Hamilton International Ltd., Plaintiff, -v- Vortic LLC, et al., Defendants.
17-CV-5575 (AJN)(OTW)
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF
September 30, 2019
ALISON J. NATHAN, District Judge
OPINION & ORDER
ALISON J. NATHAN, District Judge:
This litigation concerns allegations that a watch sold by Defendant Vortic LLC (“Vortic“), as well as advertisements for that watch, infringed on Plaintiff Hamilton International Limited‘s (“Hamilton“) trademark. Before the Court is Plaintiff‘s motion for summary judgment on its infringement, counterfeiting, dilution, and unfair competition claims. Also before the Court is Defendants’ motion to strike, Defendants’ motion to transfer, and Plaintiff‘s sealing motion.
For the reasons stated below, all motions are denied.
I. BACKGROUND
Defendant Vortic LLC (“Vortic“) is a watchmaker that specializes in restoring antique pocket watches and converting them into wristwatches. Affidavit of Robert Custer (“Custer Aff.“), 8-9, Dkt. No. 101. One of Vortic‘s watches is called “The Lancaster.” It is made with a restored, “Railroad-Era” movement (i.e. internal mechanism), face, and hands from pocket watches produced by the Hamilton Watch
II. MOTION FOR SUMMARY JUDGMENT
Summary judgment may not be granted unless all of the submissions taken together “show[ ] that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
In seeking summary judgment, the initial “burden is upon the moving party to demonstrate that no genuine issue respecting any material fact exists.” Gallo v. Prudential Residential Servs., 22 F.3d 1219, 1223 (2d Cir. 1994). Where the non-moving party would bear the burden of proof at trial, “the burden on the moving party may be discharged by ‘showing‘—that is, pointing out to the district court—that there is an absence of evidence to support the nonmoving party‘s case.” Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). If the movant “demonstrates ‘the absence of a genuine issue of material fact,’ the opposing party must come forward with specific evidence demonstrating the existence of a genuine dispute of material fact” to survive summary judgment. Brown v. Eli Lilly & Co., 654 F.3d 347, 358 (2d Cir. 2011) (citation omitted) (quoting Celotex Corp., 477 U.S. at 323).
A. Trademark Infringement
A “plaintiff in a trademark infringement action must show that defendant (1) without consent, (2) used in commerce, (3) a reproduction, copy or colorable imitation of plaintiff‘s registered mark, as part of the sale or distribution of goods or services, and (4) that such a use is likely to cause confusion.” Gruner + Jahr USA Publ. v. Meredith Corp., 991 F.2d 1072, 1075 (2d Cir. 1993) (citing
The Second Circuit applies the landmark, multifactor test from Polaroid Corp. v. Polarad Electronics Corp. when determining the likelihood of confusion in trademark cases. See 287 F.2d 492 (2d Cir. 1961). This analysis looks to “the strength of his mark, the degree of similarity between the two marks, the proximity of the products, the likelihood that the prior owner will bridge the gap, actual confusion, and the reciprocal of defendant‘s good faith in adopting its own mark, the quality of defendant‘s product, and the sophistication of the buyers” as relevant variables. Id. at 295. The touchstone when considering the Polaroid factors is the existence of “a probability of [consumer] confusion, not a mere possibility.” Streetwise Maps v. VanDam, Inc., 159 F.3d 739, 743 (2d Cir. 1998). In other words, “whether numerous ordinary prudent purchasers are likely to be misled or confused as to the source of the product in question because of the entrance in the marketplace of defendant‘s mark.” Playtex Prods. v. Georgia-Pacific Corp., 390 F.3d 158, 161 (2d Cir. 2004) (quotation omitted).
However, the Polaroid factors are not “mechanical” nor are they exhaustive. Guthrie Healthcare Sys. v. ContextMedia, Inc., 826 F.3d 27, 37 (2d Cir. 2016) (quoting Nabisco, Inc. v. Warner-Lambert Co., 220 F.3d 43, 46 (2d Cir. 2000)). As the Second Circuit has cautioned repeatedly, “depending on the complexity of the issues, ‘the court may have to take still other variables into account.‘” Savin Corp. v. Savin Group, 391 F.3d 439, 456 (2d Cir. 2004) (quoting Polaroid, 287 F.2d at 295). In cases such as this one, involving modified genuine products, the Supreme Court has found whether the defendant adequately disclosed the origins of the product to be dispositive. See Champion Spark Plug Co. v. Sanders, 331 U.S. 125 (1947); Prestonettes, Inc. v. Coty, 264 U.S. 359 (1924); see also Nora Bevs., Inc. v. Perrier Grp. of Am., Inc., 269 F.3d 114, 119 (2d Cir. 2001) (“Although no one factor is necessarily dispositive, any one factor may prove to be so.“).
