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Confessions of a former watch flipper by GQ.

Gav1967
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I know others have made similar points but in my opinion it's too easy to blame flippers. I know this is an over-simplification and a sweeping generalisation, but while the market is rigged with under-supply to artificially inflate value (or at the very least to maintain value or the reputation of watches as investment pieces), then you will have people who will take advantage of the situation. If you could walk into an AD and buy whatever new watch you wanted tomorrow at RRP then the market for flipping would be all but eliminated.
By the way I have never personally sold a watch to date but I can see how others are tempted
 
Archer
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BradleyJ. BradleyJ.
People claim that flippers are driving up the prices.

I don't believe flippers are driving up prices. It's the people buying from the flippers that are more responsible IMO, and the brands for not supplying what people want.

But what the flippers do is insert themselves into the normal distribution path as another middleman, and the one in some cases making the most profit of anyone in the entire distribution chain.

Dan S Dan S
This is not the type of flipping being discussed in the article. It is describing flipping new and unworn watches purchased from an AD for a profit.

Agreed - reading between the lines it appears he had asked the AD to get him his PP, and then immediately flipped it for profit. I would guess as much as he says he really wanted it, he bought it with the express purpose to flip it. In other words, he pulled a "Stuffers Mom"...
 
jaspers
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Interesting read indeed. I take issue with the GQ piece's reasoning though:

As a lawyer, I think it's preposterous how brands try to restrict what buyers do with the watches they purchased. Property is a fundamental concept in law—once I have purchased something, I can do whatever the heck I please with it as long as I don't break the law. For all I care someone buys a Patek and then smashes it.

There's been this tendency of luxury brands to control aftermarket sales as if they license their products instead of selling them. This is their way to both have the cake and eat it: controlling output to increase scarcity, while at the same time trying to prevent the resulting excess resale profits that they don't internalize themselves. Excessive grey market prices would not occur with a better balance between supply and demand. This is the direct consequence of the scarcity they themselves created, and they're greedy for the profits made outside of their influence.

So I think it's questionable to demonise someone as a flipper who has *once* purchased a Patek and sold it at a profit. Someone who does this constantly is at best a bit of a douche, but well within their rights to do so. Flippers can only exist in an ecosystem with artificial scarcity, which to me is a textbook example of market failure. We shouldn't blame the market failure on the flipper.
 
Archer
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jaspers jaspers
There's been this tendency of luxury brands to control aftermarket sales as if they license their products instead of selling them.

It's same thinking that allows Rolex to consider any Rolex watch with any aftermarket modification a counterfeit watch, so no better than some cheap thing with a Chinese movement in it. To Rolex they are both counterfeits.

Right now they are suing a place in California that buys up older Rolex watches (DateJusts for example) completely services them with genuine parts, but strips and reprints the dials in bright colours that Rolex would not dream of (think Mumbai specials in the Omega world). They make it clear that these are modified watches, and not the way Rolex sold them initially, so there is no intent to mislead or deceive, yet Rolex considers all these to be counterfeits.

This is expected from Rolex - they are bullies. What surprised me the most was that on some other forums, the people who have drank enough of this to have it coursing through their veins:



Are fully behind the Rolex lawsuit. This is like me buying up older cars (insert your favourite brand here) and stripping and painting them colours that the factory doesn't paint them, and the car maker declares them all counterfeit.

It's insane, but that is the way this industry works. It's also the reason why the brands try to limit where you can get your watch serviced - they all to a degree think they still own the watch and want to dictate what happens to it, long after they have actually sold it...I can't think of an equivalent in any other industry...

Cheers, Al
 
M'Bob
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Archer Archer
watches (DateJusts for example) completely services them with genuine parts, but strips and reprints the dials in bright colours that Rolex would not dream of (think Mumbai specials in the Omega world). They make it clear that these are modified watches, and not the way Rolex sold them initially, so there is no intent to mislead or deceive, yet Rolex considers all these to be counterfeits.

Interesting and I wonder, from a legal perspective, if the suit has any legs.
 
