Chanel v. What Goes Around Comes Around: Trademarks

A New York jury found a luxury reseller liable for willful counterfeiting and false association over Chanel-branded bags, holding that even items that left a Chanel factory can be 'counterfeit' when they fail the brand's quality controls.

The most consequential counterfeiting verdict of the luxury-resale era did not turn on a single obvious knockoff. In Chanel, Inc. v. What Comes Around Goes Around LLC (d/b/a What Goes Around Comes Around), No. 1:18-cv-02253-LLS (S.D.N.Y.), a jury concluded on February 6, 2024 that one of the best-known vintage and pre-owned dealers in the country had sold counterfeit Chanel goods, even though much of the merchandise had, at some point, originated inside Chanel’s own supply chain. The jury found for Chanel on every count and awarded $4 million in statutory damages. Judge Louis L. Stanton entered final judgment and a sweeping permanent injunction on February 26, 2025, and in a June 26, 2025 opinion denied WGACA’s post-judgment motions while declining to brand the case “exceptional” for fee-shifting purposes. The dispute is now headed to the Second Circuit, but the trial record already supplies a template for how brands can attack the gray market without ever producing a crude fake.

At a glance

Case: Chanel, Inc. v. What Comes Around Goes Around LLC, et al., No. 1:18-cv-02253-LLS (S.D.N.Y.) (the defendant, legally “What Comes Around Goes Around LLC,” does business as “What Goes Around Comes Around,” or WGACA).
Judge: Louis L. Stanton.
Jury verdict: February 6, 2024: liability for Chanel on all submitted counts, including willful trademark infringement, false association, counterfeiting, and false advertising; $4 million in statutory damages.
Final judgment: Entered February 26, 2025: $4 million statutory damages, $12,739 in disgorged profits, and a permanent injunction (including a mandatory non-affiliation disclaimer). Post-trial, the court denied WGACA’s new-trial motion, denied Chanel’s roughly $6.7 million fee request as not “exceptional,” and awarded litigation costs.
Status: On appeal to the U.S. Court of Appeals for the Second Circuit; the appeal remained pending as of July 2026.

Counterfeiting under the Lanham Act, without a “knockoff”

The intuitive picture of counterfeiting is a street-corner imitation: a bag stitched in an unauthorized factory and stamped with a stolen logo. The Lanham Act’s definition is narrower and, in this case, more dangerous to resellers. A “counterfeit” is defined as a spurious mark “which is identical with, or substantially indistinguishable from, a registered mark.” 15 U.S.C. § 1127. The parallel “counterfeit mark” definition used for the counterfeiting remedies adds that the mark must be registered for the goods or services actually sold, offered for sale, or distributed, and excludes marks the producer was authorized to use at the time of manufacture. 15 U.S.C. § 1116(d)(1)(B)(i). The doctrinal hinge is the word spurious: the question is not whether the bag is well-made or even whether Chanel artisans once touched it, but whether the mark on it is one Chanel authorized for that item in the marketplace.

Chanel built its counterfeiting case around three categories of goods that, it argued, bore unauthorized marks regardless of provenance. First, bags carrying serial numbers from a batch of roughly 30,000 authenticity cards and stickers stolen in 2012 from the Renato Corti factory in Italy, a Chanel supplier: numbers Chanel had voided so that any item bearing them was, by definition, never released for sale. Second, “point-of-sale” and “counter-support” items: displays, props, and similar materials never intended for retail. Third, individual bags with serial numbers that had never been entered into Chanel’s records at all. In each instance, the CHANEL mark appeared on goods Chanel never authorized to enter commerce, and the jury was entitled to treat those marks as spurious.

The result reframes counterfeiting around authorization rather than origin. A genuine-looking, even genuinely-manufactured, article can carry a counterfeit mark if the brand never sanctioned that specific unit’s sale. For a reseller whose entire value proposition is moving secondhand branded inventory, that is a profound shift in risk.

Statutory damages under 15 U.S.C. § 1117(c)

Because the jury found counterfeiting, Chanel could elect statutory damages under 15 U.S.C. § 1117(c): the counterfeiting-specific remedy that lets a plaintiff bypass the difficult task of proving actual damages or tracing the infringer’s profits unit by unit. The statute authorizes an award of $1,000 to $200,000 “per counterfeit mark per type of goods or services sold,” and lifts the ceiling to $2,000,000 per mark per type where the use was willful. The amount within those bands is committed to the factfinder’s discretion, guided by deterrence and the defendant’s culpability rather than a strict compensatory measure.

The $4 million verdict makes sense only against that framework. With multiple counterfeit-mark findings and a jury that returned willfulness findings across the board, the award sits comfortably inside the enhanced statutory range without requiring Chanel to quantify lost sales or disgorge specific revenue. The separate $12,739 disgorgement figure (profits tied to unauthorized handbags and 779 counter-support items) underscores the point: actual ill-gotten gains were modest, but statutory damages exist precisely to make counterfeiting unprofitable and to deter repetition. The structure also illustrates why counterfeiting findings are so valuable to brand plaintiffs. Ordinary trademark infringement carries no statutory-damages option; only the counterfeiting label unlocks § 1117(c) and its punitive, deterrence-oriented ceilings.

Marketplace and resale liability: the WGACA-versus-The RealReal line

WGACA is not a passive intermediary in the mold of an online marketplace that merely hosts third-party listings. It buys, holds, authenticates, and resells inventory under its own banner, and the trial record turned heavily on how it marketed that inventory. The evidence showed WGACA deploying the CHANEL word mark in its own stylized presentation, promoting “WGACA CHANEL,” guaranteeing “100% authenticity,” and circulating hashtags such as #WGACACHANEL alongside Chanel imagery and what appeared to be brand marketing materials. The jury could reasonably read that conduct as conveying sponsorship or an affiliation that did not exist: false association under 15 U.S.C. § 1125(a)(1)(A).

