As we have written before, trademark law differs from patent and copyright law in one basic way: its purpose is not to protect creativity, but to protect the right of a merchant or company to identify goods as its own, and to protect consumers from confusion and deception that one company’s goods are another’s. Not all uses by a third party of a brand owner’s trademark are forbidden – only those that create a likelihood of confusion among consumers. Very simple – no confusion, no infringement.
What kind of confusion? Courts have recognized several kinds. The most basic is confusion as to who manufactures a product – a “Brand X” product is recognized as made by the company that owns the “Brand X” mark.
But another form of confusion is confusion as to association or sponsorship. A store or other retail outlet cannot use another’s trademark in a way that confuses or misleads consumers into believing the store is an authorized dealer, for example, or that its services (for example repair services on the product) are authorized by the brand owner.
On the other hand, if the product truly emanates from the brand owner, then anyone is free to sell it, and is free to advertise the fact that it is selling Brand X product.
Anyone may sell genuine goods that bear a trademark. There is no requirement in U.S. law that the seller be authorized by the brand owner – even if the sales are not “authorized” they are perfectly legal.
The seller may truthfully advertise that it sells authentic product of that brand, and use the brand’s trademarks to inform the public of such. If a store truly sells, say, genuine Gucci, Fendi, and Prada items, it may say so in advertising.
On the other hand, the seller may not use the marks (or other symbols) to falsely imply it is an authorized dealer of the brand.
Nor may the seller falsely imply that its services related to the product are authorized. Thus a seller may say, for example, “we provide our own warranty on the product,” but not “covered by the manufacturer’s warranty” if that is not so.
As always, in trademark law consumer perception is paramount: what do consumers think when they see the seller using the mark? In the Chanel case against WGACA, if consumers merely think that WGACA sells Chanel product, Chanel will lose. If they think WGACA is an authorized Chanel dealer or its services are authorized, Chanel will prevail.
Although the website offers other brands (Bottega Venata, Celine, Christian Dior, Fendi, Gucci, Hermes, and Louis Vuitton) the “greatest number” of products are Chanel.
Visitors to the site are never advised that WGACA is not affiliated with Chanel.
The WGACA home page features a sale of CHANEL-branded handbags, accessories, apparel, and jewelry displaying Chanel’s famous CC Monogram trademark and Chanel’s iconic handbags.
The WGACA website makes “repeated and unnecessary use of Chanel’s famous trademarks, by including in the visual look and feel of the website CHANEL-branded designs that are not offered for sale by WGACA and by posting images and content exclusively associated with Chanel.
Some of these complaints strike us as weak sauce – if Chanel is WGACA’s largest selling item, it is entitled to show that on its website. But “excessive use” of Chanel’s trademarks and imagery – including of Chanel products WGACA in fact does not offer – might well suggest an association with Chanel.
Some of WGACA’s Instagram pages include photographs of models and influencers wearing or carrying CHANEL handbags that clearly display Chanel’s famous CC Monogram and photographs of Chanel’s iconic handbags.
WGACA refers to secondhand Chanel products as “our #WGACACHANEL” or with the designation “#WGACACHANEL”.
Some of WGACA’s Instagram pages feature photographs from previous Chanel advertising campaigns, including those featuring famous models hired by Chanel.
The complaint adds several other examples of use of Chanel trademarks, photos of Chanel products with and without models, and various banners and hashtags incorporating the term Chanel.
WGACA clearly has made a major push to drum up excitement about its Chanel offerings using social media tools. But that is legitimate – as we discussed, it is entitled to advertise that it offers (genuine) Chanel products. The question is whether consumers reviewing these social media posts take away a further message: that WGACA is associated or sponsored by Chanel.
In the traditional bricks and mortar world, prominent display of a brand logo in a store is often thought to imply some kind of sponsorship or authorized dealer status. How that carries over to the world of social media seems to be a new issue in trademark law. The Chanel case thus seems to be treading new ground.
WGACA provides all customers with a letter of authenticity guaranteeing that the particular product is authentic. Chanel complains that (1) the letter fails to advise that the authenticators are not trained by nor affiliated with Chanel in any way, nor that Chanel itself has not authenticated the item; and (2) on two occasions, WGACA has sold a counterfeit item (WGACA denies this); and (3) the letter was used to authenticate a Chanel tissue box, but Chanel does not sell these items separately.
This “letter of authenticity” strikes us as rather contrived – it does not state what the basis is of the “confirmation” nor even what exactly that means. Is this a money back guarantee? The certification of an expert?
Still, whatever it means exactly (if anything), it is difficult to imagine that a consumer would believe this is a guarantee or certification by Chanel, rather than by WGACA. Again, WGACA is entitled to offer its own guarantee (or warranty) on its items, and it is hard to see what it could do differently to provide the same guarantee or certification without supposedly implying a connection to Chanel.
The Chanel case presents a traditional problem area in trademark law: how far can an unauthorized dealer in authentic branded goods go in using the brand’s trademarks to promote the branded products. While the basic legal principles have long been set, it remains to be decided how those are applied in the digital world. The Chanel case may well provide some guidelines for online merchants and brand owners on this topic.