luxurious chrome watch with other pieces of jewelry

Rolex Watch v. BeckerTime was a case out of the Fifth Circuit that concerned the difference between the restoration and the customization of Rolex watches. Although the District Court for the Northern District of Texas had ruled in favor of Rolex, Rolex appealed, hoping to get more damages.  

BeckerTime is a company in the business of customizing genuine Rolexes. This included things like adding more diamond bezels, as well as taking off the dial face and replacing it with another face that said “Rolex.” 

The district court found, and the appellate court agreed, that Champion Spark Plug Co. v. Sanders was the most analogous precedent — despite another Supreme Court case about watches. In the 1947 Champion decision, used spark plugs were refurbished and restored, and the refurbisher kept the original trademarks on them. The Supreme Court determined that if you’re restoring a genuine product, then it’s permissible to use the original product’s trademark on the refurbished product.

However, the Fifth Circuit said the issue was that BeckerTime was not actually restoring Rolex watches — rather, it was customizing them. The resulting watch was not like any genuine Rolex watch. Using a ROLEX label was misleading even if, in the refurbishing part of the process, the defendant told customers that they were using other, non-genuine aftermarket parts. (For one thing, that fancy brand could foster post-sale confusion among third parties who coveted the watch.)

The Fifth Circuit, in general, affirmed the district court’s decision in favor of Rolex. It added to the injunction that not only was the defendant prevented from saying that these watches were genuine Rolex, but that they also couldn’t sell the parts as parts for Rolexes because they were aftermarket diamonds not made by Rolex. But the Court said those watches that merely had the dials cleaned, and the trademarks removed and replaced, were restorations — not customizations. 

One of the interesting bits in the case is how, although Rolex won the motion, the court specifically pointed out that the defense was not frivolous. The defendant had a reasonable defense of laches because Rolex waited 10 years before bringing this suit. In those 10 years, BeckerTime argued that it reasonably relied upon Rolex’s not suing them. Because this laches defense was legitimate, the Court could not find that the disgorgement of BeckerTime’s profits (plus attorney’s fees) was automatic. If someone engaged in “unclean hands” (intentional bad conduct), that would have undermined any defense of laches. The court said this did not occur because BeckerTime used disclaimers, which in that case eliminated bad intent from the equation.

In a surprise move that probably was an attorney’s error, Rolex neglected to bring a motion for attorney’s fees within 14 days of judgment. So, the court affirmed that Rolex had waived any right to get attorney’s fees.

The obvious takeaway is, “Don’t forget about attorney’s fees.” As for the merits of the case, it seems restorers and customizers have to tread a thin line between infringement and permissible conduct. Don’t add new, non-genuine parts when making the products “as good as new.”

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