Michael Kors Holdings Ltd. is taking Costco Wholesale Corp. to a familiar place — court.
The New York-based clothing and accessories brand slapped the wholesale club with a lawsuit, claiming Costco falsely advertised that it sold Kors handbags.
Filed on Thursday in the Southern District of New York, the suit pointed to e-mail blasts that Costco sent out on April 16 of this year in advance of Mother’s Day.
Those e-mails, which Kors called “bait-and-switch” e-mails, advertised a selection of “designer handbags starting at $99.99 delivered.” Next to that text, the Issaquah, Wash.-based chain showcased three handbags, one of which was a monogrammed Kors bag, bearing the “MK” trademark. Several other photos of Kors bags were also featured in the ad, which prominently displayed Kors’ signature “MK” circular gold-toned hangtag.
According to the complaint, Costco’s ads were meant to “lure unsuspecting consumers away from bona fide Michael Kors retailers and into Costco stores.”
Prior to filing the lawsuit, Kors checked Costco’s Web site and sent representatives to 19 Costco retail stores. The company claims it was unable to find any proof that Costco sold its bags.
“To this date, consumers who arrive at Costco’s Web site through the bait-and-switch ad, or via Costco’s main Web site, will not find any Michael Kors handbags available for sale,” court papers said.
Lawyers for Kors added that: “Costco is not, and never has been, an authorized dealer of Michael Kors handbags, and upon information and belief, Costco does not currently sell Michael Kors handbags.”
Although the lawsuit deals with false advertising, Costco has run into trouble before over allegations that it sold merchandise that it wasn’t authorized to offer.
In February, luxe jeweler Tiffany & Co. sued the wholesaler, claiming it sold engagement rings that it passed off as Tiffany-branded rings in select stores. Also filed in New York federal court, that suit accused Costco of trademark infringement, and underscored that the wholesaler is not an authorized dealer of its wares.
Over the last six years, Costco has been sued by Yves Saint Laurent for both selling counterfeit perfume and for repackaging and selling actual YSL cosmetic and beauty products.
In a case that made it all the way to the Supreme Court, Omega SA also sued Costco, challenging the wholesaler’s right to sell “authentic” Omega watches it obtained on the gray market. Omega won that case in a narrow ruling that said Costco infringed upon Omega’s trademark. But a subsequent ruling in March from the Supreme Court on a different matter upheld a retailer’s right to buy authentic products from middlemen or distributors abroad and resell them at lower prices in the U.S. The legal community refers to this as the “first-sale doctrine.”
“Michael Kors is smart to police his brand integrity and to support his authorized retailers, though U.S. law has some limits,” said Susan Scafidi, director of Fordham Fashion Law Institute. “While luxury labels will never love discounters like Costco, the first-sale doctrine means that discounters have the right to sell designer goods if they can get them through third parties — provided that the goods are legitimate.”
In the Kors case, the fashion brand was unable to find any evidence that Costco sold its bags, and as a result, it is looking for an injunction barring the wholesaler from advertising its products.
The company is also seeking the destruction of any infringing goods, including advertising materials, as well as punitive damages, attorneys’ fees and other costs.
A grooming moment between @tanfrance and @antoni last night at the The LGBT Community Center Trailblazer Awards honoring Anna Wintour, Ricky Martin and more. See more photos at WWD.com #wwdeye (📷: @lexieblacklock)
“It was a very surreal feeling. It wasn’t like we were in the studio together coming up with it — it’s more like he discovered it and loved it. I didn’t let myself get my hopes up, but then it happened it was very exciting,” said singer-songwriter @nombe on discovering that @pharrell would be using his song, “Cant Catch Me” on his HBO documentary series “Outpost.” The German-born singer — named Noah MacBeth — talked to WWD about feminism, using art as a platform for political expression and personal style. Read more on WWD.com #wwdeye (📷: @jilliansollazzo)
This season, denim is going west – in influence. Brands like @fathersdaughterla (pictured here), @tommyhilfiger Jeans, @levis and more are opting for raw, top-stitching styles. (Styled by @thealexbadia; 📷: @ryanplett)
20-year-old British singer @jorjasmith_ made her debut at Coachella last weekend. We caught up with her and talked about her love for Amy Winehouse, working with Kendrick Lamar on the “Black Panther” album and her fashion philosophy. Read the interview on WWD.com #wwdeye (📷: @katiedaisyla)
Supermodel @helenachristensen teamed up with longtime friend and designer @camillastaerk on a joint @paredeyewear collaboration. The lineup features three styles and 11 offerings, all of which embody a vintage feel. Get all the details on how they celebrated the collab on WWD.com. #wwdaccessories #wwdeye (📷: @slovekinpics)
“It’s a hard industry to keep motivated, as well, so finding different subjects and people is what makes it worth it – when you’re like, oh, I’ve met great people, I feel like I’ve done something good, and I feel proud of having done this,” said French actress Stacy Martin on being grateful for the variety of roles she’s take on. Read @ktauer’s full interview with Martin on her her latest film “Godard Mon Amour.” #wwdeye (📷: @danieldorsa)