In Champion, the defendant sold repaired and reconditioned used spark plugs that were initially manufactured by the plaintiff. See 331 U.S. at 126. The Supreme Court held that the defendant could continue to display the plaintiff‘s trademark on his sparkplugs, so long as the sparkplugs also had “Repaired” or “Used” conspicuously stamped on them and their packaging indicated that the defendant had done the restoration. Id. at 127, 130. The Court explained that in such circumstances, “[f]ull disclosure” was “all the protection to which [the plaintiff] was entitled.” Id. at 130. Since the sparkplugs were second-hand goods and consumers would naturally expect a used or repaired good to be inferior, conspicuously labeling the goods as used or repaired constituted full disclosure. Id. It was otherwise permissible for the goods to retain the Champion trademark even if it means that the defendant benefits from plaintiff‘s goodwill or “gets some advantage from” plaintiff‘s mark. Id. The Court did caution that it would be possible to imagine a case “where the reconditioning or repair would be so extensive or so basic that it would be a misnomer to call the article by its original name, even if the words ‘used’ or ‘repair’ were added.” Id. at 129. In those circumstances, more disclosure would be required in order to justify continued use of the plaintiff‘s mark. The sparkplugs in Champion, though, were not so modified.
In determining the likelihood of confusion, the Court will therefore give strong weight to the “full disclosure” factor, while also considering the traditional Polaroid variables it finds to be applicable. See Int‘l Info. Sys. Sec. Certification Consortium v. Sec. Univ., LLC, 823 F.3d 153, 160 (2d Cir. 2016) (“[C]ases may certainly arise where a factor is irrelevant to the facts at hand.“) (quoting Arrow Fastener Co. v. Stanley Works, 59 F.3d 384, 400 (2d Cir. 1995)). Doing so, the Court concludes that there is a genuine question of material fact as to whether consumers are likely to be confused by advertisements for The Lancaster or The Lancaster itself.
1. Champion Disclosure Analysis
a. Advertisements
There are three advertisements at issue. The first comes from Vortic‘s website. See Aschen Declaration, Exh. 2, Dkt. No. 84-2. It states in large bold letters, “The Lancaster” and “American Artisan Series.” In smaller print, the ad explains that the movement, dial, and hands of the watch “started out their life in a Railroad-Era pocket watch made by the Hamilton Watch Company.” Id. The ad then gives some additional history on Hamilton before explaining that Vortic uses the parts to build “a completely custom watch.” The phrase “Hamilton Watch Co.” is visible on a picture of a watch component. The ad copy itself gives an accurate explanation as to how Vortic obtains its parts for The Lancaster and how it builds the watch. Applying Champion, a reasonable factfinder could conclude that “full disclosure” as to the source of the product was achieved. See Prestonettes, 264 U.S. at 369 (not infringement to “to say that the trade-marked product is a constituent in the article now offered as new and changed.“).
Vortic also created an advertisement that appears to have been in print. See Haller Declaration, Exh. 2, Dkt. No. 85-2; Custer Declaration, Exh. 1, Dkt. No. 101. “Vortic” is in large bold print, along with the company logo. The ad states: “Each piece is custom fabricated using railroad era, American made pocket watch movements to create timeless, one-of-a-kind wristwatches.” Id. It implores the reader “talk to a watchmaker at Vortic today.” Id. The ad also features a picture of both the watch‘s front and back. In type smaller than the ad copy, “Hamilton” is visible on the watch face. This ad is largely similar to the one above. A reasonable finder of fact could conclude that the ad sufficiently conveys that the watches are produced by “watchmakers at Vortic” and that they use old Hamilton watches only as a “source of railroad era, American made pocket watch movements.” A reasonable factfinder that
Plaintiff also alleges that a Vortic tweet about The Lancaster infringes on its mark. See Aschen Declaration, Exh. 3, Dkt. No. 84-3 at 32. The tweet states “A #Hamilton #Railway #Special in our nickel plated #3Dprinted #StainlessSteel #AmericanArt.” There is a picture of the watch, with the Hamilton mark in smaller print. Like the two ads above, consistent with Champion, a reasonable factfinder could conclude that the obvious message of the ad is that Hamilton watch parts are used to produce a watch that is made by Vortic. See id. (“our . . . #AmericanArt“) (emphasis added). See Prestonettes, 264 U.S. at 368 (“When the mark is used in a way that does not deceive the public we see no such sanctity in the word as to prevent its being used to tell the truth. It is not taboo.“).