M'Bob
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jsducote jsducote
I'm not sure I totally accept the supply & demand argument. For whom is the demand SO great that they HAVE TO pay flipper prices? It's not like food or shelter where you HAVE to have it. I may not have gotten the top marks in Psych 101, but I don't remember seeing the Aquanaut in Maslow's hierachy. Lots of people want a SS Rolex, myself included, but Rolex has decided not to make enough of them so I guess I won't get one. It's easy for me to take it off my "want" list and shut down my own desire for it.

Well put. I see no moral violation with flipping. These are not necessities. I don't care who the AD sells to, how many, at what price, or what that person does with it: pray over it, re-sell it, hand it down, toss it in the drink. If I wasn't fast or shrewd enough to get what I wanted from the dealer, because a flipper bought what I could have had, then I guess it's time to sit at the table, and cry into my bowl of Frosted Flakes.
 
Uniqez
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M'Bob M'Bob
Well put. I see no moral violation with flipping. These are not necessities. I don't care who the AD sells to, how many, at what price, or what that person does with it: pray over it, re-sell it, hand it down, toss it in the drink. If I wasn't fast or shrewd enough to get what I wanted from the dealer, because a flipper bought what I could have had, then I guess it's time to sit at the table, and cry into my bowl of Frosted Flakes.
I need to buy some Frosted Flakes today)))))
 
M'Bob
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Uniqez Uniqez
I need to buy some Frosted Flakes today)))))

I would recommend that. While they are in high demand, they are not yet being flipped. Plus...

image.jpeg
 
T
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Do the people buying these gray market watches at inflated prices bear no responsibility?
 
Darlinboy
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Some flippers are both loved and appreciated. This was “must see TV” when I was a kid.

 
Desmodromic
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M'Bob M'Bob
Interesting and I wonder, from a legal perspective, if the suit has any legs.

I downloaded the lawsuit from PACER. I don't seem to able to upload the pdf's to this forum, and I don't have access to a public server to store these.

Anyway, on the merits, probably not. But Rolex is clearly Bigfooting. They already have three local California attorneys on the case, and they have moved to add three NYC attorneys added Pro Hac Vice. They are going to grind down laCalifornienne, they are suing the owners individually, and they are sending a message: do not alter Rolex watches for profit without approval. I seriously doubt laCalifornienne has the wherewithal to go toe-to-toe with Rolex. After the motion to dismiss is denied, I predict they will settle soon enough, before the first round of depositions are calendared. It's a shame, because I would love to see Rolex answer, under penalty of perjury, questions about the steel watch shortage.

Anyway, regarding the merits of the lawsuit, from the Fashion Law Blog:

the term “counterfeit” has a formal legal definition in accordance with the Lanham Act (a counterfeit is “spurious mark which is identical with, or substantially indistinguishable from, a registered trademark”), which means that it is not a term that is up for interpretation by individual brands, themselves. With that in mind, it will be interesting to see how Rolex’s claims play out in court, assuming that laCalifornienne - or any emerging-stage brand, for that matter - has the resources to fight back against a company like Rolex.
 
Desmodromic
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Archer Archer
It's same thinking that allows Rolex to consider any Rolex watch with any aftermarket modification a counterfeit watch, so no better than some cheap thing with a Chinese movement in it. To Rolex they are both counterfeits.

Right now they are suing a place in California that buys up older Rolex watches (DateJusts for example) completely services them with genuine parts, but strips and reprints the dials in bright colours that Rolex would not dream of (think Mumbai specials in the Omega world). They make it clear that these are modified watches, and not the way Rolex sold them initially, so there is no intent to mislead or deceive, yet Rolex considers all these to be counterfeits.

This is expected from Rolex - they are bullies. What surprised me the most was that on some other forums, the people who have drank enough of this to have it coursing through their veins:



Are fully behind the Rolex lawsuit. This is like me buying up older cars (insert your favourite brand here) and stripping and painting them colours that the factory doesn't paint them, and the car maker declares them all counterfeit.

It's insane, but that is the way this industry works. It's also the reason why the brands try to limit where you can get your watch serviced - they all to a degree think they still own the watch and want to dictate what happens to it, long after they have actually sold it...I can't think of an equivalent in any other industry...

Cheers, Al

Well, the average watch enthusiast has been well trained by the Swiss, so that's not a surprise. This has the potential to be a far-reaching lawsuit for the collector community, but you aren't going to read about this in Hodinkee or ABTW. Just like you aren't reading that TAG pulled all Isographs from ADs because, according to my AD, they couldn't regulate them within COSC standards. It's the price of access required by the Swiss..
 
