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High-end fashion labels have been battling with counterfeiters for years to reduce the amount of knock-off merchandise sold through grey and black markets.  Chanel made a bold statement when it filed a cyber piracy and trademark infringement lawsuit accusing 399 websites that Chanel believes are selling counterfeit items under the Chanel name.  Chanel believes that these websites operate in China, the Bahamas, and other overseas areas where trademark infringement is not strictly enforced.

Historically, high-end brands have focused their battle tactics to minimizing the sales of street corner knock-offs.  Chanel’s lawsuit takes the fight to a larger war by seeking to seize or permanently disable websites from selling any counterfeit merchandise, from t-shirts to expensive jewelry, bearing the Chanel name.  Tiffany filed a similar suit in April targeting 223 unnamed websites.  Louis Vuitton filed a suit against 182 websites.  Each of the lawsuits includes several website operators that are also names in the Chanel case.

In this case, if an individual or firm purchased large amounts of legal Chanel merchandise and resold the merchandise online or through another retailer, this would be a gray-market.  Black-market goods, on the other hand, are illegal.  An example of a black-market in this instance would be if an individual or firm stole Chanel merchandise and resold it.  Counterfeit merchandise is merchandise that is made using a label that has not been approved by the manufacturer.  Counterfeit items are commonly referred to as “knock-offs.”  If a company or individual manufactured an item and applied the Chanel brand without Chanel’s consent the item would be considered counterfeit.

In August 2010, a federal judge ruled that defendants in a federal trademark or infringement lawsuit could be served legal notice via email.  The aforementioned cases have found that many of the defendants were falsifying their physical addresses.

Discussion Question:

  1. Why did Chanel file a lawsuit against 399 websites?
  2. What is the difference between counterfeit, gray-market, and black-market merchandise?

Ken Ritter, “Chanel files Internet trademark lawsuit in Vegas,” Las Vegas Sun, September 21, 2011.