Moreover, the fact that the movements may not have been restored to precise factory specifications or were restored with parts from other vintage Hamilton watches does not make the ads deceptive and infringing as a matter of law. Just as the sparkplug consumers in Champion would expect lower quality from secondhand sparkplugs, a reasonable factfinder could determine that consumers of restored, historic watches would expect these techniques as well. See Champion, 331 U.S. at 129-30; see also id. at 129 (“And we would not suppose that one could be enjoined from selling a car whose valves had been reground and whose piston rings had been replaced unless he removed the name Ford or Chevrolet“). What matters is whether a reasonable factfinder could determine that there is “full disclosure” as to the fact that Vortic is producing the watches from old Hamilton components.
b. The Watch
The use of “Hamilton” on the watch itself could also be infringing. The Court finds, however, that there is at least a genuine dispute of material fact as to whether full disclosure has been made.
Plaintiff has provided numerous photographs of The Lancaster. See Aschen Declaration, Exh. 1, Dkt. No. 84-1. The face of the clock has an antique style. The original Hamilton mark is still visible. Even though it is a wristwatch, the large knob characteristic of pocket watches is still attached to the watch. The back of the watch is mostly glass, and the inner workings of the movements are visible, along with “Hamilton Watch Co.” and a serial number which is on a movement part. A ring surrounds the glass. On that ring is written “‘The Lancaster,‘” “Vortic Watch Co.,” “American Artisanship,” and another serial number.
From the watch‘s appearance, a reasonable factfinder could determine that full disclosure has been made and that there is not a likelihood of confusion. The watch looks like a pocket watch that has been re-appropriated into being a wristwatch. A reasonable factfinder could determine that the watch looks obviously modified. See Ford Motor Co. v. Ultra Coachbuilders, Inc., Case No. EDCV 00-00243-VAP, 2000 U.S. Dist. LEXIS 20173, at *15-*16 (C.D. Cal. July 11, 2000) (stretch limousine version of Ford automobile did not infringe on Ford‘s trademark because the modifications were “apparent“). A reasonable factfinder could
Plaintiffs may argue that there is no genuine dispute of material fact on the disclosure issue, because it is uncontested that the watch itself does not spell out its relationship to Hamilton. To be sure, even the most defendant-friendly conclusions that a reasonable factfinder could draw from the physical appearance of the watch would not be the equivalent of a literal disclaimer; but the Supreme Court has never required explicit explanations on the product itself. In Champion, the Court allowed the defendant‘s product to retain the plaintiff‘s mark as long as “used” or “repaired” was stamped on the sparkplugs, even though there was no requirement that defendant‘s own mark appear on the merchandise. Champion, 331 U.S. at 129-30. While any reasonable consumer, viewing the sparkplug in isolation, would have realized that they were restored, they may have very well erroneously attributed defects in the restoration process to Champion. Yet, the Supreme Court found that there was full disclosure for trademark infringement purposes, in part because the packaging would inform consumers that the defendant had performed the restoration. Id. at 127, 129. In this case, there has been more extensive modifications and repairs, but more disclosure has arguably been provided; a reasonable factfinder could find that the watch itself effectively communicates that it was made by Vortic with Hamilton components. This would be an even more accurate picture of the product than a consumer would have received from the unpackaged sparkplugs in Champion.
Plaintiff also points to cases involving watches and applying Champion from the Fifth, Seventh, and Ninth Circuits to support its argument that The Lancaster is infringing as a matter of law. See Rolex Watch, U.S.A., Inc. v. Michel Co., 179 F.3d 704 (9th Cir. 1999); Rolex Watch USA, Inc. v. Meece, 158 F.3d 816 (5th Cir. 1998); Bulova Watch Co. v. Allerton Co., 328 F.2d 20 (7th Cir. 1964). Bulova, Meece, and Michel all involved infringement actions where the defendants either altered the cases of watches made by the plaintiffs or placed the plaintiffs’ movements into new cases, while still maintaining the plaintiffs’ trademarks. All three courts found that the “reconditioning or repair” was so extensive that more thorough explanations would be required to achieve full disclosure. They further found that providing an explanation that would properly explain the origin of those particular watches was infeasible. Accordingly, they held that the defendants could not use the plaintiffs’ trademark on the watches. See Michel, 179 F.3d at 710; Meece, 158 F.3d at 825; Bulova, 328 F.2d at 23-24.
