Chanel, Hermès Bags on Amazon thanks to WGACA Tie-Up

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Two years after Amazon first announced the launch of its Luxury store company, the offers of the major luxury brands – namely those of Chanel, Louis Vuitton, Hermès, Rolex, etc. – arrive on the high-traffic e-commerce platform. Unsurprisingly, things like Louis Vuitton bags and Rolex watches aren’t stocked on the platform founded by Jeff Bezos through the brands themselves. Instead, a partnership between Amazon and reseller What Goes Around Comes Around (“WGACA”), which has its own storefront on Amazon from Thursday means consumers can shop a growing selection of second-hand luxury goods, from Chanel, Hermès, Louis Vuitton, Gucci and Dior bags to Chanel jewelry, Hermès scarves and a handful of Rolex watches through Amazon. to place.

WGACA’s debut on Amazon’s luxury stores – which stems from an already existing link between the established retailer and Amazon-owned Shopbop, which results in a limited number of luxury product ads on Amazon’s marketplace – is likely to anger notoriously dominant luxury brands whose products are sold without their involvement or permission.

Most important is the potential for these brands to challenge the fact that their branded products are marketed and sold alongside the flow of counterfeit or otherwise infringing goods which are readily available on the main marketplace site of Amazon. Chanel, for its part, argued in its lawsuit settled since against Crepslocker that the UK retailer’s unauthorized use of the Chanel brands alongside “other brands, which do not have the same associations of luxury, prestige, exclusivity and longevity enjoyed by [Chanel]was problematic. (And there weren’t even counterfeit products at stake in this case.)

The offering of genuine goods without the authorization of a trademark after the first marketing of the goods by the brand owner of the trademark is protected against liability for infringement under first sale doctrine. (It is well established that “a producer’s right to control the distribution of his branded product does not extend beyond the first sale of the product”, in the words of the 10th Circuit.) Nevertheless, it is hard not to wonder if the brands whose products are now displayed on Amazon via WGACA still have a valid case to make, especially given the existence of counterfeit and/or counterfeit luxury goods (such as knockoffs Gucci bagsfake Prada bags, Chanel counterfeitsand false Dior bags) on Amazon’s site, which has almost certainly ruled out any possibility of partnering with most luxury brands.

The most immediate exception to the first-sale doctrine is when the wares at issue are “materially different” from those sold by a brand and/or its authorized sellers. This does not seem to apply at first glance, as the products here, including Chanel flap bags, the three Hermès Kelly bags, the long list of Dior Lady bags, etc., do not appear materially different from what they were at the time of initial sale.

Not the goods, but the conditions

However, another exception to the first sale doctrine exists beyond the offering of materially dissimilar goods. goods, and applies in cases where an unauthorized seller resells branded goods that are not subject to the quality controls of the brand owner – or in other words, the terms of sale are different. For this exception to apply, a trademark owner must demonstrate that: (1) it has quality control procedures in place that are legitimate, substantial, and not bogus; (2) it follows its quality control procedures; and (3) the unauthorized seller fails to follow procedures and its sales of nonconforming products will damage brand value and create consumer confusion.

That wouldn’t be a tough argument for luxury brands like Louis Vuitton and co. TO DO. In fact, we saw this in the Crepslocker case, in which Chanel argued that it maintained strict requirements governing “the location, interior layout and signage of the store from which the goods will be sold” , staff training, “point-of-sale guidelines”, and “marketing quality standards, including appropriate brand adjacencies”, among other things, none of which were observed by Crepslocker in connection with its sale of otherwise authentic Chanel branded goods.

Specifically, Chanel took issue with Crepslocker’s packaging, its requirement that consumers pay via PayPal (not credit card), its no-returns policy for items that were specifically purchased for individual customers, its premiums prices for items and the alleged unavailability of authentication cards for certain Chanel bags. Taken together, these factors led Crepslocker to offer “materially worse service” than what Chanel and its authorized retailers offer, and thus to harm the Chanel brand. (This case settled in court might provide some insight.)

Chanel jewelry and a Hermès Kelly bag

More recently, the United States District Court for the District of Colorado shed light on the quality control exception to the first-sale doctrine in a case involving the unauthorized sale of Otter-branded mobile phone and tablet cases online, including on Amazon’s marketplace. Otter filed suit against Triplenet, alleging that the reseller’s distribution failed to meet quality control standards observed by the company and its authorized resellers, such as conditions for shipping, product inspection, removal and reporting of damaged goods and presentation of products.

Siding with Otter (on a motion for interim relief) in November 2021, the court ruled that the company had established that it had legitimate quality control measures in place insofar as it allowed its products be sold to consumers only by it or authorized resellers, which Triplenet did not observe, and that Triplenet’s nonconforming sales diminished the value of Otter’s marks because such sales interfered with Otter’s ability to guarantee that its products meet its quality standards.

Potential marketing issues

However, particularly disgruntled brands could try to go further and challenge the marketing of products offered by WGACA. In the still ongoing lawsuit he filed against WGACA, Chanel argued that the retailer was making “excessive” use of the Chanel trademarks in an effort to trick consumers into believing that it is somehow authorized or affiliated with Chanel. (Chanel filed a complaint against WGACA in March 2018, accusing the New York-based resale entity of selling “inauthentic and counterfeit Chanel products, and of us[ing] Chanel trademarks in its advertising and marketing.”) The strength of such an argument is debatable here, as it does not appear (to me) that WGACA and Amazon are using trademarks’ trademarks in a way that goes too far in the Go beyond the list/description and display available products.

A Chanel bag on Amazon Luxury Stores

Beyond that, brands might object to marketing products here as “vintage”, as Chanel did. in his lawsuit against WGACA (and still ongoing lawsuit he filed against WGACA, as well), claiming that the retailer is going against the Federal Trade Commission’s advice on labeling “vintage” products, which are items that are “at least 50 years old.” According to Chanel, the WGACA represents “certain of its Chanel-branded products to consumers as ‘vintage’ even though such items are of recent distribution and sale”. Some of her “rare vintage” Chanel bags are, according to Chanel’s complaint, “less than twenty years old”.

It’s worth noting that with such resale-specific litigation presumably in mind (and knowing the claims some brands have made against resellers in the past), it’s no surprise that Amazon and WGACA chose not to rely too much on explicit guarantees of authenticity. WGACA’s claim, which is included in the “About” section, states that “WGACA guarantees the authenticity of each item through its multi-level authentication process. WGACA is not an authorized reseller and does not is affiliated with any of the brands they sell; the brands are not involved in their authentication process.

As for whether WGACA and Amazon are concerned about legal issues, the consensus seems to be no. Amazon Fashion President Muge Erdirik Dogan said, “Amazon’s Luxury Stores is in regular contact with all luxury brands on various ways to collaborate with Amazon’s technology, operations, innovations and more. .”

Hypothetical legal issues aside, the partnership between Amazon and WGACA is striking in light of Amazon’s well-established ambitions in fashion and luxury, and the reluctance of major fashion/luxury brands to participate. Against this backdrop, the scenario appears to be a major win for Amazon, which has access to WGACA’s supply of used goods; if RealReal’s costs and physical expansion are an indication, amassing a high-quality supply is not an easy or inexpensive endeavor. Amazon also benefits from having WGACA do the authentication work – another costly and demanding effort. Finally, WGACA will also handle the shipping of all subject goods, which seems like the best possible scenario for Amazon given the large-scale refusal of the biggest names in luxury to play ball.

UPDATE (September 20, 2022): This article has been updated to remove a quote from WGACA.

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