Designer fashion label Michael Kors recently filed suit against Costco in the U.S. District Court for the Southern District of New York for falsely advertising that Michael Kors products were sold at Costco.
This action arose from an email that Costco sent to its customers offering handbags on sale for $99.99. The email used images of Michael Kors handbags, but the problem was that Costco is not an authorized retailer of Michael Kors products. In addition, Costco does not even sell Michael Kors handbags.
Michael Kors alleges that Costco’s use of images of its handbags would make customers believe its handbags are for sale at Costco, effectively luring away prospective customers from Michael Kors retailers into Costco stores, and the advertisement of a low price destroys the value of the brand. The average price of Michael Kors handbags ranges from $128 to $1,395.
While the ad did not explicitly state that the purses in the photos were Michael Kors, the photos did depict features that would identify the bags as products of the luxury designer.
Michael Kors is seeking a court order barring any future marketing of Michael Kors products, as well as payment of monetary damages.
A similar suit was filed against Costco by Tiffany & Co. back in February for its sale of “Tiffany” brand diamond engagement rings. The rings sold at Costco were not affiliated with the company, and use of the “Tiffany” trademark was not authorized. Tiffany & Co. also brought its action in U.S. District Court in New York’s Southern District alleging that Costco’s use of the “Tiffany” brand has tarnished its image and done irreparable harm to the brand.
These cases demonstrate that special attention needs to be paid to marketing and branding of products. Choosing images and names, while the function of the creative minds in marketing, requires cross-checking to ensure that the final product does not infringe the rights of others. Skipping this step may subject non-intending companies to potential claims similar to those brought by Michael Kors and Tiffany & Co.