Chanel's $4 million (£3 million) counterfeiting judgment against luxury reseller What Goes Around Comes Around (WGACA) faces a fresh legal challenge, as appeals judges question the jury instructions and the damages awarded to the French fashion house.
During oral arguments on 21 September 2026, a three-judge panel of the US Court of Appeals for the Second Circuit examined the definition of counterfeit goods, evidence about 14 handbags, and the justification for the multimillion-dollar award.
The appeal follows a February 2024 jury verdict against WGACA in the long-running trademark dispute, which began in 2018. The reseller seeks a new trial on the counterfeiting claim, arguing that trial errors affected the outcome. The appeals court has not yet issued its decision.
The Legal Dispute Over Chanel's Handbags
The case centres on allegations that WGACA sold counterfeit Chanel handbags and used the luxury house's trademarks in ways that misled consumers about the relationship between the two businesses. The jury found WGACA liable for trademark counterfeiting, false advertising and other trademark-related claims.
A key issue on appeal is whether the 14 handbags at issue could legally be classified as counterfeit. WGACA argues that the jury was not properly instructed on a provision of federal trademark law concerning goods manufactured by an authorised manufacturer.
The reseller maintains that the disputed handbags may have originated from the Renato Corti factory, which it says was authorised to manufacture Chanel bags, although the fashion house did not authorise those specific products for sale. WGACA points to serial numbers and authentication stickers associated with the factory as relevant evidence.
However, the district court rejected WGACA's post-trial challenge, finding that the reseller had not produced sufficient evidence to establish that the disputed handbags were manufactured at a Chanel-authorised factory. The court described the claim that bags bore voided Corti serial numbers as speculation, rather than evidence of an established manufacturing origin.
WGACA continues to argue that the jury should have been instructed to consider the relevant provision of federal trademark law when deciding whether the handbags qualified as counterfeit. Chanel has defended the instructions given at trial, and the judges' questions do not mean the original verdict has been overturned.
Why the $4 Million Award Is Being Challenged
The damages award also came under scrutiny during the September hearing. The jury awarded Chanel $4 million in statutory damages for wilful trademark counterfeiting, comprising $2 million for the interlocking CC logo and $2 million for the Chanel name. The judges questioned the evidence supporting the award, including WGACA's profits from the handbags and the harm Chanel suffered.
Chanel's lawyer acknowledged that the company had not quantified reputational damage but argued that statutory damages are not limited to measurable financial losses. The lawyer also cited deterrence and WGACA's conduct, including sales made after the reseller received notice of authentication concerns.
During deliberations, the jury asked about the maximum available statutory damages, a point Chanel cited in defending the award. WGACA argues that the damages were excessive and that the jury instructions could have influenced both the finding of wilful counterfeiting and the amount awarded.
The reseller is also challenging the exclusion of evidence it says could have helped assess potential witness bias. These arguments form part of its broader effort to secure a new trial or reduce the financial penalty.
In June 2025, the district court rejected WGACA's post-trial requests for judgment in its favour or a new trial and declined to reduce the $4 million award. The final judgment, entered on 26 February 2025, also required WGACA to disgorge $12,739 (£9,500) in net profits, separate from the statutory damages.
The Second Circuit reserved its decision after hearing arguments, leaving the $4 million award in place for now. Its ruling will determine whether the counterfeiting judgment and damages stand or whether further proceedings are required, with potential implications for trademark protection in the luxury resale market.
