Estée Lauder v. Walmart: The Rise of E-Commerce and the Issue of Brand Protection

by Brookelynn Stone, Associate Member, University of Cincinnati Law Review Vol. 94

I. Introduction

Estée Lauder Companies (“ELC”) is a global leader in prestige beauty with over twenty brands operating in the luxury beauty sphere.¹ The company manufactures, markets, and sells high-quality skin care, makeup, fragrance, and hair care products.² The founder of Estée Lauder stated, “I never dreamed about success. I worked for it.”³ She built the business from just a few products and turned it into a dominant force in the makeup market that changed the luxury beauty industry.⁴ However, the success and recognition of ELC also make them vulnerable to unauthorized use and infringement, especially with the rise of e-commerce platforms.

In recent years, brand protection has become a prevalent concern for businesses as online marketplaces allow third-party sellers to reach consumers at an unprecedented scale.⁵ This has caused many companies to pursue legal actions against the producers, distributors, and advertisers of these products. ELC recently filed a federal lawsuit against Walmart for trademark infringement, accusing it of selling copycat versions of its luxury personal care products, cosmetics, and fragrance collections sold under popular brands such as Clinique, La Mer, and Tom Ford.⁶ As companies continue to operate online marketplaces with third-party marketplace offerings, tension may exist between protecting brands and the operational structure of large e-commerce platforms.

This article explores the complaint, diving into whether Walmart may face vicarious liability––a form of secondary trademark infringement––for the infringement on ELC trademarks through its online marketplace due to Walmart’s control over its marketplace and its third-party sellers. Part II provides background information on the vast history of ELC and the leading case against Walmart. That section further discusses trademark law, specifically the Lanham Act and the Supreme Court’s framework for addressing secondary trademark infringement. Part III explores how the emerging trend of non-genuine goods impact brand protection, particularly in the realm of large e-commerce platforms. Part IV concludes by reiterating that modern e-commerce marketplaces blur the line between neutral intermediary and retailer, and that existing secondary trademark liability doctrines may need to be revised.

II. Background

A. The Growth and Value of the Estée Lauder Brand

In 1946, Estée Lauder and her husband launched the company and began selling skincare and makeup.⁷ Just a year later, the company landed its first major order from Saks Fifth Avenue.⁸ Estée pushed the boundaries of beauty and turned their unseasoned startup company into a multimillion-dollar business.⁹ Throughout her time at the company, Estée oversaw the creation of five new brands, including Clinique.¹⁰

Currently, ELC owns over twenty brands, each of them touted as having a “unique perspective on luxury beauty…united by a dedication to creating prestige products that are high-quality, boundary-pushing, and trusted favorites of our consumers.”¹¹ The global organization employs over 57,000 individuals and sells products in approximately 150 countries and territories.¹² Their net sales for fiscal year 2025 were $14.32 billion, making it one of the top global leaders in luxury beauty.¹³ That commercial success, however, makes ELC products attractive targets for counterfeiters and unauthorized sellers, particularly within large online marketplaces.

B. Trademark Law and the Lanham Act

A trademark is a distinctive word, name, symbol, device, or other designation in a person’s goods or services that is used in such a manner that consumers identify the goods or services with the company, effectively acting as a source identifier.¹⁴ Although registration is not required to obtain trademark protection, registering a mark with the United States Patent and Trademark Office (“USPTO”) provides significant benefits, including public notice, a presumption of ownership, and access to federal courts.¹⁵

Trademark law is primarily concerned with protecting a mark owner’s reputation and goodwill and protecting consumer expectation through quality control and preventing confusion or deception.¹⁶ Section 45 of the Lanham Act provides that trademark law is centered towards “regulat[ing] commerce within the Control of Congress by making actionable the deceptive and misleading use of marks in such commerce” and “protect[ing] persons engaged in such commerce against unfair competition.”¹⁷ The Lanham Act also seeks to prevent fraud and deception via the use of reproductions, copies, counterfeits, or colorable imitations of registered marks.¹⁸ When approaching trademark infringement cases, the central inquiry is the “likelihood of confusion” among consumers as to the source of the mark.¹⁹

In the present case, the existence and validity of ELC trademarks are not in dispute. Rather, the central issue is whether Walmart may be held vicariously liable for alleged infringement occurring through its marketplace platform by third-party sellers.

C. Estee Lauder Inc. et al. v. Walmart Inc. et al.

In California district court, ELC and its affiliated brands (collectively “Plaintiffs”) filed suit against Walmart and several unidentified defendants.²⁰ Plaintiffs allege trademark infringement, false designation of origin and descriptions, trade dress infringement and common law claims of trademark infringement and unfair competition.²¹ Crucially, Plaintiffs advance a claim based on vicarious trademark infringement.²²

This lawsuit alleges that Walmart’s online marketplace facilitated the marketing and sale of non-genuine cosmetic and fragrance products that infringe upon Plaintiffs’ trademarks and trade dress.²³ Plaintiffs assert that Walmart is responsible for these actions because its e-commerce platform, check-out process, and “marketplace” partnership model leads reasonable consumers to believe they are purchasing authentic goods directly from Walmart rather than from third-party sellers.²⁴

