A New York federal court has proposed a sweeping injunction following a jury trial win for the luxury goods brand in February and a subsequent bench trial over equitable remedies. In an email to the parties last week, Judge Louis Stanton set out proposals for injunctive relief for Chanel by way of an order that – if finalized – will prevent What Goes Around Comes Around from, among other things, “using any of the CHANEL trademarks or any marks confusingly similar thereto to advertise or promote WGACA’s general business” and will permanently block the reseller from “making any advertising claims, representations, or statements [about] the genuineness of any CHANEL-branded items” unless it has records to support such authentication claims.
At a high level, the far-reaching proposed injunction, as first reported by TFL, seeks to ensure that consumers are not confused about the lack of connection between Chanel and What Goes Around Comes Around (“WGACA”) or the nature of any Chanel-branded products that are being offered up by WGACA. In furtherance of this aim, the court proposed an array of restrictions and/or requirements that WGACA must abide by within 90 days of the injunction being issued …
> Use of Chanel branding: Primarily, the court stated that WGACA must refrain from using the CHANEL word mark or any marks confusingly similar thereto in Chanel’s “stylized font,” and using any of the CHANEL marks … in connection with its advertisement, promotion, distribution, or sale of CHANEL-branded items, “other than to identify a particular item currently for sale as made and sold by Chanel, or to the extent the specific item currently for sale itself bears CHANEL marks.”
Beyond that, WGACA also must not: (1) use photos or copies of Chanel runway and marketing campaigns and/or Chanel print ads bearing the CHANEL Marks or any marks confusingly similar thereto; (2) use any hashtags consisting of or including the word “Chanel”; (3) use the word “Chanel” in discount codes; and/or (4) use the name, image, or likeness of Gabrielle “Coco” Chanel.
And in any circumstance, the court says that WGACA “must ensure that no more of any of the CHANEL marks is used than is necessary to identify the particular item being offered for sale, such as, but not limited to, emphasizing the CHANEL marks or using the CHANEL marks more prominently than the surrounding text.”
> Disclaimers: The court’s proposed injunction requires WGACA to “prominently display, clearly and conspicuously, the following disclaimer on any webpage or social media post advertising or selling a CHANEL-branded item, or on physical tags where products are sold in person: ‘THIS ITEM HAS NOT BEEN AUTHENTICATED BY CHANEL.’”
For CHANEL-branded items being advertised and/or sale online, WGACA must post the disclaimer “noticeably on the individual product page, not merely at the bottom of the webpage, and that page must also list the CHANEL-branded item’s Chanel Serial Number as it appears on the accompanying Authenticity Card, Authenticity Plate, or label affixed to the actual CHANEL-branded item.”
> Refurbished and/or modified goods: WGACA may not advertise, offer for sale, or sell any CHANEL-branded items that have been “materially altered or changed, including, without limitation, items that combine original and non-original Chanel parts.” Additionally, it may not advertise, offer for sale, or sell any “genuine CHANEL-branded items that have been repaired, restored, or refurbished without fully disclosing on any webpage selling a CHANEL-branded item, or on physical tags where products are sold in person, the nature of the repair, restoration, or refurbishment.”
> Authentication claims: WGACA may not certify, guarantee, or otherwise make “any advertising claims, representations, or statements asserting the genuineness of any CHANEL-branded items advertised or sold by WGACA for which WGACA has no records of its own authentication to support its authentication claims.” (You can find more about how resellers are quietly reworking the language of their authentication claims here.)
> Point of sale items: WGACA “may not advertise, offer for sale, or sell any CHANEL- branded items that have not been authorized for sale by Chanel, including, but not limited to, point-of-sale items and retail props, after notification by Chanel that such items have not been authorized for sale.”
The two parties have since lodged responses to the proposed injunction, with Chanel looking to clarify some of the language in order to avoid ambiguity and WGACA angling to rein in the scope on several points.
In a letter to the court on December 4, counsel for Chanel pushed back against the proposed injunction in a few regards – although, given the limited number of suggested edits, the brand appears to be relatively pleased with the proposed injunction. (It is worth noting that counsel for Chanel proposed language for a broad injunction earlier this year.) Chanel’s biggest issue with the injunction comes by way of the language that bars WGACA from “advertising, offering for sale, or selling any CHANEL-branded items that have not been authorized for sale by Chanel, including, but not limited to, point-of-sale items and retail props, after notification by Chanel that such items have not been authorized for sale.” (Emphasis courtesy of Chanel.)
Counsel for Chanel asserts that “taken literally, this language would impose a burden on Chanel to continually monitor what WGACA is selling and then give WGACA notice for all CHANEL-branded items that were not authorized for sale, including non- genuine or counterfeit items,” which would “defeat the purpose of the Proposed Injunction and impermissibly shift the burden to Chanel, ignoring the fact that the Lanham Act does not require that an infringer be put on notice.” (Emphasis courtesy of Chanel.) Because the notice requirement is not required by law and renders the proposed injunction “both unfeasible for Chanel and ineffective at enjoining WGACA,” Chanel requests that it be deleted.
