It's only been a matter of weeks since word broke that Coach (NASDAQ:COH) had filed a lawsuit against Target (NYSE:TGT), alleging that the discount retailer was peddling counterfeit Coach handbags. Target now says that lawsuit has been dropped.
If you recall, Coach claimed that Target was selling the counterfeit bags in a Florida store and sought $1 million in connection with the suit. At the time, Target said the Coach bag in question was "authentic and legitimate" and that the legal action was without merit.
Although I haven't been able to track down Target's announcement on this development, news agencies are reporting that Target said the lawsuit was dismissed at Coach's request and that it got the handbags at a "major department store's" liquidation sale (and needless to say, it stands by its stance that they weren't fake). It won't pay any damages to Coach, either.
As I pointed out earlier this month, brand holders like Coach have a serious stake in protecting their brands from counterfeiting. That's why many retailers have faced similar controversy -- consider Tiffany's (NYSE:TIF) complaint against eBay (NASDAQ:EBAY) several years ago, for example. Costco (NASDAQ:COST) has also had similar situations, such as in 1996, when Calvin Klein (now owned by Phillips-Van Heusen (NYSE:PVH)) complained that the warehouse discounter was carrying fake Calvin Klein jeans in its stores.
The fact that Coach is dropping the suit against Target now, with little fanfare, is almost as interesting as the fact that it filed it to begin with. Given the lack of detail on Coach's decision, it certainly brings up some questions, not least of which is the implication that Coach was in the wrong when it comes to going after Target (although nobody can fault its concern about the possibility of counterfeit wares floating around). Regardless, though, Target shareholders certainly should feel relieved that this issue has passed by.
For related Foolishness:
eBay and Costco are Motley Fool Stock Advisor recommendations. To find out what other companies David and Tom Gardner have recommended to shareholders, take a 30-day free trial.
Alyce Lomax does not own shares of any of the companies mentioned.
