Chanel v. What Goes Around Comes Around: A Landmark Resale Dispute

Source: SACLAB

In the fashion industry, intellectual property (IP) law has always been an important tool for protecting the integrity and reputation of luxury brands. Recently, the fashion industry witnessed a landmark ruling that exemplifies the growing intersection between IP rights and the booming resale market. On February 6, 2024, Chanel won a significant legal battle against the luxury reseller What Goes Around Comes Around (WGACA) over allegations of trademark infringement, false advertising, and the sale of counterfeit goods. The jury found WGACA liable on all counts, awarding Chanel $4 million in damages, and this case highlights broader issues in the fashion industry—issues that are particularly relevant to the evolving dynamics of fashion law in Africa.

The Legal Battle and the Jury's Verdict

In March 2018, Chanel sued luxury resale company What Goes Around Comes Around (WGACA), alleging trademark infringement, unfair competition, false advertising, and false association. Chanel claimed WGACA misled consumers into believing it was affiliated with or authorised by the brand while selling counterfeit and unauthorised goods.

WGACA defended itself by arguing that it was engaged in lawful resale, using Chanel’s trademarks solely to identify authentic secondhand products—falling under nominative fair use. The case had significant implications for the luxury resale market, shaping discussions around fair use defenses and potential antitrust concerns related to brand control over resale.

After years of litigation, a jury ruled in favor of Chanel in February 2024, finding WGACA liable for trademark infringement, false association, unfair competition, and false advertising. The court awarded Chanel $4 million in statutory damages. Chanel later sought a permanent injunction to restrict WGACA’s use of its trademarks and advertising claims about product authenticity.

WGACA pushed back, arguing that Chanel had not proven actual harm and that the proposed restrictions were excessive. Despite these objections, in February 2025, the court issued a final judgment against WGACA, enforcing strict penalties, including a permanent injunction and financial penalties. The outcome was a reminder to both brands and resellers of the delicate balance between protecting a brand’s intellectual property and the legality of reselling genuine products. WGACA’s promotion of Chanel goods with excessive use of the brand’s logos, hashtags, and association with its founder violated the principles of fair use, which only permits brand names to be used to the extent necessary to describe a product.

Intellectual Property and Resale Markets: A Global Perspective

The Chanel case underscores a growing tension in the fashion world, especially within resale markets, between IP protection and the desire to make products accessible in a circular economy. Resale markets are increasingly popular as consumers turn to second-hand luxury goods, both for their perceived sustainability and their affordability. Yet, as this market expands, so does the need to clarify how IP law applies to these transactions.

The fundamental legal doctrine governing this issue is the "first sale" doctrine, which holds that once a product is sold by the brand owner, the purchaser is generally free to resell the product without legal consequence. However, this principle is nuanced. Goods that are materially altered, counterfeit, or never authorised for sale are not protected under this doctrine. In the case of WGACA, the sale of counterfeit Chanel bags and unapproved resale practices led the court to rule in favor of the brand, reinforcing the idea that resellers must be mindful of authenticity and the conditions under which they sell products.

Implications for Fashion Law in Africa

For Africa's growing fashion industry, which is built on both creativity and the production of raw materials like cotton, the lesson from the Chanel case is twofold. First, intellectual property rights are paramount in safeguarding the identity and heritage of brands, particularly in the context of Africa’s vibrant, culturally diverse fashion scene. Second, while reselling and upcycling can contribute positively to the industry, businesses must ensure their activities adhere to intellectual property laws that protect both local and international brands.

In regions where fashion is rapidly developing, such as West Africa, where there is a notable increase in both the manufacturing of fashion products and the presence of luxury goods, brands face the challenge of balancing protection with growth. African fashion law must evolve to integrate the complexities of resale markets, ensuring that brands, local artisans, and resellers can operate within a legal framework that fosters creativity while preventing the spread of counterfeit goods.

The Role of African Governments and Policymakers

To navigate the complexities highlighted by the Chanel v. WGACA case, African policymakers must focus on creating robust intellectual property laws that not only protect local designers but also regulate the resale market effectively. Many African nations still face challenges related to enforcing IP rights due to a lack of resources and widespread counterfeiting. This gap creates an opportunity for regional cooperation and the creation of policies that protect African brands while facilitating access to global markets.

Moreover, as the African fashion industry continues to grow, policymakers must ensure that laws governing resellers align with broader economic strategies, such as the African Union’s Agenda 2063, which envisions an integrated and prosperous Africa. A key part of this vision should involve creating a legal framework that encourages innovation and entrepreneurship while providing safeguards against the misuse of IP.

The Future of Fashion Resale

As resellers adapt to the changing legal landscape, luxury brands will increasingly look to adopt strategies that allow for collaboration with trusted secondary markets. Already, some brands have launched their own authorized resale platforms, ensuring consumers can buy authentic second-hand items with confidence. In Africa, the opportunity for brands to embrace a legal resale market could lead to more sustainable practices, especially if the legal system is equipped to deal with the complexities of these transactions.

Ultimately, the Chanel case serves as a case study not just for luxury resellers, but for the fashion industry at large. It emphasizes the importance of protecting brand identity in the resale market and offers lessons for regions like Africa, where the fashion industry’s potential is rapidly unfolding. As African nations continue to invest in both fashion and intellectual property law, ensuring these laws can protect against counterfeiting and uphold the authenticity of products will be crucial to the continent's continued growth in the global fashion industry.

The Chanel v. WGACA case marks a pivotal moment in fashion law, highlighting the ongoing battle between protecting intellectual property and fostering a thriving resale market. For African fashion, the implications are profound—policymakers must act swiftly to ensure that their legal frameworks can protect local talent and brands, creating a sustainable and legal marketplace for both original and second-hand goods. The case reminds us that while the law evolves with the marketplace, it must remain vigilant in upholding the principles of fairness and protection in an increasingly globalised industry.