The Lanham Act and corollary state trademark laws are rooted in preventing consumer confusion. It can seem hard to reconcile that fundamental principle of trademark law when consumers knowingly purchase fake products – i.e., counterfeits or infringements.[1] If a buyer specifically seeks out an e-commerce or a brick-and-mortar store to purchase a “replica” handbag, where is the confusion?
That question sits at the center of the lawsuit Chanel filed against TaROO, a retail store, and its owner in the United States District Court for the Southern District of New York. Chanel, Inc. v. Taroo Second, Inc., No. 24-cv-9038 (S.D.N.Y.). Chanel alleges that TaROO knowingly sold counterfeit Chanel-branded handbags, apparel, and accessories and continued doing so despite receiving multiple cease-and-desist letters. In response, TaROO has emphasized that consumers were aware they were purchasing replica products rather than authentic Chanel merchandise, contending that the products’ low prices and the alleged use of the term “replica” eliminated any meaningful risk of point-of-sale confusion. The dispute therefore raises a broader question: Does trademark law cease to apply simply because a purchaser knows the product is fake?
The answer has long been no. A seller cannot avoid trademark liability merely because an immediate purchaser understands that a lower-priced product is a replica, copy, or counterfeit. Relevant confusion may occur later, when third parties encounter the goods and mistake them for genuine articles or believe that the trademark owner authorized their sale. The doctrine therefore protects against marketplace harms that a point-of-sale disclosure cannot necessarily cure.
TaROO’s argument focuses on only one potential form of confusion, that is the purchaser’s understanding at the moment of sale. Yet trademark infringement is not confined to such narrow inquiry. Courts have long recognized that trademark law protects against harms extending beyond the immediate purchaser at the cash register or entering credit-card information online. A purchaser’s knowledge that a product is counterfeit does not end the infringement inquiry. Nor does a seller avoid liability simply by acknowledging that its unauthorized goods are replicas. Instead, Courts consider broader marketplace harms, including confusion among observers after the sale and injury to the goodwill embodied in the owner’s trademarks.
Post-Sale Confusion and Beyond: Protecting Goodwill, Reputation and Brand Value
Counterfeit products are frequently marketed and sold as replicas or “superfakes.” These coined terms signal to consumers that the goods are inauthentic but intended to closely mimic genuine goods associated with a famous brand. The appeal of these products for some consumers stems from the fact that they closely resemble authentic products while carrying a significantly lower price tag. Consumers seeking out replica products therefore often do so intentionally and with a full understanding that the product has not been manufactured or sold by the brand owner.
The purchaser, however, is not the only consumer for whom confusion matters. Nor is the point of sale the only moment at which confusion may arise. “Post-sale confusion” focuses on the perceptions of individuals who encounter a product after it has already entered the marketplace. The relevant question is whether those observers are likely to attribute the unauthorized goods to the trademark owner or believe that the owner approved them — not simply whether the first purchaser understood that the goods were not genuine.
The Second Circuit addressed this precise dynamic over 25 years ago in Hermès International v. Lederer de Paris Fifth Avenue, Inc. 219 F.3d 104, 108–10 (2d Cir. 2000). There, sellers openly told customers that their handbags were Hermès copies, yet promoted the bags on the premise that third-party observers could not tell them from the genuine article. The court held that the absence of point-of-sale confusion did not eliminate actionable post-sale confusion because, inter alia, members of the public could mistake the knockoffs for genuine Hermès goods. Id.; see also Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 799 F.2d 867, 872–75 (2d Cir. 1986) (affirming injunction against substantially similar jeans-pocket stitching because labels did not eliminate likely source and affiliation confusion when the jeans were seen after sale); Ferrari S.P.A. Esercizio Fabbriche Automobili e Corse v. Roberts, 944 F.2d 1235, 1244–46 (6th Cir. 1991) (affirming liability for replica Ferrari vehicles despite disclosures that purchasers were not buying genuine Ferraris because the replicas could cause post-sale source confusion and damage Ferrari’s reputation); Polo Fashions, Inc. v. Craftex, Inc., 816 F.2d 145, 147–48 (4th Cir. 1987) (holding that an interior label did not cure post-sale confusion where observers seeing the polo-player emblem on a worn shirt could attribute the inferior garment to Polo).
