The billion-dollar business of second-hand clothing: Opportunity or risk of brand infringement?

brand infringement

The billion-dollar business of second-hand clothing: Opportunity or risk of brand infringement?

brand infringementWho says second-hand fashion isn’t exciting? Nowadays, the trend of shopping for branded second-hand fashion is in the spotlight, especially among generation Z and millennials who are increasingly concerned with sustainable consumption. A recent report even predicts that the second-hand fashion market will nearly double in the next few years, reaching a turnover of $350 billion.

The turnover of second-hand fashion varies across online and offline stores. Despite being a huge business opportunity, this phenomenon poses significant risks to brands. One of them is the circulation of counterfeit branded second-hand clothing. 

Second-hand clothing market and legal challenges

In terms of Intellectual Property Rights (IPR), there is actually nothing wrong with the sale of branded second-hand clothing. This is due to the “first sale doctrine” in IPR law. Based on the doctrine, after the initial sale, the buyer has the right to sell, lease, or distribute the product with intellectual property rights without requiring additional consent from the intellectual property rights holder.

It becomes an issue of legal infringement if the second-hand clothing sold turns out to be counterfeit. According to the WTO, trademark infringement occurs when a trademark or service mark is used without the permission of the registered mark owner so as to cause confusion, deception, or misunderstanding as to the source of the goods or services.

The recent case of Chanel vs What Goes Around Comes Around (WGACA) highlights the risk of brand infringement in the second-hand clothing market which includes claims of trademark infringement, counterfeiting, and dilution. Previously, Chanel had also filed a similar lawsuit against luxury goods retailer TheRealReal (TRR). Another similar claim case is Tiffany Inc. vs eBay Inc.

Market opportunity and brand protection

The second-hand market can actually be an opportunity for brands to reach more consumers, build loyalty and even contribute to sustainability issues. At the same time, brand owners can make some efforts to protect their intellectual property rights. 

There are several brand protection efforts that can be implemented, including:

– Authentication. Brand owners work with second-hand merchants or platforms to verify the authenticity of second-hand goods that they claim to be genuine branded goods.  This has been done by several well-known brands, such as Gucci, Burberry, Stella McCartney, and Alexander McQueen.

– Brand protection program. Establish a comprehensive plan that includes offline and online monitoring, reporting, and enforcement mechanisms to tackle counterfeiting.

– Consumer education. Raise awareness about the risks of buying counterfeit products through public campaigns, websites, and social media. Inform consumers how to recognize counterfeit products.

The most effective approach is for brand owners to collaborate with third parties, such as Integrity Asia, which provides clients with a wide range of brand protection programs including market inspections, trademark investigations, anti-counterfeiting, and liaison with law enforcement.

Protect your brand by learning more about Integrity Asia’s brand protection and other mitigation services. Consult our experts via email at contact@integrity-asia.com or fill out the form here.

 

Image by Freepik

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