Archer
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Desmodromic Desmodromic
Well, the average watch enthusiast has been well trained by the Swiss, so that's not a surprise. This has the potential to be a far-reaching lawsuit for the collector community, but you aren't going to read about this in Hodinkee or ABTW. Just like you aren't reading that TAG pulled all Isographs from ADs because, according to my AD, they couldn't regulate them within COSC standards. It's the price of access required by the Swiss..

Unfortunately you are right. People who have been arguing on behalf of Rolex's position don't seem to understand the wider implications. I've had people argue that as an individual, you can mod your own watch and Rolex doesn't care. Well I guess if you consider them classifying your watch a counterfeit not caring, they are right. 🙄

Just because Rolex isn't going after individuals now, doesn't mean they wont. If you are selling watches on eBay and sell one with a modified dial (even if you were not aware) you could potentially be in the same boat as this company.

Although people often consider watch blogs to be giving people industry news, they are mostly extensions of the brand's marketing departments. There are some actual industry publications out there, but these are not geared towards consumers, and they are very different from Hodonkey, ABTW, Fratello, etc.
 
Desmodromic
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Martin_F Martin_F
Just do it like the automotive industry:
https://www.motor1.com/news/260939/mercedes-amg-project-one/
Case closed. But that would mean Rolex doesn't want an increased value of their products on the grey market. Touché...

Scalping build slots is much different that re-interpreting trademark and IP law. Perhaps if Rolex released an LE and required all purchasers to buy a build slot in addition to the watch. But I doubt this could work under the current distribution system.
 
Martin_F
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Desmodromic Desmodromic
Scalping build slots is much different that re-interpreting trademark and IP law. Perhaps if Rolex released an LE and required all purchasers to buy a build slot in addition to the watch. But I doubt this could work under the current distribution system.
Well, the way I understand it, Mercedes has a clause in their sales contract, that prohibits the buyer to sell the car for a profit.
Isn't that what we're talking about here? Replace Mercedes with Rolex and you're there.
 
Desmodromic
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Martin_F Martin_F
Well, the way I understand it, Mercedes has a clause in their sales contract, that prohibits the buyer to sell the car for a profit.
Isn't that what we're talking about here? Replace Mercedes with Rolex and you're there.

I haven't read the contract, and you might be correct, I also believe that, as you state it, that might be unenforceable. Generally, once I take title, free and clear, I can do what I want. Mercedes might be adding a clause that states that the owner does not take take free and clear and Mercedes stays on the title. Then they have a say. You can, however, prohibit selling the build slot, since the build slot is essentially a licensing fee. But Mercedes owns their own distributors. Rolex does not. Under the current third-party distribution scheme, as I understand it, Rolex cannot not do this.
Edited:
 
Martin_F
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Desmodromic Desmodromic
I haven't read the contract, and you might be correct, but I also believe that, as you state it, might be unenforcable. You can, however, prohibit selling the build slot, since the build slot is essentially a licensing fee.

I guess my statement was more in line with the original topic of this thread instead of the modification of watches, but if Rolex sued a few flippers, maybe the practice wouldn't be as lucrative any more...
 
Uniqez
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Desmodromic Desmodromic
I downloaded the lawsuit from PACER. I don't seem to able to upload the pdf's to this forum, and I don't have access to a public server to store these.

Anyway, on the merits, probably not. But Rolex is clearly Bigfooting. They already have three local California attorneys on the case, and they have moved to add three NYC attorneys added Pro Hac Vice. They are going to grind down laCalifornienne, they are suing the owners individually, and they are sending a message: do not alter Rolex watches for profit without approval. I seriously doubt laCalifornienne has the wherewithal to go toe-to-toe with Rolex. After the motion to dismiss is denied, I predict they will settle soon enough, before the first round of depositions are calendared. It's a shame, because I would love to see Rolex answer, under penalty of perjury, questions about the steel watch shortage.

Anyway, regarding the merits of the lawsuit, from the Fashion Law Blog:
You can put it on https://wetransfer.com/ and share the link here.
 
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