Late in 2019, Rolex filed a lawsuit in the United States District Court for the Central District of California alleging that California-based laCalifornienne has been marketing and offering for sale counterfeit timepieces bearing Rolex’s trademarks. Rolex has been offering for sale its iconic timepieces for more than 114 years, including one of its most popular designs, the Rolex Oyster Perpetual. Rolex possesses trademark rights in and to ROLEX, OYSTER, and OYSTER PERPETUAL, in addition to trade dress in the designs of its timepieces. The lawsuit lists causes of action for trademark infringement, counterfeiting, and false designation of origin.
Since its inception in 2016 in Los Angeles, laCalifornienne’s business model has comprised taking vintage Rolex and Cartier timepieces, replacing the original watch crystals, refashioning the bezels, and altering the dials by stripping the paint and finish therefrom and repainting and refinishing them in various vibrant colors. However, such watches still contain all original Rolex indicia. As a result, Rolex asserts that such altered watches “no longer attain the aesthetic” nor “perform or function to the same quality standards” as unaltered, original pre-owned Rolex watches. laCalifornienne sells its timepieces to consumers for between $6,500 to $14,000.
Prior to bringing suit, Rolex received possession of two laCalifornienne timepieces bearing the Rolex trademark and indicia. The first, an original Oyster Perpetual, was purchased directly from an authorized-laCalifornienne retailer. The second was received at a Rolex service center in Pennsylvania for servicing. The first watch did not contain the alleged infringer’s name while the second did contain “laCalifornienne” added to the dial at the six o’clock position. Rolex alleges that laCalifornienne’s printing of its name on the dial of its altered watches, which continue to bear one or more of Rolex’s registered trademarks, including ROLEX and OYSTER PERPETUAL, cannot dispel their liability for infringement.
Rolex alleges that laCalifornienne’s use of Rolex’s trademarks in this manner creates the erroneous impression that its products and services emanate or originate from Rolex, and/or that said products and services are authorized, sponsored, or approved by Rolex, though this is not the case. Moreover, Rolex is unable to monitor, enforce or maintain its quality control standards on the altered Rolex products assembled and offered for sale by laCalifornienne. In this way, Rolex alleges laCalifornienne has been unjustly enriched by illegally using and misappropriating Rolex’s intellectual property for their own financial gain.
In its answer to Rolex’s complaint, laCalifornienne not only denies the allegations but also argues its watch modifications constitute fair use. Nominative fair use allows for the reasonably necessary use of another party’s trademark solely to identify that party or its products. Such fair use is allowable so long as the use is descriptive and does not suggest sponsorship or endorsement by the trademark holder. To prevail on this defense, the court will need to determine whether, by adorning Rolex timepieces in this manner, laCalifornienne has attempted to deliberately confuse and deceive the consuming public and appropriate the cachet of Rolex. Rolex is likely to argue laCalifornienne is making use of its marks in an attempt to benefit from the proven reputation and sheer appeal of Rolex’s watches.
Unlike the majority of counterfeiting cases in which brands file lawsuits against individuals or companies for marketing and offering for sale outright knock-offs, Rolex alleges laCalifornienne’s watches are counterfeit despite the fact that they contain authentic Rolex parts. Specifically, Rolex does not take issue with laCalifornienne swapping out its traditional metal wristbands for colorful leather ones because this does not impair the functioning of the watches themselves. Instead, Rolex particularly takes issue with the fact that laCalifornienne customizes the watches with colorful parts, such as dials and crystals. Rolex claims such substituted parts are not properly fitted to the watch and are likely to adversely affect the dial and movement of the watch. This position is consistent with Rolex’s long-standing policy dictating that the alteration of its timepieces to include non-authentic Rolex parts, that is, parts not approved by Rolex, transforms an authentic watch into a counterfeit.