In April of this year, Costco sent out an email blast advertising deals on "Designer Handbags," which featured a photo of a Michael Michael Kors purse.
The only problem is, Costco isn't an authorized dealer of Michael Kors products--so, needless to say, Kors's people were none too pleased to see the bag pop up in their advertising. Now Kors is suing the retailer, WWD is reporting.
The lawsuit alleges that Costco used images of Kors products as a "bait and switch" tactic to get customers in their stores. Susan Scadafi, director of Fordham Fashion Law Institute, weighed in for WWD, noting that Kors "is smart to police his brand integrity and to support his authorized retailers."
However, Costco has a reputation for buying goods on the "grey market"--buying designer items through a third party--which landed it in hot water with Omega in 2010. So Kors must be absolutely certain that Costco isn't selling Kors goods obtained through a wholesaler--which is totally legal. “While luxury labels will never love discounters like Costco, the first-sale doctrine means that discounters have the right to sell designer goods if they can get them through third parties--provided that the goods are legitimate,” Scadafi explains.
Costco is no stranger to these kinds of lawsuits; in February of this year, Tiffany & Co sued the wholesaler for leading customers to believe Tiffany-brand engagement rings were sold in its stores. Despite re-naming the offending rings and filing to have the lawsuit dismissed last March, the jury is still out. Costco has not commented on either case.