Michael Kors Making Costco Pay

Michael Kors Holdings Ltd. has filed a lawsuit against Costco, claiming the wholesale club has falsely advertised that it sold Kors handbags.

The suit was filed on Thursday in the Southern District of New York, and pointed to e-mail blasts that Costco sent out on April 16 of this year in advance of Mother's Day.

WWD detailed that the e-mails "advertised a selection of 'designer handbags starting at $99.99 delivered.' Next to that text, the Issaquah, Wash.-based chain showcased three handbags, one of which was a monogrammed Kors bag, bearing the 'MK' trademark. Several other photos of Kors bags were also featured in the ad, which prominently displayed Kors' signature "MK" circular gold-toned hangtag."

Costco has not commented.

According to the complaint, the Costco ads were meant to "lure unsuspecting consumers away from bona fide Michael Kors retailers and into Costco stores."

"To this date, consumers who arrive at Costco's Web site through the bait-and-switch ad, or via Costco's main Web site, will not find any Michael Kors handbags available for sale," court papers said.

Lawyers for Kors added that: "Costco is not, and never has been, an authorized dealer of Michael Kors handbags, and upon information and belief, Costco does not currently sell Michael Kors handbags."

"Michael Kors is smart to police his brand integrity and to support his authorized retailers, though U.S. law has some limits," said Susan Scafidi, director of Fordham Fashion Law Institute. "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."

In the Kors case, they were unable to find any evidence that Costco sold its bags, and as a result, it is looking for an injunction barring the wholesaler from advertising its products.