Estée Lauder’s Lawsuit Over Alleged Counterfeits Sold On Walmart Moves Forward, Says Report

• U.S. District Judge Hernan Vera denied Walmart's attempt to dismiss the lawsuit.
• Estée Lauder can expand its claims beyond the initial 17 products tested for authenticity. 
• The legal battle centers on third-party marketplace vendors selling knockoff cosmetics and fragrances using Estée Lauder’s luxury brand names on Walmart.com. 

Cosmetics titan The Estée Lauder Companies Inc. (EL) has secured a major procedural victory in its intellectual property dispute against Walmart Inc. (WMT) after a federal judge allowed the company to broaden the scope of its counterfeit lawsuit against the retail giant.

U.S. District Judge Hernan Vera of the Central District of California denied Walmart’s motion to dismiss the lawsuit, ruling that Estée Lauder may advance claims that extend past the initial 17 products explicitly verified as fake.

However, Walmart contended that the beauty brand failed to present adequate evidence linking the retail firm to unverified merchandise listed by marketplace vendors. Additionally, the company argued that claims should be limited strictly to tested items, but the court ruled that restriction unjustified at this early stage of litigation.

Rejecting those arguments, Judge Vera characterized Walmart’s request for partial dismissal as "unjustified at this stage," allowing Estée Lauder to move forward with discovery across a wider range of items.

EL stock rose 0.1%, while WMT stock was up 1.2% on Friday at the time of writing. 

Inside The Original Counterfeit Lawsuit

The legal clash originated on February 9, 2026, when Estée Lauder and its subsidiary brand portfolio filed a federal lawsuit accusing Walmart of facilitating widespread trademark infringement and false designation of origin.

The initial complaint centered on unauthorized third-party vendors offering non-genuine, knockoff luxury goods on Walmart's e-commerce platform. The suit highlighted fake versions of several high-profile flagship products, including Estée Lauder Advanced Night Repair skincare, Tom Ford and Le Labo fragrances, Clinique and La Mer skincare treatments, and Aveda hair care accessories and brushes.

Beyond direct counterfeiting, Estée Lauder accused Walmart of trade dress infringement, alleging that third-party sellers copied trademarked product designs, such as Tom Ford's signature rectangular perfume bottles and monochrome labels. The complaint also alleged that Walmart used Estée Lauder trademarks in its search engine optimization tools to direct consumer traffic to unauthorized listings, generating financial gains for the platform.

A primary pillar of the lawsuit is the claim of vicarious trademark infringement. Estée Lauder argued that Walmart’s check-out interface, payment processing, branding, and return services blur the line between direct retail sales and third-party vendor listings, leading reasonable consumers to believe they are purchasing authentic goods directly from Walmart.

E-Commerce Implications

Estée Lauder claims that despite Walmart’s stated protocols for selecting marketplace partners, fake products continue to reach shoppers. In response to the initial lawsuit, Walmart stated it maintains a zero-tolerance policy for counterfeit goods and defended its operational protocols.

With the court giving Estée Lauder the green light to pursue broader discovery, the case could set significant legal precedents regarding how much responsibility major e-commerce platforms bear for policing third-party marketplace sellers.

EL, WMT Stock: Retail View 

Retail sentiment on Stocktwits was ‘bearish’ on both EL and WMT stock. 

EL stock is down 9.7%, and WMT stock fell 4.1% year-to-date. 

For updates and corrections, email newsroom[at]stocktwits[dot]com.