Rolex has landed a win in a case over the sale of modified watches. In a recently-issued decision, a federal court in Georgia sided with the Swiss watch giant in its bid for summary judgment on the trademark infringement, counterfeiting, and false designation of origin claims that it waged against Jewelry Unlimited and its CEO and owner, Wafi Amin Lalani. According to the court, Rolex successfully pled its trademark claims thanks in large part to overwhelming evidence of consumer confusion. In siding with Rolex, the judge said he was unpersuaded by Jewelry Unlimited’s effort to sidestep liability by focusing on its use of disclaimers to alert consumers about the nature of the customized Rolex trademark-bearing watches.
A Bit of Background: The case got its start in July 2023 when Rolex filed suit in the U.S. District Court for the Northern District of Georgia, accusing Jewelry Unlimited, a retail jeweler in Atlanta, and Lalani (collectively, “JU”) of selling modified Rolex watches (some pictured below), with “common customizations” including dial replacement, bezel installation, bracelet swaps, and added diamonds. Given that the modified Rolex watches retain the Rolex logo and branding after being modified by JU, and in light of JU’s advertisement of the watches as “100% Genuine Pre-Owned” and “100% authentic as made by the manufacturer,” Rolex set out claims of counterfeiting, trademark infringement, false advertising, false designation of origin, and unfair competition.
This summer, both parties moved for partial summary judgment as to liability on all counts. JU argued that Rolex’s claims against it fail based on the doctrine of laches and Rolex’s failure to show that consumers are likely to be confused as to the source/nature of the watches. Rolex maintained that it produced sufficient evidence, including on the confusion front, to show as a matter of law that summary judgment should be awarded to it on all counts.
What Not to Do With Disclosures
Turning first to Rolex’s infringement claim, Judge Timothy Batten found that a number of factors in the likelihood of confusion analysis weighed in favor of the watchmaker. The strength of Rolex’s marks, the similarity of the goods, JU’s intent to misappropriate, and evidence of actual confusion all favor Rolex, the court found. However, the court focused the bulk of its analysis on JU’s disclosures, which it found to be lacking, thereby, providing insight on what not to do when looking to prevent consumer confusion by way of disclosure language.
In his November 13 order, as first reported by TFL, Judge Batten noted that all of the watches JU advertised online include a product description and “multiple disclosures regarding the nature and extent of any refurbishing, modification, or customization, as well as aftermarket parts disclosures.” And similar signs and disclosures are provided at JU’s brick-and-mortar location.
Against this background, the court stated that JU “attempt[ed] to hide behind their disclosures as evidence that they did not act with intent.” Yet, the court disagreed with JU’s contention that its public disclosures show that it did not act willfully and similarly was not persuaded by the evidence that JU’s argument that its advertising and marketing materials “accurately convey to the ordinary prudent purchaser the actual connection between genuine non-altered Rolex watches and the watches JU sells.”
Distinguishing the case at hand from the outcome in the Hamilton International v. Vortic LLC, a separate case that centered on modified watches that JU cited in its defense, the court stated that the disclosures in Vortic “are much clearer than JU’s disclosures.” As distinct from Vortic, the disclosures in the case at hand “are confusing and contradictory,” according to Judge Batten. “They begin with ‘guarantees’ that the product is a ‘100% Genuine Pre-Owned Rolex’ and then continue to explain that the band and embellishment are ‘after-market,’ without ever explaining what after-market means.”
“These contradicting statements are then followed by this disclosure: ‘Jewelry Unlimited is in no way affiliated with ROLEX nor do we claim to be. Diamonds placed on this authentic ROLEX watch are 100% aftermarket and are set by us,’” the court stated.
Ultimately, “Unlike the disclosures in Vortic,” the court found that JU’s disclosures “do not clearly convey to consumers the extent of changes made to the original Rolex.” And since JU’s watches contain only Rolex’s marks (“importantly, JU does not include any of its own marks on the watches”), it is “far from obvious that the watches are affiliated with any entity other than Rolex.”
In short: The court found that JU’s disclosures are “insufficient and fail to warn a reasonable consumer about the relationship (or lack thereof) between JU and Rolex.”
With the foregoing in mind and given that the evidence of consumer confusion weighs “strongly” in favor of Rolex, the court granted Rolex’s motion for partial summary judgment as to its trademark infringement claim.
Rolex’s Counterfeiting Claim
As for Rolex’s counterfeiting claim, the court sided with here, as well, noting that the U.S. Court of Appeals for the Fifth Circuit addressed a nearly identical situation in Rolex Watch USA, Inc. v. Meece, another case over a jeweler’s sale of modified Rolex watches. In that lawsuit, which the Fifth Circuit took on in 1998, the court held that “[b]ecause Meece’s items in question bore original Rolex trademarks, rather than imitations or copies of those trademarks, they would not seem to be ‘counterfeit’ in the literal sense. Nevertheless, other courts have found that similar uses of genuine trademarks constitute counterfeiting.”
The Fifth Circuit’s reasoning: “When an original mark is attached to a product in such a way as to deceive the public, the product itself becomes a ‘counterfeit’ just as it would if an imitation of the mark were attached.” After all, “Rolex did not perform or authorize the modifications, and its warranty was voided by Meece’s activities. Meece, not Rolex, stood behind the watches; but the trademark suggested otherwise.”
“The same undisputed material facts are present here,” Judge Batten asserted, granting Rolex’s motion for summary judgment on its counterfeiting claim.
No False Advertising Win
One place where Rolex did not prevail in this round: “Rolex fails to present sufficient evidence that allows the court to conclude that as a matter of law that [JU] engaged in false advertising, because Rolex has offered no evidence that they have been harmed by [JU’s] advertisements, the court stated. Specifically, Judge Batten determined that Rolex had not presented “evidence of economic injury stemming from [JU’s] advertisements,” and instead, focused “solely on its purported reputational injuries.”
The case is Rolex Watch USA, Inc. v. Jewelry Unlimited, Inc., 1:23-cv-03391 (N.D. Ga.)
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