal will encompass not only the final judgment but also any prior adverse rulings that were part of the case’s trajectory.
The case number for this legal encounter is Chanel, Inc. v. What Goes Around Comes Around, LLC, et al., 1:18-cv-02253 (SDNY). As the parties prepare for the next round in federal appeals court, the fashion industry watches closely, aware that the outcome could have significant implications for the resale market and branding rights in the luxury goods sector.
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