The instructive contrast, surfaced repeatedly in the litigation, is Chanel’s parallel suit against The RealReal. There, on a motion to dismiss, Judge Vernon Broderick dismissed Chanel’s trademark infringement and false-endorsement counts, reasoning in part that The RealReal did not feature the CHANEL mark more prominently than other brands and disclosed that the brands it sells are not affiliated with it, so its use was descriptive rather than suggestive of sponsorship. Chanel, Inc. v. The RealReal, Inc., 449 F. Supp. 3d 422 (S.D.N.Y. 2020). That was a partial win only: the counterfeiting and false-advertising claims survived, and the case remains pending as of July 2026. The lesson for marketplaces and resellers is not that selling secondhand branded goods is unlawful (it plainly is not), but that the manner of presentation determines whether nominative, descriptive use shades into actionable false association. A platform that foregrounds a brand as its own marketing engine, guarantees what the brand itself will not, and blurs the line between reseller and authorized retailer invites the very confusion the Lanham Act targets. Genuine intermediaries that surface third-party listings, by contrast, operate under different liability rules and contributory-infringement standards. WGACA’s first-party model, though, placed it squarely on the merchant side of that line.

The first-sale doctrine and the authentication line

The first-sale (or “exhaustion”) doctrine ordinarily lets a buyer resell a genuinely trademarked good without the brand’s permission; once the markholder releases an authentic unit into commerce, it cannot use trademark law to control downstream resale. WGACA leaned on that principle, and on the surface it had a point: reselling real Chanel bags is lawful.

The verdict marks where that defense stops. First sale protects the resale of genuine goods, and a good is not “genuine” for these purposes if it differs materially from what the markholder authorizes, including goods that never passed the brand’s quality-control and authentication regime. Items bearing voided or never-registered serial numbers, point-of-sale props never meant for retail, and units Chanel’s controls would have rejected fall outside the category of authorized genuine goods. By that logic, the items were never lawfully placed in commerce by Chanel at all, so there was no “first sale” to exhaust the brand’s rights. The quality-control gloss on materiality (well established in gray-market cases) did the analytical work: a bag can be physically authentic in the colloquial sense yet legally non-genuine because it escaped the controls that define authenticity for the brand. That is the doctrinal bridge between “first sale protects resale” and “counterfeit even though Chanel-made.”

Open questions

Appellate durability. The Second Circuit will test whether labeling quality-control-failing, brand-origin goods “counterfeit” stretches the Lanham Act’s “spurious mark” definition past its breaking point, and whether the statutory-damages award is proportionate.
The genuine/non-genuine boundary. How far does the “failed quality control equals non-genuine” theory travel? Does it reach any deviation from brand protocol, or only material ones that bear on authenticity and consumer expectations?
Resale-marketing safe harbors. The RealReal/WGACA contrast suggests presentation governs liability, but the line between permissible nominative use and impermissible false association remains fact-bound and unpredictable for platforms.
Burden of authentication. The injunction requires WGACA to back authenticity claims with documentation. Where does the practical and evidentiary burden of proving a resale item’s pedigree ultimately rest, and can independent authenticators satisfy it?

Implications

Provenance is not a defense. Resellers cannot assume that “it came from the brand” defeats a counterfeiting claim; voided serials, props, and quality-control rejects can be treated as counterfeit.
Counterfeiting findings unlock § 1117(c). Brands that can characterize gray-market goods as counterfeit gain access to statutory damages and willfulness multipliers, sharply raising settlement leverage.
Marketing discipline matters more than inventory. Disclaimers, restrained nominative use, and avoiding brand-as-endorsement messaging are now central risk controls for resale businesses.
Authentication must be documented. Post-judgment, authenticity guarantees should be backed by records; unsupported “100% authentic” claims invite false-advertising and false-association exposure.
A roadmap for luxury brands. Chanel’s playbook (serial-number forensics, quality-control evidence, and a false-association theory) gives brand owners a replicable template against the secondary market.

Frequently asked questions

Is it now illegal to resell authentic Chanel products? No. The first-sale doctrine still protects the resale of genuine, brand-authorized goods, and the verdict does not outlaw the secondary luxury market. The liability attached to specific categories (items with voided or unregistered serial numbers, non-retail point-of-sale props, and goods that failed Chanel’s authentication) plus marketing that implied an affiliation Chanel never granted. Reselling a legitimately purchased Chanel bag, described accurately and without suggesting brand endorsement, remains lawful.

How can a Chanel-made item be “counterfeit”? Because the Lanham Act defines counterfeiting around the mark, not the manufacturer. A mark is counterfeit when it is spurious (used on goods the brand never authorized for sale), so an item that escaped Chanel’s quality-control and authentication system can bear a counterfeit mark even if Chanel artisans once handled it. In trademark terms such goods are “non-genuine,” which both supports the counterfeiting finding and removes them from first-sale protection.

Why was the damages award $4 million when disgorged profits were only about $13,000? The $4 million is statutory damages under 15 U.S.C. § 1117(c), a counterfeiting-specific remedy untethered from actual profits. The statute permits up to $200,000 per counterfeit mark per type of goods, rising to $2 million per mark for willful conduct. With multiple counterfeit-mark and willfulness findings, the jury’s award fits within that punitive, deterrence-driven range; the separate $12,739 disgorgement reflects the comparatively small actual profit Chanel could trace.