Client Alert
Kirk A. Damman, Charla M. Claypool, Miranda R. Nolan
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Many well-known companies release products for a limited time, often making them available only briefly or in restricted quantities. These limited-edition products can include anything from sneakers and clothing to luxury vehicles and electronics. The scarcity can heighten demand, inflate secondary market prices, and strengthen brand cachet—but it can also introduce legal risk.
Consider a hypothetical: a company launches a new product, registers a trademark, and limits the production to a single run that sells out quickly. If the item is never produced again, is the mark still “in use”? In the United States, trademark rights require continued commercial use. A mark that drops out of the marketplace without intent to resume use risks abandonment or cancellation. A business model that avoids continuous use to cultivate exclusivity increases that risk
A notable example of this dynamic arose in the European Union, where Ferrari lost trademark rights in the shape of the 250 Gran Turismo Omologato (“250 GTO”), an ultra-luxury vehicle regarded as one of the most valuable classic cars in the world. Only 39 models of the 250 GTO were ever built, between 1962 and 1964. Ferrari registered a trademark for the shape of the vehicle in the EU in 2007. However, in 2018, another manufacturer, Ares Design, sought to produce a modern version of the 250 GTO and filed for cancellation of Ferrari’s trademark. Under EU law, a mark must be put to genuine use within five years of registration. In 2020, the European Union Intellectual Property Office (EUIPO) canceled Ferrari’s registration after finding the company had not demonstrated ongoing commercial use of the 250 GTO’s shape. While the decision was based on European law, similar principles regarding use and abandonment apply in the United States and other jurisdictions.
Exclusivity strategies also raise advertising law concerns. For example, New York City’s Consumer Protection Law Section 5.11 prohibits describing an item as “limited” unless its production is restricted to: (1) a predetermined maximum quantity, or (2) the actual quantity ordered or subscribed to within a specified and reasonably short time frame. Any claim that a product is limited must be accompanied by a clear and conspicuous disclosure of the maximum quantity produced or the deadline for ordering the item. This disclosure must appear in close proximity to the claim. The rule applies to all terms that suggest limited production, and violations may be deemed deceptive advertising.
Limited-edition branding can strengthen image and demand, but without safeguards it can also weaken enforceable rights and attract regulatory challenge. These overlapping considerations highlight the tension between leveraging exclusivity for brand appeal and maintaining enforceable legal rights. When a product is no longer sold, trademark rights may lapse, and misleading “limited” claims may expose companies to regulatory scrutiny. While limited-edition strategies can elevate a brand, they must be executed with an eye toward both trademark continuity and consumer protection compliance. Companies pursuing scarcity strategies should ensure trademarks are maintained through documented commercial use and should review all “limited” claims for compliance with advertising standards.
If you have any questions about the impact of limited product releases or would like to explore how trademark law may affect your business strategy, please don’t hesitate to contact a member of our Design & Luxury, Intellectual Property, or Advertising, Promotions & Social Media teams.