Cosmetics wars: MAC rejects Target’s settlement over fake make-up claims

MAC’s legal brawl with Target continues after the cosmetics giant rejected a settlement offer made by Target yesterday.

A spokesperson for Target said the retailer made an offer to settle the proceedings which were brought by MAC’s owner, Estee Lauder, last year.

“The offer was made for commercial reasons, without any admission of liability,” the spokesperson said in a statement.

“Furthermore, the company does not plan to resume sale of MAC or Bobbi Brown products in its stores.”

MAC claims Target was selling fake MAC and Bobbi Brown products which it obtained from a non-authorised distributor in the United States.

SmartCompany understands the two main sticking points for Estee Lauder are that Target’s offer did not include an apology to customers or an acknowledgment the goods were counterfeit.

As a consequence, Estee Lauder has not accepted the settlement offer and the legal dispute will continue.

Stephen Stern, partner at law firm Corrs Chambers Westgarth, told SmartCompany both MAC and Target were adopting perfectly normal commercial stances in the dispute.

“It’s very rare for a large corporation to admit liability and a denial of liability does not surprise me,” he says.

“Equally from a brand owner’s perspective, what MAC needed to do was to establish it was right, that its case had merit, and that it was prepared to show not just a commercial compromise but a compromise that acknowledges it had rights that were infringed.”

Stern warns businesses can run into legal trouble if they parallel import goods as there are a “significant number” of counterfeits in a whole range of industries.

“If you don’t buy from a genuine authorised source you are always taking a risk and if you are buying brand name products as opposed to commodities the risk is even higher,” he says.

Stern’s recommendation is to exercise “extreme caution” if buying products from non-authorised representatives.

Target’s settlement offer indicates Target cannot make out a defence to the counterfeit claim, according to Chris McLeod, partner at law firm Clayton Utz.

“If the defence can’t be made out, the relevant products infringe the local trade mark registration and are, in that sense, considered ‘counterfeit’ under Australian law,” he says.

“Target obviously doesn’t want to admit the products are counterfeit and is making an offer to try and convince the trademark owner to accept it. If the trademark owner does not, it risks adverse cost consequences if it does not do better at trial.”

SmartCompany contacted Estee Lauder but the company declined to comment.