ROLEX WATCH INC v. JEWELRY UNLIMITED INC (2024)

ORDER

This case comes before the Court on cross-motions [54 & 62] for summary judgment.

I. Background

This is a trademark infringement action brought by Plaintiff Rolex Watch U.S.A., Inc. against Defendants Jewelry Unlimited, Inc. (“JU”) and JU's chief executive officer and owner, Wafi Amin Lalani (collectively, “Defendants”).

The luxury jewelry company, Rolex, has been in the watch industry since as early as 1912. Its famous crown design and ROLEX trademarks are incontestable.

JU is a private retail jeweler located in Atlanta, Georgia that specializes in diamond jewelry and luxury watches. JU has sold jewelry in the Atlanta area since 2003. It sells refurbished and customized Rolex watches direct to consumers in-person and online, but most of its Rolex sales come from “marketplace” retailers such as eBay and WalMart. [59] at 25.

These parties have a history.

On September 8, 2014, Rolex sent a cease-and-desist letter to JU related to JU selling diamond rings and pendants with Rolex's crown design trademark. Gibney Anthony, the law firm representing Rolex in this current matter, also represented Rolex in the 2014 matter. Fast forward to 2017; Gibney Anthony hired a private investigator to visit JU's Atlanta store and review its website. This investigation revealed that a store called Diamond Bazaar—not JU—had Rolex-branded watches on its shelves.¹

The watches giving rise to this action were purchased by Rolex's investigator on May 16 and 17, 2023. The first watch, purchased in the store, was a woman's Rolex Datejust that included a non-Rolex ² diamond bezel, a non-Rolex dial, and a non-Rolex bracelet attached to a genuine Rolex-branded clasp. The second watch, purchased online, was a men's Rolex Datejust that included a non-Rolex diamond bezel and a non-Rolex dial.

To understand the claims, one must understand the way JU does business. With regard to watches, JU's business model is referred to as a “Just in Time” business model. This means that JU advertises products that it does not have in its inventory. Once a customer places an order, JU sources a watch similar to the watch listed on the product listing, assembles the watch with any customizations, and then delivers the watch to the customer. Lalani, JU's owner, sources Rolex watches from watch dealers using the WhatsApp messaging application. All customizations are performed by a third-party watch maker. Common customizations include dial replacement, bezel installation, bracelet swap, and adding diamonds. The watches retain the Rolex logo and branding.

Defendants advertise the watches as “100% Genuine Pre-Owned” and “100% authentic as made by the manufacturer.” Each watch sold contains an authenticity guarantee and a warranty and care booklet, and all watches 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.” [54-1] at 28. Similar signs and disclosures are provided at JU's brick and mortar location.

JU's inspections are performed by a third-party company, Gemological Appraisal Laboratories, Inc. (“GAL”). GAL inspects the watches solely based on photographs rather than physical inspections.

On July 31, 2023, after Rolex's investigators purchased the two watches from JU, Rolex filed this suit against Defendants, asserting claims of trademark counterfeiting; trademark infringement; false advertising; and false designation of origin, false descriptions and representations, and unfair competition. Rolex seeks monetary damages and an injunction.

On July 31, 2024, both parties moved for partial summary judgment as to liability on all counts. Defendants contend that Rolex's claims against them fail for two reasons: (1) the doctrine of laches, and (2) Rolex has failed to show a likelihood of confusion. Rolex contends that it has produced sufficient evidence to show as a matter of law that summary judgment should be awarded to it on all counts.

II. Legal Standard

Summary judgment is appropriate when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). There is a “genuine” dispute as to a material fact if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” FindWhat Inv. Grp. v. FindWhat.com, 658 F.3d 1282, 1307 (11th Cir. 2011) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). In making this determination, “a court may not weigh conflicting evidence or make credibility determinations of its own.” Id. (citation omitted). Instead, the court must “view all of the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in that party's favor.” Id. (citation omitted).

“The moving party bears the initial burden of demonstrating the absence of a genuine dispute of material fact.” Id. (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). If the nonmoving party would have the burden of proof at trial, there are two ways for the moving party to satisfy this initial burden. United States v. Four Parcels of Real Prop., 941 F.2d 1428, 1437–38 (11th Cir. 1991). The first is to produce “affirmative evidence demonstrating that the nonmoving party will be unable to prove its case at trial.” Id. at 1438 (citing Celotex Corp., 477 U.S. at 331, 106 S.Ct. 2548). The second is to show that “there is an absence of evidence to support the nonmoving party's case.” Id. (quoting Celotex Corp., 477 U.S. at 324, 106 S.Ct. 2548).

If the moving party satisfies its burden by either method, the burden shifts to the nonmoving party to show that a genuine issue remains for trial. Id. (citations omitted). At this point, the nonmoving party must “ ‘go beyond the pleadings,’ and by its own affidavits, or by ‘depositions, answers to interrogatories, and admissions on file,’ designate specific facts showing that there is a genuine issue for trial.” Jeffery v. Sarasota White Sox, Inc., 64 F.3d 590, 593–94 (11th Cir. 1995) (per curiam) (quoting Celotex Corp., 477 U.S. at 324, 106 S.Ct. 2548).

III. Discussion

Both sides move for summary judgment as to liability on all counts. Defendants contend that the doctrine of laches serves as an affirmative defense to all claims against them, and that Rolex has not met its burden of demonstrating a likelihood of confusion. Rolex contends that the doctrine of laches is not applicable because it did not delay in bringing suit, and that regardless, Defendants cannot assert an equitable defense because they have unclean hands and engaged in “willful” trademark infringement.

