Can Chanel Prevent Re-sale of its Products?

I read an article a few months ago on The Fashion Law blog regarding Chanel putting a quota system in place for some of its bags. Admittedly I’m a little late commenting my view here (please follow my Twitter here for all the immediate reactions!), but nevertheless, it seemed appropriate to share my thoughts here too.

Chanel has joined a host of other brands with similar systems including Hermes, Rolex and Louis Vuitton. The problem seems to be the ever-growing re-sale market where Chanel cannot control which of its products is being sold, how and to whom. The ‘terms of service’ on some of these brand websites have been amended to say that a purchaser warrants that they are buying the product for personal use only, not a commercial purpose.

I do wonder how the Courts will react to this. The idea that a consumer can be prevented from re-selling an item that they have fully purchased and ostensibly own, in a brand's bid to retain its market positioning, seems, at the very least, disingenuous.

It will be interesting to see how this is argued should consumers decide to challenge this. The brand will most likely either have to argue that the consumer does NOT, in fact, fully own the item they have purchased (in which case, what are they even paying for?), or that the brand belongs in a standalone category (perhaps with other luxury brands), which grant it privileges not available to other consumer (specifically, fashion) brands. i.e. that Chanel is special and should be treated as special in Law.

However, the re-sale market is booming. For a Court to decide that Chanel (or others like it) should have special privileges allowing it to control the journey of its products, post-purchase, puts it at loggerheads with the re-sale market.

I would be keen to see this play out in Court. The legal reasoning behind any decision will be fascinating.