Together, these decisions illustrate why post-sale confusion can harm a trademark owner even when the initial purchaser knowingly buys a replica. Consumers who encounter replicas in the marketplace may wrongly attribute their poor quality, defects, or inferior performance to the trademark owner rather than the counterfeiter. That mistaken association harms the trademark owner by weakening the goodwill embodied in its marks and undermining the reputation for quality that those marks represent. The trademark owner therefore bears the reputational consequences of products it neither manufactured nor approved. The counterfeiter, meanwhile, captures the commercial benefit of the mark without assuming responsibility for the standards the mark represents.
For luxury brands, the potential harm extends beyond product quality. Much of the value of a luxury trademark lies in the prestige, exclusivity, and status associated with the brand—attributes that brand owners spend decades cultivating and protecting. The widespread availability of counterfeit and replica products threatens that value by placing the mark on goods the brand owner neither manufactured nor approved. As a result, consumers and observers may associate the mark with commonplace, unauthorized products rather than carefully controlled luxury goods. Post-sale confusion can therefore threaten a brand’s reputation for quality as well as the distinctiveness, prestige, and goodwill that make its marks valuable in the first place.
Beyond Fashion: The Same Principles Apply Elsewhere
Courts have applied these principles well beyond the fashion industry. In the Ferrari decision, for example, the Sixth Circuit recognized that replica automobiles could create actionable post-sale confusion even when the initial purchasers knew they were not buying genuine Ferraris. Similarly, in Acad. of Motion Picture Arts & Scis. v. Creative House Promotions, Inc., the Ninth Circuit held that post-sale confusion was possible where the defendant distributed a gold statuette known as the “Star Award,” which closely resembled the Academy’s famous “Oscar” award. 944 F.2d 1446 (9th Cir. 1991). Although initial purchasers understood they were not buying genuine Oscars, recipients and other observers could nevertheless mistakenly associate the award with the Academy. In finding that the Academy had sufficiently demonstrated a likelihood of confusion between the awards, the Ninth Circuit emphasized the district court had “ignored the problem of post-purchase confusion” by failing to recognize that recipients and later viewers of the defendant’s award encounter it “outside the context in which it is originally distributed” and may therefore “confuse the Star Award with the Oscar.” Id. at 1456.
These cases reflect the broader concern shared by brands across a wide range of industries: products encountered in public can create mistaken source or sponsorship associations long after the initial sale has occurred. Whether the product is a handbag, an automobile, or even a ceremonial award, courts have consistently recognized that post-sale confusion can inflict the same reputational and goodwill-related harms that trademark law is designed to prevent.
Key Takeaways for Brand Owners
Seen through this lens, it becomes clear why the confusion inquiry does not and should not end with a purchaser’s knowledge that a product is not genuine. Trademark law protects against more than confusion at the moment of sale; it also safeguards the goodwill, reputation and distinctiveness embodied in a trademark, all of which can be harmed when infringing goods enter the marketplace. As courts recognize, confusion may arise after the sale when consumers and observers encounter infringing products and mistakenly associate them with the brand owner. Accordingly, the fact that a product is marketed or sold as a replica does not insulate the seller from trademark infringement liability; a simple label cannot neutralize the marketplace confusion and harm caused by the unauthorized use of another’s mark.
For trademark owners confronting sales of infringing products to knowing consumers, several practical lessons emerge:
- A purchaser’s knowledge that a product is infringing will not by itself defeat a trademark infringement claim.
- The post-sale confusion doctrine remains a powerful tool for brand owners seeking to combat counterfeit and replica goods.
- Courts recognize that trademark law protects against harms extending beyond the initial sale, including reputational injury, dilution of goodwill and damage to the distinctiveness of a mark.
- For luxury brands in particular, the relevant inquiry extends beyond product quality to encompass the prestige, exclusivity and status associated with the trademark itself.
- Businesses that market counterfeit products as replicas or use other euphemisms to describe unauthorized goods should not assume that labeling alone eliminates trademark risk, particularly when those products trade on the recognition, reputation and goodwill of a famous brand.
[1] Counterfeiting is a particularly egregious form of trademark infringement involving the use of a spurious mark that is identical with, or substantially indistinguishable from, a registered trademark. 15 U.S.C. § 1116(d)(1)(B).
