A Brand Owner's Perspective on Third-Party Authentication

• Author: Cheryl Wang
• Pages: 40-63

Published in Landslide, Volume 14, Number 3, 2022. © 2022 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion

thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the

American Bar Association.

40

Image: Shutterstock; yellow bag: Getty Images

Published in Landslide, Volume 14, Number 3, 2022. © 2022 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion

thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the

American Bar Association.

40

Imagine you are in-house intellectual property (IP) counsel and

the customer care team sends you an urgent request to speak

with an upset client who seems to be threatening litigation over

a purportedly counterfeit product. At this point, you likely have a

few questions in mind. Was the purchase made directly from your

company? Or through an unrelated third party? How did the indi-

vidual determine authenticity?

After connecting with the individual, you learn that the

purchase was made through another platform, with whom your

company has no relationship. This individual was upset to discover

that the purchase, which arrived with an authenticity certicate,

was actually counterfeit upon taking it for repair or restoration.

From this individual’s perspective, the durability and quality of

the products your company makes are now suspect. After all, the

individual reasons, product that is truly made with durable quality

craftsmanship and materials should not fall apart at the secondary

resale market stage of consumption.

You take the time to explain that although the company tightly

controls its supply chains to ensure consistent quality and durabil-

ity, it cannot guarantee the authenticity, quality, and/or durability

of products that have left its authorized channels of trade. Unfor-

tunately, the damage appears to have been done, at least from this

individual’s perspective.

What just happened here?

This article examines the role that third-party authentication

services play in the ever-increasing rise in resale and the IP issues

presented from a brand owner’s perspective and discusses the

high-prole case Chanel v. RealReal.1 This case, which is now in

mediation, was poised to have lasting implications in the resale

industry.

What Is Third-Party Authentication?

First, let’s take a step back. What is third-party authentication?

While an accepted denition has not been formally developed

specically for the resale context, for the purposes of this arti-

cle, third-party authentication is dened as a determination of a

product’s authenticity made by a third party outside of the brand

owner’s authorized channels of trade.

Cheryl Wang is associate general counsel at Birkenstock

USA, LP, where she handles general corporate matters with

a focus on intellectual property and brand protection. She

can be reached at cwang@birkenstockusa.com. The views

expressed are the author’s and do not necessarily ref‌lect

those of her employer.

A Brand Owner’s

Perspective on

Third-Party

Authentication By Cheryl Wang

These days, it is impossible to ignore the ever-increasing popu-

larity of resale platforms. In the last half of 2021, dozens of articles

discussing the increase in luxury resale appeared.2 According to a

2021 Resale Report from resale marketplace ThredUp, the second-

hand market is predicted to double in the next ve years, reaching

$77 billion by 2025, with $47 billion of that amount expected to

come from the retail clothing sector.

3

With the pandemic ongo-

ing, even those who were reluctant to adopt the habit of online

shopping have had to accept it as a fact of everyday life. From

a consumer’s perspective, the attraction is obvious. Many of us

aspire to do our part to protect the environment. Being able to

combine that with our purchasing habits is an extra bonus.

The History of Authentication and the

Authentication Process

However, do any of us ever stop to consider what exactly third-

party authentication means or entails? We can trace our current

understanding of authentication back to its traditional roots. Long

before large corporate brands and mass production, individuals

who inherited or otherwise acquired personal property would take

it to be valued or appraised. It is a commonly held misconception

that appraisers will authenticate personal property.4 In fact, even

licensed appraisers who identify a property are, in actuality, only

providing a reection of the market’s recognition and treatment

of the property.5

As discussed by the International Society of Appraisers, the

identication part of the valuation process is based on measur-

able criteria, such as dimensions, materials, form, construction

techniques, and more.

6

Therefore, it is rarely subject to dispute.

On the other hand, authentication, which can be understood as

the scholarly determination of whether an item is genuine or has

Published in Landslide, Volume 14, Number 3, 2022. © 2022 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion

thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the

American Bar Association.

41