The Court does not read Bulova, Meece, and Michel as suggesting that a watch movement in a new casing can never bear the trademark of the movement manufacturer. Rather, it reads them for the proposition that there was no feasible way to use the movement manufacturer‘s mark while providing full disclosure for those specific watches. For example, the Bulova court explained that “the exposed portion of the dial of the cased 6 3/4 x 8 ligne movement is such [that] no appropriate and readable legend could be placed thereon which would satisfy the disclosure requirements the facts and circumstances here demand.” Bulova, 328 F.2d at 24; see also Michel, 179 F.3d at 710 (“Nor would the face of
The presence of a genuine dispute of material fact on full disclosure as to both the advertisements and the watch itself strongly weighs against granting summary judgment.
2. Polaroid Factors
Analysis under the Polaroid factors supports this conclusion. See Arrow Fastener Co. v. Stanley Works, 59 F.3d 384, 400 (2d Cir. 1995) (“[I]t is incumbent upon the district judge to engage in a deliberate review of each [Polaroid] factor, and, if a factor is inapplicable to a case, to explain why.“); Bumble Bee Seafoods, 2004 U.S. Dist. LEXIS 13897, at *19-24 (selectively applying Polaroid factors). The strength of mark and similarity factors are not relevant in this case, because Defendants admit to using the mark but assert that their use is not confusing. The proximity of the products, bridging the gap, and the quality of the product are all also unhelpful, because application of these factors would penalize defendants who have only lightly modified a genuine product. Yet, under Champion, these are the defendants who have the lowest burden to meet the full disclosure standard. See Champion, 331 U.S. at 129.
This leaves actual confusion, the defendant‘s good faith, and the sophistication of the buyers as relevant Polaroid factors. On actual confusion, Plaintiff points primarily to an email that Hamilton‘s Canadian affiliate received from a potential customer. Aschen Declaration, Exh. 4, 29:13 to 37:23, Dkt. No. 84-4. It states: “my friend is looking for a vintage Hamilton as per attached. Would it be available? If so how much would it be?” Memorandum of Law in Support of Summary Judgment, at 6, Dkt. No. 83. The sender then attaches the second of the three Vortic advertisements discussed above. Defendants object to the admissibility of this email. Assuming that it is admissible, the email is still not determinative for Plaintiff at the summary judgment stage. Drawing all inferences in favor of the Defendant, the email could suggest only that the buyer is in the market for a vintage Hamilton watch and the advertisement gave her the idea. It does not necessarily support the proposition that the buyer thinks that Hamilton made the watch. Other than this email, there is no evidence in the record of actual confusion. There is a genuine dispute of material fact as to this factor.
On good faith, there is also a genuine dispute of material fact. “The Polaroid good faith factor ‘looks to whether the defendant adopted its mark with the intention of capitalizing on plaintiff‘s reputation and goodwill and any confusion between his and the senior user‘s product.‘” Nora Bevs., 269 F.3d at 124 (quoting Lang v. Ret. Living Pub. Co., Inc., 949 F.2d 576, 583 (2d Cir. 1991). This factor has less force in the modified genuine products context, because under Champion, a defendant may, under the right circumstances, purposefully use the plaintiff‘s mark so that their product can benefit from the plaintiff‘s reputation and goodwill. Champion, 331 U.S. at 130. Thus, merely displaying the holder‘s mark cannot give rise to a presumption of bad faith. Yet, intentionally using a mark to capitalize on confusion would.
Given that a reasonable factfinder could determine that Defendants properly gave full disclosure when using the Hamilton mark, there is at least a genuine dispute as to Defendant‘s good faith as well.
The Court finds that there are genuine disputes of material fact as to both the presence of full disclosure under Champion and as to the applicable Polaroid factors. The Court thus denies summary judgment on the trademark infringement claim.
B. Federal Counterfeiting Claim
In order to prevail on a counterfeiting claim, Plaintiff must show that use of the counterfeit mark is “likely to cause confusion, or to cause mistake, or to deceive.”
C. Dilution Claim
Plaintiff has also moved for summary judgment on both Federal and New York dilution claims. However, the Complaint contains only a New York dilution claim under
Plaintiff‘s motion for summary judgment on its dilution claim is denied.
