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Gucci "Loves" New York, But City Not Returning Sentiment

The relationship was renewed only three days ago and yet Gucci's love affair with NY is already hitting a stumbling block. New York City's Empire State Development Corporation (ESDC) is challenging Gucci's use of the 'Gucci (loves as symbolized by a heart) New York' slogan on its new limited edition bags.

Why? The ESDC is the economic development arm for the State of New York and it owns the trademark to the marketing campaign ''I (love as symbolized by a heart) New York.' They did not give Gucci permission to use the slogan. Gucci's CEO already met with the agency and negotiations are continuing this week. Take a look at the Gucci campaign here.

Gucci designed around 600 of the bags to commemorate the opening of its 46,000 square foot NY flagship. The proceeds from all sales will go to the Playground Partners Central Park Improvement Program. In other words, Gucci [owned by PPR which trades in France] doesn't financially benefit from the design itself. They do hope that the NY-store exclusive would help drive traffic to the new flagship.

Here's what I find strange: (1) a NYC agency is supposedly challenging the sale of a bag whose financial proceeds benefit the city itself and (2) the agency markets tourism and commerce in the city yet doesn't want a luxury brand to promote the image of a chic-trendy New York.

The point of dispute is that Gucci did not give ESDC a cut of the proceeds and that the agency was not given a head's up about the luxury company's intention to reference the trademark. It seems to me that this is either a case of overeager litigation or plain shortsightedness. The ESDC owns the trademark and sells it to 47 different licensees.

The kitchyness of the Gucci design is that a common slogan (referencing one printed on plastic grocery bags and t-shirts) and that it is embossed on a luxury bag that costs hundreds and sometimes thousands of dollars. That said, the chic marketing tactic is a win-win for marketing of the city and marketing of the company. We'll keep you posted on how the dispute plays out.

Do you think that the ESDC has a case against Gucci? Take the poll and write to me what you think.

On a separate note, a second market for the limited edition bags has now sprouted up online. The bags were given out in gift bags at the launch party on Wednesday and then were put on sale last Friday when the store officially opened. Will the resale market add another element of complication to the case? After all, the resellers are the ones making money off the bags. Gucci never did! Check out ebay's collection.

Questions? Comments? retaildetail@cnbc.com