Further, Rolex contends that it has established that there is a likelihood of consumer confusion, so summary judgment as to liability should be awarded in its favor on all counts against Defendants. Rolex also contends that no genuine issue of fact exists concerning Lalani's personal liability, so summary judgment should be granted as to his personal liability.³

As a threshold matter, the Court notes that neither party has moved for summary judgment on damages. But Rolex does weave in arguments in favor of a finding of willfulness and intentional infringement, which Defendants contest. “Although intent is not an essential element of a trademark infringement cause of action, it is a relevant consideration in evaluating whether the infringing use is likely to cause confusion.” Chanel, Inc. v. Italian Activewear of Fla., Inc., 931 F.2d 1472, 1476 n.4 (11th Cir. 1991) (citations omitted). As discussed infra, the Court considers intentionality in the likelihood of confusion analysis but finds that there is insufficient evidence before it to determine as a matter of law that Defendants acted intentionally or with bad faith. Regardless, the question of intent is better left to be addressed alongside damages. See id. at 1476 (“If the infringement is intentional, however, § 1117(b) governs: unless the court finds extenuating circumstances, treble damages and attorneys’ fees are mandated.”) (citing 15 U.S.C. § 1117(b)). Accordingly, this Order makes no finding as to whether Defendants acted intentionally or with bad faith.

A. Trademark Infringement

Both sides move for partial summary judgment on Rolex's trademark infringement claim.

A prima facie case of trademark infringement and unfair competition requires a plaintiff to show that “(1) it owns the trademarks at issue; (2) defendants used the marks without authorization; and (3) defendants’ use is likely to cause confusion, mistake, or deception as to the source, affiliation, or sponsorship of defendants’ goods.” Ford Motor Co. v. O.E. Wheel Distribs., LLC, 868 F. Supp. 2d 1350, 1361 (M.D. Fla. 2012) (citations omitted).

Here, the first two elements are undisputed, so the only issue for the Court to decide is whether Defendants’ use of Rolex's mark creates a likelihood of confusion.

In this circuit, courts analyze seven factors to determine whether a likelihood of confusion exists. See Aronowitz v. Health-Chem Corp., 513 F.3d 1229, 1239 (11th Cir. 2008) (per curiam). As such, the Court will consider the following seven factors:⁴

(1) the strength of the allegedly infringed mark; (2) the similarity of the infringed and infringing marks; (3) the similarity of the goods and services the marks represent; (4) the similarity of the parties’ trade channels and customers; (5) the similarity of advertising media used by the parties; (6) the intent of the alleged infringer to misappropriate the proprietor's good will; and (7) the existence and extent of actual confusion in the consuming public.

Fla. Int'l Univ. Bd. of Trs. v. Fla. Nat'l Univ., Inc., 830 F.3d 1242, 1255 (11th Cir. 2016) (citation omitted). “Of these factors, the type of mark and the evidence of actual confusion are the most important.” Id. (citation omitted). Courts evaluate and weigh these factors to determine “whether consumers are likely to confuse the defendant's services with the plaintiff's services.” Jellibeans, Inc. v. Skating Clubs of Ga., Inc., 716 F.2d 833, 840 (11th Cir. 1983).

As a threshold matter, the parties dispute which test the Court should use to determine if there is a likelihood of confusion. Rolex favors analysis under the “material differences” test, contending that the traditional seven-factor likelihood of confusion analysis is unnecessary because “materially different products bearing the same trademark are inherently likely to confuse.” [64] at 20 (emphasis omitted) (quoting Schütz Container Sys., Inc. v. Mauser Corp., No. 1:09-cv-3609-RWS, 2012 WL 1073153, at *20 (N.D. Ga. Mar. 28, 2012)). Defendants counter that the typical seven-factor likelihood of confusion analysis is appropriate.

This Court faced the same dispute in Schütz. Judge Story did not decide which test was proper because he determined that a likelihood of confusion existed under either test, but he explained that the material-differences test is an exception to the first-sale doctrine.⁵ Schütz, 2012 WL 1073153, at *20. Rooted in the Supreme Court's decision in Champion Spark Plug Co. v. Sanders, 331 U.S. 125, 67 S.Ct. 1136, 91 L.Ed. 1386 (1947), the material-differences exception stands for the proposition that “the unauthorized resale of trademarked products will constitute infringement if the products are materially different from those sold by the trademark owner.” Id. (citing Davidoff & CIE, S.A. v. PLD Int'l Corp., 263 F.3d 1297, 1299 (11th Cir. 2001)). But there are limits to the test: “Not just any difference will cause consumer confusion. A material difference is one that consumers consider relevant to a decision about whether to purchase a product.” Id. at *21 (quoting Davidoff, 263 F.3d at 1302).

Like the Court in Schütz, we need not determine which test is more appropriate. Although Rolex argues that the seven-factor likelihood of confusion is unnecessary due to the material differences between its watches and those sold by Defendants, Rolex still briefed the Court on the seven factors. See [64] at 25–33. And upon analyzing the relevant factors, the Court concludes that a reasonable jury could only conclude that retaining Rolex's mark on the watches Defendants sell is likely to cause consumer confusion.

1. Factors One and Two

It is undisputed that the first two factors—the strength of the marks and the similarity of the marks—weigh in Rolex's favor.

2. Factor Three

The third factor, similarity of the goods sold, also weighs in Rolex's favor. The Court is not persuaded by Defendants’ argument that the watches are substantially different because they focus on vintage and used watches rather than new watches. Although “there is substantial variation within the watch market,” Rolex presents more than enough evidence to show that the watches Jewelry Unlimited sells are like those sold by Rolex. But see Hamilton Int'l Ltd. v. Vortic LLC, 486 F. Supp. 3d 657, 666–67 (S.D.N.Y. 2020) (finding that the similarity-of-goods factor “would essentially be a wash” because simply arguing that the markets “are the same because they both sell watches” is insufficient to support a finding of a likelihood of confusion).

3. Factor Four

The fourth factor, sales and advertising methods, weighs slightly in Defendants’ favor. “This factor takes into consideration where, how, and to whom the parties’ products are sold.” Hard Candy, LLC v. Anastasia Beverly Hills, Inc., No. 16-cv-21203, 2017 WL 9521905, at *7 (S.D. Fla. June 2, 2017) (citation omitted). “[E]vidence that the products are sold in the same stores is certainly strong,” but there is no requirement that “parties’ outlets and customer bases need [to] be identical [and] some degree of overlap should be present.” Id. (quotations omitted).

