It is an interesting read and an impressive feat of research but do we know what drilling out the SN was meant to accomplish? It struck me that the legal judgment specifically prohibited the defendant from selling Omega watches with drilled-out serial numbers in Norman Morris territory (US including Puerto Rico), implying that obscuring the SNs somehow created a loophole for the grey-market company to compete in the same market. I’m guessing that the court saw no need to reiterate that the defendant couldn’t sell Omega watches at all, since it found that NM was indeed the exclusive distributor.
There must be something in the court opinion that addresses the intent behind carefully drilling out the SN. The article writer complains a lot about how hard it was to slog through reading the original court judgment, but in fact the article itself is not very clearly written, so I might have missed this explanation.
openjurist.org
OK, the article does say at the end of the third paragraph from the bottom “[t]he reason for the serial number alteration appeared to be to prevent the Omega Watch Company from identifying which dealers sold the altered Omega watches.” The opinion, which is an appeal of a previous case that went against the defendant, Weinstein, states:
“48
The law fosters and protects lawful competition, but prohibits unlawful competition.
9 A manufacturer has the right to select the agent who shall exclusively represent him in the sale of his product, and to designate the territory within which he shall so act.
49
By so doing, it does not in any way prohibit Weinstein from importing into the United States Omega watches lawfully acquired by him in Europe and lawfully selling them in the United States and Puerto Rico.
50
The injunction provision of the decree reads:
51
“Hyman Weinstein, d/b/a Bright Star Enterprise, his agents, servants, employees, attorneys, and all persons acting in conjunction with the defendant or at his direction, be and they are hereby permanently restrained and enjoined from selling or distributing any watches bearing the name 'Omega' which have drilled out serial numbers and which do not have with them the genuine guarantee of the Omega Watch Company in any of the fifty states of the United States and the island of Puerto Rico.”
52
Weinstein contends that such language prohibits him from selling Omega watches anywhere in the United States and Puerto Rico. That is a tacit admission by Weinstein that he cannot acquire Omega watches unless the identifying digits in the serial numbers of the watches have been drilled out.”
I understood that drilling SN was meant to obscure where the watches came from to protect their sources. But I may be wrong.
That does indeed seem to be the intent. The European dealers who sold the defendant these watches in quantity wanted to hide their involvement in his scheme.
Weinstein appealed the original summary judgment by arguing that Norman Morris had not produced proof of their agreement with Omega and because of that the original court did not have jurisdiction to made a decree against him. The appeals court threw out his arguments and said the decree upholds Norman Morris’s case that Weinstein falsely represented his watches as being authorized and guaranteed by Omega and that he unfairly hurt their business in Florida, where Weinstein had sold watches to dealers and by mail order directly to customers. The dealers told Norman Morris they would stop selling Omega watches unless NM “straightened out” the situation, presumably because they could not be sure if Omega would guarantee the Weinstein watches. The dealers also said their sales were being undercut by Weinstein, presumably because of his mail-order business.
The appeals court agreed that the original injunction should have clarified that Weinstein was enjoined only from selling Omega products without disclosing that the serial numbers had been drilled out and without disclosing that the watches are not guaranteed by Omega but only by Weinstein himself. In other words, he can sell whatever he wants as long as he makes it abundantly clear that Omega does not guarantee the watches. The court also held Weinstein liable for the costs of the appeal, so it seems to have gone pretty badly for him.