Plaintiffs further allege that ELC trademarks were used in search engine optimization tools to drive traffic to those listings and increase Walmart’s profits.²⁵ At its core, Plaintiffs argue that Walmart is deliberately exploiting their goodwill and causing widespread consumer confusion regarding the origin and quality of the product; thus, Walmart should be held vicariously liable.²⁶

To support their consumer perception theory, Plaintiffs point to Vans v. Walmart, where a court recognized that consumers could reasonably believe products sold by third-party sellers on Walmart.com were sold by Walmart.²⁷ Although that case involved contributory rather than vicarious liability, it emphasized Walmart’s structural control over payment processing, returns, and customer service.²⁸ The case settled out of court, but a permanent injunction was issued barring Walmart from making, marketing, or selling infringing sneakers.²⁹

Plaintiffs argue the Vans finding applies here, asserting that consumers using Walmart’s marketplace would reasonably believe that Walmart was the seller of the products or, at a minimum, authorized the third-party sales.³⁰ They further contend that because Walmart selects and partners with its sellers and exercises a certain level of involvement in the promotion, advertising, fulfillment, and returns, this situates Walmart as the “seller” and therefore is the proper subject of vicarious liability.³¹

Although Plaintiffs do not assert a standalone claim for contributory infringement, the Supreme Court’s decision in the following case remains foundational in defining the limits of secondary trademark liability.

D. Contributory Trademark Infringement: The Inwood Framework

In 1982, the Supreme Court dealt with the theory of secondary liability in Inwood.³² There, the Court affirmed the lower court’s understanding that liability for trademark infringement extends beyond those who actually mislabel goods with the mark of another.³³ The Court held that a party may be liable if it (1) intentionally induces another to infringe a trademark or (2) if a manufacturer or distributor continues to supply its product to one whom knows or has reason know is engaging in trademark infringement.³⁴ Notably, for there to be secondary liability, there must also be a direct infringement.³⁵

E. Extending Inwood to Online Marketplaces: Tiffany (NJ) Inc. v. eBay

Courts have extended the Inwood framework to service providers, including online marketplaces.³⁶ In Tiffany v. eBay, the Second Circuit affirmed the district court’s finding that Inwood applies to a service provider who exercises sufficient control over the means of the infringing conduct.³⁷ In that case, the court dealt with the issue of whether eBay is liable because of the services it provides to those who used its website to sell counterfeit Tiffany products.³⁸

Tiffany pointed to evidence, such as a demand letter sent to eBay, thousands of Notice of Claimed Infringements (“NOCI”) it filed with eBay alleging its good faith belief that certain listings were counterfeit, and various complaints from buyers about the authenticity of the Tiffany products.³⁹ Ultimately, the Second Circuit found that generalized knowledge that its services are being used for counterfeit goods is insufficient to meet the Inwood test.⁴⁰

This case demonstrates that marketplaces have substantial protection when structured as neutral intermediaries. The following section turns to the second form of secondary liability: vicarious liability. Although more cases have been brought as contributory liability claims, the law continues to evolve, and is particularly relevant here because ELC filed a claim for vicarious trademark infringement.⁴¹

F. Secondary Liability: Vicarious Trademark Infringement

Vicarious trademark infringement is a form of secondary infringement and requires “a finding that the defendant and the infringer have an apparent or actual partnership, have authority to bind one another in transactions with third parties or exercise joint ownership or control over the infringing product.”⁴² Unlike contributory liability, vicarious liability does not hinge on knowledge, rather, the focus is on the nature of the relationship between the defendant and the direct infringer.⁴³ Essentially, a party can be found liable when it has the right or ability to control the infringing conduct, and a partnership of some sort exists.⁴⁴ Plaintiffs in other cases have argued for copyright law’s standard for vicarious liability to apply, which includes a financial interest in the conduct at issue.⁴⁵ However, lower courts have stated that the Supreme Court believes that secondary liability for trademark infringement should be drawn more narrowly than copyright.⁴⁶

III. Discussion

A. Key Aspects of the Estée Case

The central question is whether Walmart’s hybrid retail marketplace model renders it sufficiently integrated with third-party sellers to justify vicarious trademark liability. Unlike contributory liability under Inwood and Tiffany, vicarious liability does not require knowledge of the specific infringing act.⁴⁷ This was likely a strategic move on Estée Lauder’s part, as courts have been reluctant to extend contributory trademark liability to defendants when there is uncertainty as to the extent or nature of infringement and the burden to establish “knowledge” is rather high.⁴⁸ By proceeding under a vicarious theory, Plaintiffs avoid the stringent “specific knowledge” requirement articulated in Tiffany, and instead may focus on Walmart’s operational involvement in the marketplace transactions.⁴⁹