There is no evidence that Rolex and JU sell in the same stores, but there is evidence suggesting that their customer base overlaps. See [66-10] at 6 (email from JU customer referencing that she has “had Rolex watches in the past”); [66-12] (eBay message to JU account that the buyer had the same Rolex watch without the diamonds from Rolex previously); [66-13] at 4 (eBay message to JU account where buyer states that she “own[s] three other Rolex watches”). What is missing from the evidence, however, is whether those customers bought new or used Rolexes. Without this evidence, or other evidence showing direct customer overlap, the Court cannot conclude as a matter of law that “the medium ․ that customers frequent would expose them to both marks.” FCOA LLC v. Foremost Title & Escrow Servs. LLC, 57 F.4th 939, 954 (11th Cir. 2023) (citations omitted).

4. Factor Five

The fifth factor, similarity of advertising, also weighs in Defendants’ favor. In analyzing this factor, the Court “assess[es] whether the overlap in readership of the parties’ advertisements is ‘significant enough’ that ‘a possibility of confusion could result.’ ” Id. at 955 (citations omitted). This is analyzed in a way “very similar to the previous factor.” Id.

JU advertises on “social media channels, third-party websites such as eBay, and its own website.” [67-1] at 21. But Rolex has not presented evidence of how its advertising efforts overlap with JU's. Rolex's argument that Defendants trade upon their fame and goodwill misses the mark on this point.

5. Factor Six

The sixth factor, intent to misappropriate, favors Rolex. To demonstrate the intent to misappropriate, Rolex must show that Defendants intended to derive a benefit from Rolex's business reputation, or that Defendants were “intentionally blind to confusion between the parties’ marks.” Trilink Saw Chain, LLC v. Blount, Inc., 583 F. Supp. 2d 1293, 1317 (N.D. Ga. 2008) (citation omitted).

“If it can be shown that a defendant adopted a plaintiff's mark with the intention of deriving a benefit from the plaintiff's business reputation, this fact alone may be enough to justify the inference that there is a confusing similarity.” Frehling Enters., Inc. v. Int'l Select Grp., Inc., 192 F.3d 1330, 1340 (11th Cir. 1999) (citing John H. Harland Co. v. Clarke Checks, Inc., 711 F.2d 966, 977 (11th Cir. 1983)).

Rolex contends that Defendants were willfully blind because they failed to inspect the watches to confirm genuineness, failed to keep records of how they use Rolex versus non-Rolex watch parts, mischaracterized GAL's appraisal certificates as certificates of authenticity, and sold the watches in green boxes similar to those used by Rolex. In response, Defendants point to their use of disclosures to show that they did not manifest an intent to deceive purchasers.

The Court concludes this factor favors Rolex. There is no doubt that Defendants were, at the least, intentionally blind to the risk of confusion in selling the altered watches with the Rolex trademark. Although Defendants attempt to hide behind their disclosures as evidence that they did not act with intent, they clearly market the watches as Rolex watches. The only reasonable explanation for this would be that Defendants capitalized on Rolex's established brand and reputation to entice buyers to purchase JU's watches.

The Court disagrees with Defendants’ contention that their public disclosures show they did not act willfully. They continually reference Vortic, 486 F. Supp. 3d at 657, and Champion Spark Plug, 331 U.S. at 125, 67 S.Ct. 1136, for the proposition that their disclosures offer them full protection. But the Supreme Court has cautioned that disclosure is not always enough, especially in situations “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 though the words ‘used’ or ‘repaired’ were added.” Champion Spark Plug, 331 U.S. at 129, 67 S.Ct. 1136.

The Court is not persuaded by the evidence that Defendants’ 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. Defendants urge the Court to look to Vortic for the idea that disclosures protect them. But the Court finds Vortic distinguishable.

The disclosures in Vortic are much clearer than JU's disclosures. Vortic's disclosures are clear that Vortic took antique Hamilton watch movements and parts, and “meticulously restore[d] the inner workings in order to build a completely custom watch around it.” Vortic, 486 F. Supp. 3d at 663 (citations to record omitted). Most importantly, the new watches had both Hamilton's and Vortic's marks, with Vortic's logos predominating. See id. (“[W]hile the Hamilton mark is visible in a picture, Vortic's logos predominate.” (citations to record omitted)). The alterations were so obvious that the court found that the Vortic watch “obviously presents to a viewer as restored antique pocket watch movement, face, and hands that have been reincorporated into a new wristwatch.” Id. at 664.

Defendants’ disclosures are confusing and contradictory. 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. See [54-20] at 6–7. 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.” [54-20]. Importantly, JU does not include any of its own marks on the watches.

Further, the Eleventh Circuit has limited Defendants’ contention that disclaimers eliminate the likelihood of confusion. In University of Georgia Athletic Ass'n v. Laite, 756 F.2d 1535, 1547 (11th Cir. 1985), the court rejected the argument that a disclaimer abated all possible confusion. The Eleventh Circuit found that the disclaimer did not prevent confusion because it was “relatively inconspicuous” and because, in instances of “exact duplication,” “words which indicate it was not authorized by the trademark owner are insufficient to remedy the illegal confusion.” Laite, 756 F.2d at 1547 (quotation omitted).

Although Defendants contend that their disclosures are obvious and clear, the Court finds that they are just as inconspicuous as the disclaimer in Laite. Defendants’ disclosures are found on a separate area of the listing, visible only if selecting the “Details” tab at the bottom of the window. See [54-20].

The Court also rejects Defendants’ argument that BeckerTime supports their position on disclosures. Defendants contend that they modeled their disclosures after the disclosures in BeckerTime, but the Fifth Circuit found “no clear error” with the district court's determination that customers were confused despite BeckerTime's “many disclaimers” because the disclaimers were not available to subsequent potential purchasers and “the disclosures misled purchasers into thinking there is a comparable genuine Rolex, when in fact, there is not always one.” Rolex Watch USA, Inc. v. BeckerTime, L.L.C., 96 F.4th 715, 722 (5th Cir. 2024) (internal quotation marks omitted). Therefore, even though the Fifth Circuit affirmed the district court's conclusion that BeckerTime acted in good faith, its disclosures were found to be lacking.