Chanel also aims to get the court to up the ante on the terms surrounding WGACA’s display of a disclaimer. While the court proposes that WGACA “post [the] disclaimer noticeably on the individual product page[s],” Chanel wants the court to require it to “prominently display, clearly and conspicuously” the disclaimer. (Emphasis courtesy of Chanel.) This language is “both more effective and unambiguous,” per Chanel, which “respectfully requests that this language be reinserted.”
In a December 4 filing of its own, WGACA urges the court to rein in the proposed injunction in several respects, arguing, among other things, that as it currently stands, the injunction runs afoul of the First Amendment …
> First Amendment/Fair use concerns: Counsel for WGACA primarily points to language in the proposed injunction that enjoins it from using the Chanel marks to “advertise or promote WGACA’s general business”. (Emphasis courtesy of WGACA). This restriction is problematic, per WGACA, as it would “violate the nominative fair use doctrine and the First Amendment.”
Specifically, the reseller’s counsel claims that under the nominative fair use doctrine, WGACA can “lawfully use a plaintiff’s trademark where doing so is necessary to describe the plaintiff’s product.” WGACA states that it “legally sells Chanel products and is legally entitled to say so to promote its general business of selling secondhand luxury items from multiple fashion brands.” For instance, WGACA notes that the “About Us” section of its website states: “WGACA’s selection of top- tier pre-owned accessories and apparel from brands such as vintage Chanel, Hermès, Louis Vuitton, Gucci, Dior, Fendi, and Saint Laurent.”
This description “represents fair use, which is vital for WGACA to be able to communicate to consumers what WGACA sells. This type of language is also protected by the First Amendment as lawful commercial speech.” As such, WGACA suggests that the court adopt language that would enable it to “use the Chanel name in the nominative fair use sense while guarding against potential confusion.”
> Advertising: WGACA says that it agrees to the restriction that the items that appear in any of its ads must have been at one point in time offered for sale but disagrees with the requirement that advertising be restricted to items “currently” for sale. WGACA asserts that its advertising (including its social media) includes items that are or were at one point for sale, and that requiring it to retract advertisements from the internet after the items advertised therein are sold “would serve as an extreme burden to WGACA and would also serve no meaningful purpose.”
> Disclaimer: In terms of the disclaimer proposed by the court, which states, “THIS ITEM HAS NOT BEEN AUTHENTICATED BY CHANEL.” WGACA pushes back on the basis that “the Chanel items being offered for sale have in fact been authenticated by Chanel” (by virtue of the fact that they have been put into the market by Chanel). (Emphasis courtesy of Chanel.) Instead, WGACA argues that the point of the disclaimer should be to convey that Chanel and WGACA are not affiliated in any way. As such, WGACA proposed language – WGACA “IS NOT AN AUTHORIZED RESELLER AND IS NOT AFFILIATED WITH ANY OF THE BRANDS WE SELL.” – that it says makes it clear that it is not associated with Chanel.
> Authorized Goods: While the injunction “appropriately reflects the fact that it is impossible for WGACA to know whether Chanel has authorized any given good for sale, in part because Chanel does not publicize the serial numbers it has voided,” it Paragraph 3(f), WGACA argues that the injunction enjoins it from selling “any ‘infringing’ or ‘counterfeit’ Chanel product without any mechanism for WGACA to determine whether Chanel regards a given product as infringing or counterfeit.” As a result, WGACA proposes language that it will not advertise or sell any counterfeit or otherwise infringing goods “after notification by Chanel that such items are deemed by Chanel to be counterfeit or infringing.”
A Bit of Background: Chanel first filed suit against WGACA in March 2018, alleging that the resale company was trying to “deceive consumers into falsely believing [that it] has some kind of … affiliation with Chanel or that Chanel has authenticated [the pre-owned] goods [it was offering up] in order to trade off of Chanel’s brand and goodwill,” all while allegedly offering up counterfeit or otherwise infringing products. In response to Chanel’s suit, What Goes Around Comes Around – which touts itself as “the leading global purveyor of authentic luxury vintage accessories and apparel” – argued that it should be shielded from liability on the basis that Chanel’s lawsuit is an impermissible attempt by Chanel to bar the legitimate resale of its products, and that WGACA uses the Chanel trademarks simply to identify its products (which it has claimed amounts to nominative fair use), and does not claim any affiliation or sponsorship by Chanel.
The case is Chanel, Inc. v. What Goes Around Comes Around, LLC, et al., 1:18-cv-02253 (SDNY).