The lawyers' thread: discussion on watch-related legal matters

JwRosenthal · Jan 17, 2020

I told @dx009 to mention this here as I find it intersting that companies like Rolex in particular can lay claim to alterations or changes made to their watches post sale, and can dictate terms of the future of their products- almost as if we are liscensing the product from them.
If a bejeweled aftermarket dial that has Rolex’s name on it (the dial is a fake, but the watch is rea), does that give them the right to dictate the terms of sale of a second hand product that was of their making but altered with an aftermarket dial?
And as for the Doxa situation, if he listed the product as “new” on eBay and the product was genuinely new and never removed from the box or worn, does that give Doxa the right to make any claim since he had a valid warranty card and the product was indeed a genuine product.
The question is - can these companies dictate how their product is traded or sold after the POS from their retailers?

jaspers · Jan 20, 2020

dx009
1. https://www.rescapement.com/blog/rolex-is-suing-la-californienne-for-its-custom-counterfeit-watches (I can't figure out who's in the wrong here, Rolex or the company)

There's two things going on here: (1) Rolex is refusing to service watches coming in that have been modded by LaCalifornienne and is (2) suing LaCalifornienne for trademark infringement. The former is a matter of consumer law, the latter of trademark law. In both cases, on a legal level Rolex seems well within their rights. On (1), in pretty much any jurisdiction a producer can refuse liability, warranty or repairs if the product has been tampered with. On (2), under the US Lanham Act a trademark violation can be established when (a) Rolex have a valid and legally protectable mark; (b) Rolex own the mark; and (c) the LaC's use of the mark to identify goods or services causes a likelihood of confusion. The latter prong of this test is a little complex to go into at length, but in short its outcome depends on whether or not Rolex and LaC compete on the same market—Rolex will argue that they will, because in such a case a Tm infringement is more easily found. More info here.

Now, on a policy level, there's much more to argue against here. This suit by Rolex is part of a larger trend of watch manufacturers trying to monetize their own second-hand market. Part of this strategy is lashing out against firms active on that second-hand market, such as, in case of LaC, aggressively claiming that their modded Rolex watches are counterfeit. This attempt to control the second-hand marker, however, runs counter to centuries of property law, and moves the concept of property towards a license. So long story short: Rolex are within their rights to sue, but in the greater scheme of things it's probably not the best outcome should they win in court.

dx009
2. A year or two ago I put up a discontinued (for a few years) Doxa Quartz watch that was in as new condition with box and card on eBay. It gained lots of attention (views and people saving the listing) and at some point after a few weeks my listing gets cancelled by eBay and they message me saying that they've received a complaint, supposedly, from some Doxa representative and they canceled the listing and that I'm no longer allowed to re-list it. The weird thing is that their motivation for this was very ambiguous and generic. Something like "it might be a fake". The watch was about 200-300$ in price so not an enormous value. Moreso if I remember correctly it had been sold only in select markets but I was part of those markets. The watch under no circumstance was a fake, nothing about it was fake, inside and out. The box and card were legit as well. The eBay program that does this actually has a name but I really can't remember it now. It's an abbreviation. I tried contacting them asking for more details and trying to communicate to them that I'm not selling anything fake or "dubious" but they didn't care.

This experience seems related to the above Rolex case, but only partially so. If the complaint indeed came from Doxa, they may have wished to prevent parallel trade from emerging—so "grey market" trade from select markets where the product is sold through official channels, to markets where the product isn't officially sold. Issuing a complaint with eBay, however, was probably just that. eBay does not cancel a listing based on a legal test, it just follows up on whatever credible complaint.

Does this answer your questions?

JwRosenthal · Jan 20, 2020

jaspers
This attempt to control the second-hand marker, however, runs counter to centuries of property law, and moves the concept of property towards a license. So long story short: Rolex are within their rights to sue, but in the greater scheme of things it's probably not the best outcome should they win in court.

