Chanel, Inc. v. What Comes Around Goes Around LLC

Document and procedural posture

The provided text is a November 25, 2020 letter from Chanel’s counsel to Judge Louis L. Stanton. Chanel asks the court to clarify its November 18, 2020 order concerning a certification Chanel submitted under the court’s August 21, 2020 discovery order. The text does not include a ruling on the request.

Background

The August 21 order required Chanel, through an officer with knowledge, to certify for each item it claimed was counterfeit that Chanel had admissible evidence that the item was not made in a factory that made genuine Chanel products and was substantially indistinguishable from a genuine article. The order also stated that, after the certification, the defendants had to follow the next step in the discovery procedure regardless of their views about the evidence.

Chanel’s certification stated that the listed items were not made in a Chanel-authorized factory permitted to make genuine Chanel products and that the items or their trademarks were substantially indistinguishable from genuine Chanel articles.

The November 18 order questioned Chanel’s use of “Chanel-authorized factory, which is permitted to make genuine Chanel products” instead of “factory which made genuine Chanel products.” According to the letter, the court was concerned that Chanel’s wording might exclude factories that had previously made Chanel items still in the market. The order warned that evading its terms could be treated as a concession that Chanel could not meet them and could lead to dismissal of Chanel’s counterfeit claims.

Chanel’s arguments

Chanel argued that the November 18 order could improperly shift to Chanel the ultimate burden of proving that the overrun exclusion does not apply. The overrun exclusion is a statutory exception for a mark used on goods made by a manufacturer that was authorized, at the time of manufacture, to use the mark for that type of goods. Chanel cited the Lanham Act and legislative history for its position that the defendants bear the burden of proving that the exclusion applies.

Chanel stated that WGACA had not produced documentation about the sources of the accused items and had offered only speculation that authorized factories made them. The letter also says that WGACA witnesses testified that WGACA had no evidence showing that the items were initially purchased from a Chanel-authorized factory.

Chanel further argued that its certification language tracked the statutory language. It stated that the only factory authorized to use Chanel’s marks for bags bearing the relevant serial numbers was the Renato Corti factory, and that Chanel had admissible evidence that this factory did not make the bags bearing those numbers. Chanel argued that even if another Chanel factory made the bags, the overrun exclusion would not apply because that factory was not authorized to use Chanel’s marks for bags bearing those serial numbers.

Chanel also argued that the products were counterfeit because stolen Chanel authenticity cards and labels were attached without authorization to bags of unknown origin and then sold by WGACA. Chanel asserted that this differed from the sale of overrun or non-quality-controlled bags, which it characterized as trademark infringement rather than counterfeiting. Chanel said that 11 of the 12 certified products involved bags with stolen Corti serial numbers and that the twelfth was counterfeit because its bag type did not match the genuine Chanel item associated with the relevant serial number.

Disposition

The provided text contains Chanel’s request for clarification but does not state whether Judge Stanton granted, denied, or otherwise resolved it. Accordingly, no disposition of the request can be identified from this text.