The Court finds that Defendants’ disclosures are insufficient and fail to warn a reasonable consumer about the relationship (or lack thereof) between JU and Rolex. Unlike the disclosures in Vortic, Defendants’ disclosures do not clearly convey to consumers the extent of changes made to the original Rolex. JU's watches contain only Rolex's marks, and it is far from obvious that the watches are affiliated with any entity other than Rolex.

Given these important distinctions, it cannot be said that “[a]ny viewer of [Defendants’] advertisement would come away with an accurate understanding of the relationship between [Jewelry Unlimited] and [Rolex].” Vortic, 486 F. Supp. 3d at 663.

6. Factor Seven

The final factor, evidence of actual confusion, “is the most important circumstantial fact.” FCOA, 57 F.4th at 956. In fact, this is the only factor that Defendants focus on in support of their motion for summary judgment. Despite the importance of this factor, “the quantum of evidence needed to show actual confusion is relatively small.” Wreal, LLC v. Amazon.com, Inc., 38 F.4th 114, 139 (11th Cir. 2022) (quotation omitted). And even “very little evidence of actual confusion is highly probative.” MC3 Invs. LLC v. Local Brand, Inc., 661 F. Supp. 3d 1145, 1166–67 (N.D. Fla. 2023) (quotation omitted). This is because “[a]ctual confusion by a few customers is evidence of likelihood of confusion by many customers.” Earth, Wind & Fire IP, LLC v. Substantial Music Grp. LLC, 720 F. Supp. 3d 1261, 1285 (S.D. Fla. 2024) (citing Freedom Sav. & Loan Ass'n v. Way, 757 F.2d 1176, 1185 (11th Cir. 1985)).

The analysis under this factor focuses on the “ ‘purchasing public,’ which includes both ‘those who are potential direct purchasers of the allegedly counterfeit goods’ and ‘potential purchasers of the trademark holder's products who encounter allegedly counterfeit goods in a post-sale context.’ ” Id. at 1280 (quoting United States v. Torkington, 812 F.2d 1347, 1352 (11th Cir. 1987)). These two categories are commonly referred to as point-of-sale confusion and post-sale confusion. See Yellowfin Yachts, Inc. v. Barker Boatworks, LLC, 898 F.3d 1279, 1294–95 (11th Cir. 2018). Point-of-sale confusion refers to confusion as to the source of the goods that occurs when a purchase is made. See 3 McCarthy on Trademarks and Unfair Competition § 23:5 (5th ed. May 2024 update). Post-sale confusion affects future purchasers of the products and occurs when “an observer sees the defendant's inferior product and because of similar marks or trade dress, mistakenly thinks it's a product of plaintiff, damaging plaintiff's reputation and image.” Id. at § 23:7.

This final factor strongly favors Rolex. There is sufficient evidence demonstrating point-of-sale confusion, i.e., that customers were confused about the product they were receiving and whether the watch was a genuine Rolex.

a. Point-of-Sale Confusion

As Defendants recognize, “[p]oint-of-sale confusion is by far the most important [type of purchaser confusion], because it directly affects individuals who are in the market for the particular product.” [54-1] at 24 (citing Plasticolor Molded Prods. v. Ford Motor Co., 713 F. Supp. 1329, 1336 n.8 (C.D. Cal. 1989)). Confusion can be evidenced by “reported instances of individuals who have actually become confused about the source of the products.” Earth, Wind & Fire, 720 F. Supp. 3d at 1286 (citation omitted).

Defendants point to the lack of survey evidence as proof that Rolex cannot demonstrate a likelihood of confusion, but the Eleventh Circuit has explained that “[l]ack of survey evidence does not weigh against the plaintiff when determining the likelihood of confusion.” PlayNation Play Sys., Inc. v. Velex Corp., 924 F.3d 1159, 1169 (11th Cir. 2019) (citation omitted); see 3 McCarthy on Trademarks and Unfair Competition § 23:17 (5th ed. May 2024 update) (“[A]ll courts agree that survey evidence is not required to prove a likelihood of confusion.”).

Rolex has provided undisputed evidence that some of Defendants’ customers were confused about the watches they were purchasing. Even ignoring the self-serving evidence—like a statement by one of Rolex's executive vice presidents that “[m]any customers who bring in their watches to be serviced and learn that their Rolex watch includes non-genuine parts are often surprised, disappointed, and sometimes angry,” [65-15] ¶ 25—Rolex provides sufficient evidence of actual customer confusion for the Court to find as a matter of law that the likelihood of confusion is proven.⁶

And the examples of customer confusion are compelling. Customers have complained of water damage to their watches—all stemming from confusion over the fact that genuine, unaltered Rolexes can be worn in the water. See, e.g., [66-7], [66-8] at 4; [66-9] at 10; [66-10] at 6. Others have complained about various aspects of the watch breaking despite not having any problems with their other Rolexes. See, e.g., [66-13]. Others are confused about why the watches they purchased through Defendants are having issues despite Rolex's established quality. See [66-15] at 6.

Perhaps the most telling example of confusion involves a customer who purchased a watch through Defendants via Walmart's website. When the customer received the watch and took it to Rolex authorized dealers, he was told it was “fake and after-market.” [66-21] at 5. JU responded to the customer's message and clarified that portions of the watch were after-market, and the customer responded that his “intention was to purchase a fully authentic Rolex with its papers.” Id. at 4.

Another telling example is a customer who purchased a watch and then emailed JU's customer service stating that three jewelers, including one official Rolex dealer, concluded the watch she purchased was “fake” and requested “an exchange of [the] watch for a fully authentic one, which is what we were told we were buying.” [66-29] at 2.

In response to these examples, Defendants harken back to their extensive disclosures. However, the evidence demonstrates that customers are confused despite the disclosures. One customer sought repair of a watch he purchased through JU, stating that he “didn't spend money ․ [for JU] to be using aftermarket parts that don't last or [aren't] durable.” [66-17] at 2; see also [66-21], [66-28]. One customer responded to an eBay listing by saying she was “a little confused by the listing” and asking which part of the watch was genuine. [66-34].