D. Unfair Competition Claims
As Plaintiff acknowledges, the standard for a trademark infringement claim under
III. MOTION TO STRIKE DECLARATION OF ANTOINE HALLER
Defendants object to the declaration of Antoine Haller, Dkt. No. 85. Because the Court would reach the same result regardless of whether the declaration is considered, Defendants’ motion is denied as moot. See Callari v. Blackman Plumbing Supply, Inc., 988 F. Supp. 2d 261, 293 (E.D.N.Y. 2013); Fraser v. Fiduciary Trust Co. Int‘l, No. 04-cv-6958, 2009 U.S. Dist. LEXIS 75565, at *3-*4 n.2 (S.D.N.Y. Aug. 25, 2009), aff‘d, 396 F. App‘x 734 (2d Cir. 2010) (“The Court need not strike or otherwise disregard the declarations submitted by Plaintiff and his counsel in order to reach this conclusion. Consequently, Defendants’ motion to strike all or part of these declarations is moot.“).
IV. MOTION TO TRANSFER
After Plaintiff moved for summary judgment, Defendants moved to transfer the case to the District of Colorado under
“While motions to transfer are typically considered at an early stage in a case . . . nothing bars a court from granting a motion to transfer venue at a later stage in a case.” Jones v. Walgreen Co., 463 F. Supp. 2d 267, 271 (D. Conn. 2006). Yet, “[t]he timing of a motion to transfer venue, although not by itself normally dispositive, is relevant.” Commercial Union Ins. Co. v. Emery Air Freight Corp., No. 92-cv-6513, 1995 U.S. Dist. LEXIS 5140, at *3 (S.D.N.Y. Apr. 11, 1995) (summarily denying a motion to transfer when plaintiff‘s direct case had already been submitted in writing during a bench trial).
A district court may transfer a case “for the convenience of parties and witnesses, in the interest of justice.”
While a plaintiff‘s choice of forum is generally entitled to great weight, “the deference a court gives to the plaintiff‘s
Considering the factors, the Court finds that Defendants have not met their burden of making a strong case for transfer. The issue of judicial economy and timeliness of Defendants’ motion outweigh everything else. It is very late in the litigation process to change forums and Defendants do not demonstrate an overwhelming need to litigate in Colorado. See Commercial Union Ins., 1995 U.S. Dist. LEXIS 5140, at *3; United States v. Stamps, No. 18-cv-1106, 2018 U.S. Dist. LEXIS 195970, at *8-*9 (E.D.N.Y. Nov. 16, 2018) (denying motion to transfer when “lion‘s share” of discovery had been completed); cf Genden v. Merrill, Lynch, Pierce, Fenner & Smith, Inc., 621 F. Supp. 780, 783 (N.D. Ill. 1985) (granting motion to transfer case made during discovery when “overwhelming number of witnesses and documents are located” in transferee district). Virtually all of Defendants’ arguments, especially those regarding operative facts, could have been made earlier in this litigation. Plaintiff‘s misconduct during the settlement process with Judge Wang, see Dkt. No. 63, does not justify Defendants’ delay. And in any event, that process concluded over seven months before the motion was made. In that time, Plaintiff moved for summary judgement. The motion to transfer is denied.
V. PLAINTIFF‘S SEALING REQUESTS
Plaintiff seeks to make certain redactions in its filings and exhibits. See Dkt. No. 76. Its justification is that the material contains “proprietary or trade secret information that has been designated ‘Confidential-Attorneys’ Eyes Only’ by counsel pursuant to the stipulated Protective Order.” Id. Under Lugosch v. Pyramid Co., 435 F.3d 110, 119-20 (2d Cir. 2006), a presumption of public access attaches to judicial documents. In order to overcome the presumption, there must be “specific, on the record findings.” Id. at 120 (quotation omitted). “[E]ven if material is properly designated as Confidential or
Within ten business days of the date of this Order, Plaintiff may resubmit its denied redaction request. In addition, Plaintiff shall support its application for redactions and/or sealing with authority and articulated reasoning that is specific to the content that it seeks to keep under seal. If no further application is made within this time frame, the unredacted materials must be filed on the public docket.
VI. CONCLUSION
For the foregoing reasons, Defendants’ motion for summary judgment is DENIED, Plaintiff‘s motion to strike the Haller declaration is DENIED as moot, Plaintiff‘s motion to transfer is DENIED, and Defendants’ motion to seal is DENIED as well, with leave to refile as directed.
A final pre-trial conference in this matter will be scheduled by separate order.
This resolves Dkt. Nos. 77, 95, 97.
Dated: September 30, 2019
New York, New York
ALISON J. NATHAN
United States District Judge