Earlier this year, Costco got hit with a lawsuit by Tiffany & Co. for alleged trademark infringement, counterfeiting, deceptive business practice, and false advertising. This week, Costco is getting hit with another lawsuit. This time by Michael Kors. The lawsuit filed in the U.S. District Court for the Southern District of New York alleges that Costco ran a mass bait-and-switch false advertising scheme by advertising Michael Kors bags for $99 in order to get shoppers in the doors. No such bags are offered for sale by Costco.
The lawsuit is not filed without proof. Michael Kors cites one instance in which Costco sent an e-mail to its shoppers advertising that Michael Kors handbags were on sale for Mother’s Day for a low price of $99. A visit to nineteen different Costco stores proved the suspecting hypothesis that Costco does not carry Michael Kors handbags in its inventory. Michael Kors handbags start at $298.
Luxury brands will go to any length to protect their brand even if it means going to court to file suit over a few alleged instances of false advertising. If the allegations are true, Costco is effectively using the Michael Kors trademark and brand to lure shoppers looking for a great deal only to find that no such great deal exists. This not only cheapens the Michael Kors brand, but it does so to the tune of possibly millions of dollars. Michael Kors is seeking to recoup Costco’s profits and punitive damages.
Stay tuned. We’ll be watching these two lawsuits against Costco and see if the wholesaler will be liable for any trademark offenses.