Walmart’s marketplace performs functions traditionally associated with retailers, including payment processing, checkouts, returns, advertising, and seller vetting.⁵⁰ These functions may blur the distinction between a neutral intermediary and a retailer, suggesting that Walmart exercises sufficient operational control over the marketplace transactions to support a claim for vicarious liability. Unlike eBay, where consumers have knowledge that their products are not coming from eBay directly, consumers in this case could reasonably believe that Walmart is the seller of the products in dispute or again, at a minimum, in a contract with the third parties, thereby blurring the lines between the third-party seller and Walmart.⁵¹

While courts have frequently rejected the application of the precedent for vicarious liability in copyright law, the court may choose to consider the financial interest Walmart has in the relationship.⁵² In 2025, Walmart’s e-commerce sales in the United States rose 27% compared to the prior year.⁵³ This was primarily due to the delivery of online orders and their third-party marketplace.⁵⁴ Based on this, it is likely that Walmart derives some economic benefit from its partnership with the third-party sellers of the products in dispute. This could potentially strengthen Estee Lauder’s claim that Walmart is vicariously liable for trademark infringement. However, courts remain cautious about expanding secondary trademark liability in ways that could alter the structure of e-commerce platforms.

B. Possible Impact on E-Commerce Platforms

It can take decades to build a brand from scratch, and even more to create the link between a brand and its products in the minds of consumers, which is precisely why trademark law and the protections it offers is often litigated. ELC started with a woman with an entrepreneurial spirit and a desire to change the market for luxury beauty products.⁵⁵ And she did just that, through hard work and dedication.⁵⁶ Brands should be afforded the protection they deserve, but the rise in e-commerce platforms has proven difficult for brands to be successful in policing their brands.

ELC brought claims against Walmart itself, as well as the third parties involved in some manner for causing the wrongful acts, signaling that marketplace operators should be responsible for policing and removing ingenuine products. If the district court in Estée Lauder finds for the plaintiffs, it would impact how e-commerce platforms operate and the level of control they possess over third-party sellers. For example, Amazon has a marketplace model whereby third-party sellers can sell their goods to consumers directly on Amazon.com.⁵⁷ Platforms like Amazon would need stricter and more robust monitoring and enforcement mechanisms to ensure there is no trademark infringement or counterfeit goods. This could substantially increase compliance costs and possibly trickle down into the cost of the product itself.

As was the case in Tiffany, it is difficult to hold e-commerce operators liable for contributory trademark infringement.⁵⁸ A ruling for the plaintiffs would likely open the door to a substantial amount of litigation specifically for vicarious trademark infringement, as well as contributory.

C. Limitations of the Current Secondary Liability Doctrine

As demonstrated in the cases discussed above, plaintiffs are hardly successful in their secondary trademark liability claims.⁵⁹ The knowledge requirement for contributory liability is particularly burdensome and it is at least ambiguous as to what degree e-commerce service providers and intellectual property owners must monitor online marketplaces for infringing marks.⁶⁰ Critics argue that the “knowledge” standard in Tiffany functions closer to having actual knowledge and that the requisite level of knowledge should be fixed to the Supreme Court’s “reason to know” standard.⁶¹

Vicarious trademark infringement presents a different but significant challenge. The difficulty lies in the ability to sufficiently prove that the defendant and infringer have authority to bind each other in transactions with third parties or exercise joint ownership or control over the infringing product. This is particularly difficult to satisfy in the context of e-commerce platforms, such as Amazon, where third-party sellers often operate with substantial independence.⁶² Courts have rejected claims for vicarious trademark infringement when the defendant’s role is mainly processing payments and collecting processing fees without exercising meaningful control over the allegedly infringing goods.⁶³

Whichever secondary liability theory plaintiffs pursue, they are likely to face an uphill battle.⁶⁴ Existing doctrines of secondary trademark liability were largely developed before the rise of highly integrated online marketplaces.⁶⁵ As modern platform continues to increase their involvement in performing functions traditionally associated with retailers, while subsequently disclaiming their status as sellers, courts may need to reconsider how their doctrines apply in the digital marketplace. In doing so, courts will likely have to confront the challenge of balancing brands and their trademark rights with marketplace innovation.

IV. Conclusion

The purpose of trademark law is to ensure that businesses can protect their brand, reputation, and goodwill and ensure that consumers are not deceived by confusingly similar marks.⁶⁶ As e-commerce marketplaces continue to grow, brands cannot be expected to police every platform to be afforded the protection they deserve. The current doctrines of secondary liability for trademark infringement, contributory and vicarious, were developed before the rise of highly integrated online marketplaces and are insufficient to address the challenges posed by these platforms.⁶⁷

The Estée Lauder case illustrates this tension.⁶⁸ Walmart’s operational involvement in the marketplace transactions through payment processing, fulfillment, advertising, and seller vetting, blurs the lines.⁶⁹ A ruling in favor of Plaintiffs could signal that platforms can be held accountable for third-party sales if their systems create customer confusion or support the infringing activity. Even if this case ultimately settles, as was the case in Vans, it underscores the need to reevaluate secondary liability doctrines in the digital age, as a permanent injunction blocking Walmart and the third-party sellers from engaging in the alleged conduct would only partially solve the widespread issue.

Cover Photo by Christine Zhang on Unsplash

Brookelynn Stone

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