In addition to demonstrated examples of the disclosures not abating consumer confusion, the Court has already distinguished Defendants’ reliance on Vortic and demonstrated how the disclosures in that case were much more substantive than the disclosures Defendants provide.

b. Post-Sale Confusion

Although the Court finds sufficient evidence of point-of-sale confusion, there is no evidence supporting post-sale confusion among potential purchasers. The Court could certainly imagine instances where potential purchasers would see one of Defendants’ altered watches and believe it was an authentic and non-altered Rolex, but the record is devoid of any evidence of such a situation. To the extent Rolex contends that post-sale confusion can be inferred from the strength of its mark alone, the Eleventh Circuit has rejected such an argument. See Yellowfin, 898 F.3d at 1295–96. The Court cannot grant summary judgment on this point “without any evidence corroborating [Rolex's] postsale confusion theory.” Id. at 1296; see also Libman Co. v. Vining Indus., Inc., 69 F.3d 1360, 1363 (7th Cir. 1995) (“A finding of likely confusion can no more be based on pure conjecture or a fetching narrative alone than any other finding on an issue on which the proponent bears the burden of proof.”).

In weighing the factors holistically with a focus on the existence of actual confusion and strength of the plaintiff's mark, see Yellowfin, 898 F.3d at 1289, the Court concludes there is sufficient evidence from which a reasonable jury could only conclude a likelihood of confusion. Although factors four and five weigh in Defendants’ favor, the rest of the factors—especially those which carry the most weight—favor Rolex.

The Court recognizes that likelihood of confusion is typically a question of fact, but it also “is obligated to examine all the evidence and draw therefrom all reasonable inferences.” Rolls-Royce Motors Ltd. v. A&A Fiberglass, Inc., 428 F. Supp. 689, 694 (N.D. Ga. 1976) (citations omitted). “[S]ummary judgment is [not] necessarily appropriate in all suits for trademark infringement,” but it is obvious in this case that Defendants’ watches infringe Rolex's protected trademarks. Id. at 694–95 (granting summary judgment in plaintiff's favor upon finding that defendants’ car kits “are from appearance substantially identical to the genuine Rolls-Royce products” and determining that it was “evident, from the defendant's advertising alone, that its kits were selling and were designed to sell primarily, if not exclusively, because of public recognition of Rolls-Royce”).

As such, Rolex's motion for partial summary judgment on liability will be granted as to the trademark infringement claim.

B. Counterfeiting

To state a claim for trademark counterfeiting under 15 U.S.C. § 1114(1)(b), a plaintiff must allege that “(1) the defendants counterfeited a registered mark and applied such counterfeit mark to labels, signs, or advertisements used in commerce and (2) such use is likely to cause confusion, mistake or deception among the consuming public.” Cole-Parmer Instrument Co. v. Pro. Lab'ys, Inc., 568 F. Supp. 3d 1307, 1314 (S.D. Fla. 2021) (citations omitted). The Eleventh Circuit has construed § 1114(1) “to require simply the likely confusion of the purchasing public,” which encompasses both point-of-sale and post-sale confusion. Torkington, 812 F.2d at 1352 (citations omitted).

Rolex contends that this case presents a clear case of trademark counterfeiting as a matter of law pursuant to Rolex Watch, U.S.A., Inc. v. Michel Co., 179 F.3d 704 (9th Cir. 1999), and Rolex Watch, U.S.A., Inc. v. Meece, 158 F.3d 816 (5th Cir. 1998), cert. denied, 526 U.S. 1133, 119 S.Ct. 1808, 143 L.Ed.2d 1011 (1999). Defendants disagree, contending that Rolex's “material differences” analysis is incorrect and urge the Court to use the seven-factor likelihood of confusion test. Like in the trademark infringement discussion supra, the Court need not determine which is the correct analysis because Rolex has demonstrated a claim for trademark counterfeiting under either analysis. For the same reasons explained in the previous section, the seven-factor likelihood of confusion analysis weighs strongly in Rolex's favor. And the Court agrees with Rolex that this case is like both the Michel and the Meece cases.

In Michel, the Ninth Circuit affirmed the district court's conclusion that Mottale's (a wholesale jewelry and luxury watches seller) retention of Rolex trademarks on altered watches constituted trademark counterfeiting and affirmed the permanent injunction, which enjoined Mottale from selling altered Rolex watches “without (1) adding permanent independent marks on the non-Rolex parts, and (2) including a written disclosure concerning the generic replacement of parts on tags, invoices, promotions, and advertising.” Michel, 179 F.3d at 706.

Like JU, Mottale reconditioned used Rolex watches with non-genuine parts and then sold the altered watches. Mottale's alterations included replacing the watches’ “bezels ․, dials, and bracelets, and/or ․ inserting diamonds into their dials.” Id. at 707. Mottale's alterations were not authorized or provided for by Rolex, and the altered watches retained the original Rolex trademarks. Some parts on the final watches bore an imitation of the Crown logo, and some parts did not include any independent mark. The Ninth Circuit concluded that Mottale's reconditioning of the watches resulted in a different product and directed the district court to extend the injunction and enjoin Mottale from retaining any of Rolex's trademarks on the altered watches. It also concluded that the district court did not go far enough in protecting Rolex, explaining that it was insufficient for Mottale to be required to add an independent mark on the non-Rolex parts because such a requirement does not “convey[ ] basic changes that have been made to the watch.” Id. at 710.

The Fifth Circuit addressed a nearly identical situation in Meece. See Meece, 158 F.3d at 816. Meece is a wholesale jeweler who sells only to jewelers—not to the public. One of the watches at issue was a Rolex that was enhanced with a non-genuine diamond bezel and dial. Like the watches sold by Mottale and JU, “[n]either the watch, nor the accompanying literature, contained any markings to indicate the presence or source of non-genuine parts or any disclosures that Rolex would not warrant or service the watch.” Id. at 820. The district court found that Rolex established a substantial likelihood of confusion by selling such watches and entered an injunction. Specifically relevant to the counterfeiting claim, the Fifth Circuit explained 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.” Id. at 826. This is because “[w]hen 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.” Id. (quoting Westinghouse Elec. Corp. v. Gen. Cir. Breaker & Elec. Supply, Inc., 106 F.3d 894, 900 (9th Cir. 1997), cert. denied, 522 U.S. 857, 118 S.Ct. 155, 139 L.Ed.2d 101 (1997)).

