“A luxury, once enjoyed, becomes a necessity.” – C. Northcote Parkinson
Approximately $49.3 billion worth of secondhand luxury products were sold worldwide in 2023, with resales accounting for about 12% of the value of the market for new luxury goods. While some brands have embraced the resale industry through official collaborations, others have objected and brought trademark claims seeking to shut down resellers. Read on for a discussion of legal issues arising from the resale, customization, and upcycling of luxury goods.
Earlier this year, Chanel won its case on all counts against luxury reseller What Goes Around Comes Around (WGACA). Chanel claimed that WGACA used its brand marketing materials and trademarks on social media, improperly guaranteed authenticity of items, and sold counterfeit bags and non-genuine goods. Chanel succeeded in obtaining partial summary judgment with the court holding that WGACA’s sales of goods with voided and pirated serial numbers and lack of disclosure on its website created consumer confusion and established liability under the Lanham Act. The case went to trial and, in February, a jury awarded Chanel $4 million in statutory damages. The parties recently filed post-trial motions.
Customization of luxury goods also raises trademark issues. For example, La Californienne customized Rolex watches, refinished the dials and repainted them in bright colors. Rolex objected in 2019, claiming that a Rolex watch containing non-Rolex parts was a counterfeit. Rolex obtained a consent judgment barring La Californienne from using any of the Rolex registered trademarks or any copy or imitation of the Rolex trademarks. A similar issue involves LA-based footwear company Shoe Surgeon, which used canvas material bearing Goyard intellectual property on custom-made sneakers. Goyard filed suit over the summer. Shoe Surgeon claims fair use, arguing that it only used the Goyard name to describe the goods and not to cause confusion. Shoe Surgeon also claims Goyard’s rights were cut off when the products were initially sold, relying on the first sale doctrine, also known as trademark exhaustion. Shoe Surgeon also claims that its use of the Goyard marks was non-commercial because the sneakers were a bespoke product not meant for widespread distribution. As of early October, the suit is still in the discovery phase.
A related issue is known as upcycling, a fashion trend that involves deconstructing pre-owned pieces of clothing or accessories and creating a new fashion item. For example, in 2021 Louis Vuitton filed suit against Sandra Ling Designs, which had added fabric patches prominently featuring the Louis Vuitton trademark onto knit hats and other garments without authorization. Sandra Ling Designs has since paid Louis Vuitton over $600 thousand dollars and stopped selling any products bearing the trademark as part of a settlement agreement. Upcycling vendors may claim their use is a form of recycling that is good for the environment, but trademark owners likely have strong arguments that the resellers are unfairly profiting from the brand’s reputation, offering materially changed goods, and that consumers will be confused as to whether the practice is authorized. Lawsuits by Chanel and Levi Strauss were also settled so the caselaw in this area remains in development.
We anticipate continued litigation over the resale, customization, and upcycling of luxury goods as creative sellers seek to push the envelope and trademark owners seek to enforce their rights.
Feel free to contact us if you have questions, would like to discuss these issues or would like to join our mailing list. To learn more about strategies for combatting counterfeiting of your intellectual property, see our previous article.
Nancy J. Mertzel
Mertzel Law PLLC
1204 Broadway, 4th Floor, New York, NY, 10001
(646) 965-6900
Offices in New York and New Jersey
תגובות