Customized Cartier Watches Not Necessarily Counterfeit
A federal court in Manhattan has held that a genuine Cartier stainless steel watch became a counterfeit when the defendant, intending to resell it, had it encrusted with diamonds and polished it so that it appeared to be a more expensive white gold Cartier watch. However, despite enjoining the defendant, Symbolix, Inc., from selling Cartier watches that it had modified in this manner, the court refused to enjoin Symbolix from performing the same modification for customers who already owned stainless Cartier watches and sought to have them "customized" in the same manner for their own use.
Why is the same modified watch considered a counterfeit if intended for resale, but not if it is merely being customized for its existing owner? The answer is found in the "use in commerce" requirement of the Lanham Act. Courts have held that this "use in commerce" requirement contemplates a trading upon the goodwill of, or association with the trademark holder. It is well established that a mere repair of a trademarked product for its owner's personal use does not fall within the scope of the Lanham Act because such repairs do not trade upon the goodwill of a trademark holder and, hence, do not result in use of a trademark in commerce. If, however, a repair or modification is so extensive as to result in a different product, that modification trades on the goodwill of, or association with, the trademark holder and is a "use in commerce." Thus, the question in Cartier v. Symbolix was whether encrusting a Cartier watch with diamonds for its owner results in a modification so extensive as to result in a different product.
Because the components of the stainless steel Cartier watch were still incorporated in the diamond encrusted final product, the court concluded that the customization was not so extensive as to result in a different product. Symbolix's customization service thus fell within the scope of permissible product repair even though the very same modifications were enjoined when done for resale purposes.
While from a purely legal perspective the distinction drawn by the court makes sense, its ultimate holding may seem counterintuitive particularly as watches customized for their owners are as likely to result in confusion as those that are customized for resale.