On remand, Meece was ultimately found by the district court to have engaged in trademark counterfeiting. See Rolex Watch U.S.A., Inc. v. Meece, No. 3:95-cv-1058, 2000 WL 33582648, at *4 (N.D. Tex. Jan. 25, 2000). In effectuating the remand, the Ninth Circuit outlined the evidence of counterfeiting:

[N]ew, genuine Rolex watches were modified by Meece with non-genuine parts to make them resemble more expensive Rolex watches. Although Rolex was still the source of the watches, it was not responsible for the non-genuine diamond bezels added by Meece, or for refinishing and placing diamonds in the genuine Rolex dials, or for any diamonds Meece added to the bracelets. Rolex did not perform or authorize the modifications and its warranty was voided by Meece's activites. Meece, not Rolex, stood behind the watches; but the trademark suggested otherwise.

Meece, 158 F.3d at 827.

The same undisputed material facts are present here. Defendants attempt to distinguish themselves, focusing on menial facts such as the fact that the defendants in Meece and Michel sold directly to jewelry dealers and retailers rather than the public. See [67-1] at 12–14. The Court is not persuaded that the factual nuances constitute material distinctions. In fact, the Court finds that the likelihood of confusion is even higher because Defendants market and sell directly to consumers.

Defendants also rely on their use of disclosures, contending that the disclosures further distinguish them from Meece and Michel. The Court has already considered the disclosures’ impact in the context of trademark infringement and concludes that the disclosures are equally unavailing to defeat the counterfeiting claim. For the same reasons discussed supra, the Court concludes JU's disclosures are insufficient.

Rolex's motion for partial summary judgment will be granted as to the trademark counterfeiting claim.

C. False Designation of Origin, False Descriptions and Representations, and Unfair Competition

“The test for liability for false designation of origin ․ is the same as for a trademark counterfeiting and infringement claim—i.e., whether the public is likely to be deceived or confused by the similarity of the marks at issue.” Chanel, Inc. v. besumart.com, 240 F. Supp. 3d 1283, 1289 (S.D. Fla. 2016) (citing Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 780, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992) (Stevens, J., concurring in the judgment)). It is undisputed that the mark at issue is protectible, so Rolex need only “establish the likelihood of confusion, that is, that an appreciable number of ordinarily prudent purchasers are likely to be misled, or indeed simply confused, as to the source of the goods in question.” Yarmuth-Dion, Inc. v. D'ion Furs, Inc., 835 F.2d 990, 992–93 (2d Cir. 1987) (quotation omitted). “The likelihood of confusion test is the same for claims under both § 1114(a) and § 1125(a).” Tarsus Connect, LLC v. Cvent, Inc., 452 F. Supp. 3d 1334, 1362 (N.D. Ga. 2020) (citation omitted); see also Intertape Polymer Corp. v. Inspired Techs., Inc., 725 F. Supp. 2d 1319, 1328 n.15 (M.D. Fla. 2010) (explaining that “both § 1114 and § 1125(a) are governed by the same likelihood of confusion test” (citation omitted)).

The Court has already determined that Rolex has established a likelihood of confusion as a matter of law and therefore finds that Defendants are liable for false designation of origin. As such, summary judgment as to liability will be granted in Rolex's favor.

D. False Advertising

To establish a false advertising claim pursuant to 15 U.S.C. § 1125(a), Rolex must prove the following:

(1) the ads of the opposing party were false or misleading, (2) the ads deceived, or had the capacity to deceive consumers, (3) the deception had a material effect on purchasing decisions, (4) the misrepresented product or service affects interstate commerce, and (5) the movant has been—or is likely to be—injured as a result of the false advertising.

Osmose, Inc. v. Viance, LLC, 612 F.3d 1298, 1308 (11th Cir. 2010) (quotation omitted). “Accordingly, if the claimant fails to make a showing sufficient to establish the existence of any of these essential elements, summary judgment properly may be granted against him.” Schütz, 2012 WL 1073153, at *7 (citation omitted).

“An advertisement is ‘false’ if it is literally false.” Intertape Polymer Corp., 725 F. Supp. 2d at 1333 (citing Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1261 (11th Cir. 2004)). “[A]n advertisement is ‘misleading’ if it may literally be true (or is ambiguous) but implicitly conveys a false impression, is misleading in context, or is likely to deceive consumers.” Id. (citing Hickson Corp., 357 F.3d at 1261). “If an advertisement is not literally false, then the plaintiff must demonstrate that consumers were actually deceived.” Id. (citing Johnson & Johnson Vision Care, Inc. v. 1-800 Contacts, Inc., 299 F.3d 1242, 1247 (11th Cir. 2002)). The “[c]hallenged statements are not to be read in isolation, but must be perused as the average reader would against the whole apparent scope and intent of the writing.” Pernod Ricard USA, LLC v. Bacardi U.S.A., Inc., 653 F.3d 241, 251 (3d Cir. 2011) (quotation omitted).

Rolex takes issue with several of Defendants’ representations and statements, contending that they are “materially false and misleading because they misrepresent the nature, qualities, and authenticity of ROLEX-branded watches sold by JU.” [64] at 34 (citation omitted). Rolex contends that the “Just in Time” business model, coupled with advertising statements that the watches are “100% Genuine Pre-Owned” and “come with original paperwork and manufacturer's box” paint a false and misleading picture.

The advertisements, considered in context, teeter the line between literally false and likely to mislead or confuse customers. The Court is most troubled by two statements: (1) that the watches are “100% Genuine Pre-Owned” and (2) “All our watches are 100% authentic as made by the manufacturer ․ All watches will come with original paperwork and manufacturer's box, as provided by the manufacturer upon purchase.” [64] at 35.

The Defendants do not dispute that their statements had a material effect on consumer's purchasing decisions. But Defendants contend that there is a genuine dispute of material fact as to the meaning of a key term in the advertisements: “genuine.”

According to Rolex, any Rolex watch that has been altered with non-Rolex components is no longer genuine. See [80] at 10 (“The critical fact is that Defendants materially-altered ‘integral’ ROLEX-branded watch components, which rendered them no longer genuine ․”). Defendants respond that the industry considers their watches “as genuine Rolex watches even though they contain non-genuine aftermarket parts, so long as the case and movement are genuine Rolex.” [67-1] at 31. But a close look at GAL's 30(b)(6) deposition reveals that the definition is not in dispute.⁷ After much back and forth regarding whether GAL would certify Rolex watches with aftermarket parts as 100% genuine, the testimony eventually concluded that GAL would not consider a genuine Rolex watch with aftermarket parts to be genuine. See [67-34] at 12 (“I wouldn't say genuine but I would still say a Rolex.”).

This shows that there is no genuine dispute of material fact as to the definition of “genuine,” and per the sole definition, Defendants’ statement “100% Genuine Pre-Owned” is literally false. Regarding the other statements, in resolving all doubts in favor of Defendants, the Court determines that at least some of the statements have a tendency to deceive consumers—as evidenced by some customer statements that they believe they were getting a true, genuine Rolex.

But whether the Court holds that the statements are false or misleading is irrelevant because Rolex presents evidence of consumer confusion. See Diamond Resorts Int'l, Inc. v. Aaronson, 371 F. Supp. 3d 1088, 1105 (M.D. Fla. 2019) (“The classification of an advertisement as literally false or true but misleading affects the [plaintiff's] burden with respect to the element of consumer deception. If an advertising is literally false, there is no requirement to present evidence of consumer deception. But if an advertisement is merely misleading, then evidence must exist.” (citing Osmose, 612 F.3d at 1318–19)).

Despite the above, Rolex fails to present sufficient evidence that allows the Court to conclude that as a matter of law Defendants engaged in false advertising, because Rolex has offered no evidence that they have been harmed by Defendants’ advertisements. See id. at 1109 (“ ‘[A] plaintiff suing under § 1125(a) ordinarily must show economic or reputational injury flowing directly from the deception wrought by the defendant's advertising,’ which ‘occurs when deception of consumers causes them to withhold trade from the plaintiff.’ ” (quoting Lexmark Int'l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 133, 134 S.Ct. 1377, 188 L.Ed.2d 392 (2014))).

Rolex has not presented evidence of economic injury stemming from Defendants’ advertisements. Rather, it focuses solely on its purported reputational injuries. But the Court concludes that the evidence presented is insufficient to conclude as a matter of law that Rolex suffered reputational harm at the hands of the advertisements. This causation element “can be established when the movant provides evidence linking the false advertisement to the consumers’ decisions not to purchase the movant's product.” Snac Lite, LLC v. Nuts ‘N More, LLC, No. 2:14-cv-01695, 2016 WL 6778268, at *10 (N.D. Ala. Nov. 16, 2016) (citation omitted).

To prove reputational injury, Rolex relies on customer disappointment resulting from customers who bring watches purchased from JU to Rolex authorized retailers for service and learn that the watch is not covered under Rolex's warranty. But Rolex presents only a few examples where such a complaint has been made, and none of those complaints directed animosity towards Rolex. See, e.g., [66-21] (customer complaint stating that he took the watch to two Rolex authorized dealers and was embarrassed to learn it was fake and after-market”). Additionally, the case Rolex cites to support the contention that this level of reputational harm is considered an injury sufficient to prove false advertising discusses reputational harm in the context of willfulness and counterfeiting, not false advertising. See Motor Components, L.L.C. v. Imex Serv., Inc., No. 04-civ-22371, 2005 WL 8155973 (S.D. Fla. Apr. 19, 2005). Rolex provides no support, and the Court cannot find any, for the proposition that the sort of reputational harm Rolex allegedly suffered is sufficient for summary judgment to be awarded in its favor. See Nview Health, Inc. v. David V., No. 8:21-cv-385, 2022 WL 16923585, at *17 (M.D. Fla. Nov. 14, 2022) (holding that plaintiff lacked standing to bring a false advertising claim because he failed to produce sufficient evidence of reputational harm because “[a]t the summary judgment stage, the plaintiff must set forth by affidavit or other evidence specific facts demonstrating reputational harm” (quotation omitted)).

Rolex also contends that it suffered reputational harm from post-sale confusion, but the Court concluded supra that Rolex has failed to present evidence of any post-sale confusion.

Because Rolex has failed to produce sufficient evidence demonstrating that it was harmed by Defendants’ false advertisements, the Court will deny Rolex's motion for partial summary judgment as to liability on the false advertising claim.

E. Laches

In their motion [54] for summary judgment, Defendants rely heavily on the doctrine of laches, contending that Rolex was aware of Defendants’ actions since at least 2014 and that Rolex inexcusably failed to bring this action until 2023.

“The equitable defense of estoppel by laches may be applied to bar ․ Lanham Act [claims].” Kason Indus., Inc. v. Component Hardware Grp., Inc., 120 F.3d 1199, 1203 (11th Cir. 1997). To successfully assert laches as a defense, a defendant must demonstrate “(1) a delay in asserting a right or claim; (2) that the delay was not excusable; and (3) that there was undue prejudice to the party against whom the claim is asserted.” Id. (citation omitted).

“If a trademark infringement claim is filed within the analogous state limitations period, a strong presumption is created that laches is inapplicable.” Angel Flight of Ga., Inc. v. Angel Flight Se., Inc., 424 F. Supp. 2d 1366, 1370 n.5 (N.D. Ga. 2006) (alteration and quotation omitted). While “the Lanham Act does not describe what constitutes an impermissible delay nor does it contain a statute of limitations,” “the Eleventh Circuit has borrowed from the closest analogous state law and held that the four-year period applicable to similar causes of action under Georgia's Uniform Deceptive Trade Practices Act ․ governs the inquiry in Lanham Act cases.” Id. at 1370 (citing Kason Indus., Inc. v. Component Hardware Grp., Inc., 120 F.3d 1199, 1203–05 (11th Cir. 1997)).

“In calculating delay, the clock begins at the point in which the plaintiff ‘knows or should know she has a provable claim for infringement.’ ” Id. (quotation and citation omitted). “[A] plaintiff should not be obligated to sue until its right to protection has ripened such that plaintiff knew or should have known, not simply that defendant was using the potentially offending mark, but that plaintiff had a provable infringement claim against defendant.” ProFitness Physical Therapy Ctr. v. Pro-Fit Orthopedic & Sports Physical Therapy, P.C., 314 F.3d 62, 70 (2d Cir. 2002) (citations omitted).

However, “[a] laches defense cannot be asserted by a party with unclean hands because it is equitable.” BeckerTime, 96 F.4th at 723 (quoting Abraham v. Alpha Chi Omega, 708 F.3d 614, 620 (5th Cir. 2013)). Therefore, the defense is not available to “[a] defendant who intentionally infringes a trademark with the bad faith intent to capitalize on the markholder's good will.” Id. (quoting Abraham, 708 F.3d at 620).

The Court finds that Rolex knew or should have known that it had a potentially viable trademark infringement claim only in May 2023 when its agent purchased the two watches at issue in the complaint. The Court rejects Defendants’ attempt to stretch a lawyer's statement that she reviewed JU's website in association with a 2014 cease-and-desist letter related solely to rings and pendants as confirmation that Rolex was “fully aware” of all of JU's “watch-related activities.” See [54-1] at 15.

Even assuming JU's website was reviewed by Rolex's counsel in 2014 and that counsel saw Rolex watches on the website, the law is clear that the period for laches does not start when a plaintiff first had notice that its mark was being used. See Alfa Corp. v. Alpha Warranty Servs., Inc., 696 F. Supp. 3d 1086, 1106 (M.D. Ala. 2023) (explaining that the plaintiff's argument that the delay should be measured from when it first had notice was a “misunderstanding” because the delay is measured from when plaintiffs knows or should have known there was a “provable claim for infringement” (emphasis and quotation omitted)). And in determining the length of delay for the purposes of laches, courts focus on “the conduct upon which the claimant bases its infringement claim.” See Adidas Am., Inc. v. Payless Shoesource, Inc., 529 F. Supp. 2d 1215, 1253–54 (D. Or. 2007) (rejecting the argument that a cease-and-desist letter sent regarding Payless's “slides” style of shoes was evidence that plaintiff knew as a matter of law in of a potential trademark infringement claim related to athletic and casual footwear).

There is no evidence that Rolex ever investigated watches in 2014 to determine whether the “likelihood of confusion loom[ed] large.” 4 McCarthy on Trademarks and Unfair Competition § 31:19 (5th ed. Sept. 2024 update). In fact, JU admits that the 2014 letter and communications were “solely with respect to certain non-watch jewelry.” [54-1] at 14.

Defendants also point to a 2017 investigative report ordered by the law firm representing Rolex as evidence that Rolex had actual knowledge of Defendants’ watch-related activities prior to 2023. But any references to Rolex watches from the 2017 investigation is regarding a different store—Diamond Bazaar. When the investigators went to JU's store in 2017, they were told that “all their Rolex watches had been moved ‘downstairs to [their] other store, Diamond Bazaar.’ ” [60] at 4. The period for laches does not begin when an investigation begins but rather when a plaintiff believes it has a provable claim. This investigation did not reveal any connection between JU and watches, and therefore it cannot be said that Rolex had a provable claim against JU in 2017.

The Court concludes that there is no genuine issue of material fact as to whether Rolex delayed in bringing this action. Additionally, as discussed supra, the Court finds that there is no genuine issue of material fact as to whether Rolex proved a likelihood of confusion. As such, the Court will deny Defendants’ motion [54] for summary judgment in its entirety.

IV. Conclusion

For the foregoing reasons, Defendants’ motion [54] for summary judgment is denied. Rolex's motion [62] for partial summary judgment as to liability is granted in part and denied in part. It is granted as to the trademark infringement claim, counterfeiting claim, false designation of origin claim, and Defendant Lalani's personal liability. It is denied as to the false advertising claim.

The parties are directed to file a proposed consolidated pre-trial order within thirty days.

IT IS SO ORDERED this 13th day of November, 2024.

FOOTNOTES

1.   Diamond Bazaar closed its storefront in 2021 and is a “separate entity from JU.” [74] at 36. Although evidence shows the two stores are related, they were separate business entities with different addresses and different ownership.

2.   The parties disagree on the nomenclature of the watches sold by JU. Rolex refers to them as “counterfeit” and “non-genuine,” while Defendants refer to them as “aftermarket,” “customized,” or “refinished.” For consistency, the Court will refer to these products as “non-Rolex” products.

3.   Defendants do not respond to Rolex's argument regarding Lalani's personal liability, and they do not dispute that “Defendant Wafi Lalani, owner and CEO of JU, is responsible for directing all of JU's activities at issue.” [67-2] at 16. Therefore, summary judgment will be granted as to Lalani's personal liability.

4.   The Court notes that some courts analyze an additional factor, consumer sophistication, in determining likelihood of confusion. See FCOA LLC v. Foremost Title & Escrow Servs. LLC, 57 F.4th 939, 957–58 (11th Cir. 2023). The Court will not address this additional factor because neither party argued how consumer sophistication weighs into the analysis.

5.   “[U]nder the first sale doctrine, ‘the resale of genuine trademarked goods does not constitute infringement.’ ” Schütz, 2012 WL 1073153, at *20 (quotation omitted).

6.   The Court recognizes the relatively small number of examples of consumer confusion but is not concerned by this because “[a]ctual confusion by a few customers is evidence of likelihood of confusion by many customers.” Earth, Wind & Fire, 720 F. Supp. 3d at 1285 (citing Freedom, 757 F.2d at 1185); see Yellowfin, 898 F.3d at 1295 (“[T]here is no precise number of instances of actual confusion sufficient to establish the factor.” (citation omitted)).

7.   Gemological Appraisal Laboratory's senior gemologist, Travis Lejman, was GAL's designee for the deposition.

Timothy C. Batten, Sr., Chief United States District Judge