This is the point that concerns me. At what point would Rolex be legally allowed to dictate the terms by which I can sell my personally owned Rolex watches. To whom, in what condition, modified or not, and without their consent. Will it become a situation where they can sue me for privately selling my Rolex without them verifying it’s authenticty (for a fee of course) and paying them a percentage of the sale price?
As for older watches, there was never a liscensing agreement as part of the purchase agreement at the POS, but I wouldn’t put it past them to include this on future watch sales where by purchasing their watch, you agree to all terms and conditions....it’s like the small check box we all click when subscribing to a website or service without actually reading it....I can see Rolex putting this in on the credit card scanner as you swipe your card- please click yes if you agree to terms and conditions.

dx009 · Jan 20, 2020

jaspers
This experience seems related to the above Rolex case, but only partially so. If the complaint indeed came from Doxa, they may have wished to prevent parallel trade from emerging—so "grey market" trade from select markets where the product is sold through official channels, to markets where the product isn't officially sold. Issuing a complaint with eBay, however, was probably just that. eBay does not cancel a listing based on a legal test, it just follows up on whatever credible complaint.

Does this answer your questions?

I understand what you're saying but there is one important detail that I mentioned. That watch had been discontinued for a few years. I fully understand a company trying to prevent someone that buys a watch cheap in a certain country and then goes to a different country trying to sell it for a profit. In this case, however, we're talking about an older watch that was no longer in production.

jaspers · Jan 21, 2020

JwRosenthal
This is the point that concerns me. At what point would Rolex be legally allowed to dictate the terms by which I can sell my personally owned Rolex watches. To whom, in what condition, modified or not, and without their consent. Will it become a situation where they can sue me for privately selling my Rolex without them verifying it’s authenticty (for a fee of course) and paying them a percentage of the sale price?
As for older watches, there was never a liscensing agreement as part of the purchase agreement at the POS, but I wouldn’t put it past them to include this on future watch sales where by purchasing their watch, you agree to all terms and conditions....it’s like the small check box we all click when subscribing to a website or service without actually reading it....I can see Rolex putting this in on the credit card scanner as you swipe your card- please click yes if you agree to terms and conditions.

You and me both, brother. I'd say we're still far removed from Rolex licensing their watches—and you becoming a caretaker rather than owner of a Daytona. In the mean time though, brands like Rolex, AP and Patek will go out of their way trying to increase control over the second-hand and vintage market. I've read stories of Patek "punishing" buyers who re-sell their watches by yanking them off waiting lists, and of Rolex removing tags and stickers to make re-selling their watches less attractive. Mind you: these inflated re-sale prices follow from both brands deliberately creating scarcity in the first place. In my book, that's trying to have the cake and eat it.

jaspers · Jan 21, 2020

dx009
I understand what you're saying but there is one important detail that I mentioned. That watch had been discontinued for a few years. I fully understand a company trying to prevent someone that buys a watch cheap in a certain country and then goes to a different country trying to sell it for a profit. In this case, however, we're talking about an older watch that was no longer in production.

Well, maybe Doxa genuinely flagged it as counterfeit. Or it was someone randomly trolling you. It'd be strange for a brand like Doxa to purposefully restrict NOS sale of discontinued models, but hey-ho, some times firms do strange things. Did you manage to sell it elsewhere?

JwRosenthal · Jan 21, 2020

jaspers
You and me both, brother. I'd say we're still far removed from Rolex licensing their watches—and you becoming a caretaker rather than owner of a Daytona. In the mean time though, brands like Rolex, AP and Patek will go out of their way trying to increase control over the second-hand and vintage market. I've read stories of Patek "punishing" buyers who re-sell their watches by yanking them off waiting lists, and of Rolex removing tags and stickers to make re-selling their watches less attractive. Mind you: these inflated re-sale prices follow from both brands deliberately creating scarcity in the first place. In my book, that's trying to have the cake and eat it.

We have seen this shift with software in the past 20 years. Once you bought the software, now you subscribe to the software and all previous versions are no longer supported- far more profit in subscriptions/liscensing than a strait purchase.

I get not warrantying a modified product- auto manufacturers have denied warranty on modified cars for decades (like Dinan modified BMW’s before Dinan became an authorized tuner and BMW got a piece of the pie). But the car is still personal property and the manufacturer has no claim to how they are sold, to whom, and in what state of originality. The only claim they can make is if the seller infringes on trademark- like an aftermarket BMW tuner or independent mechanic using the BMW logo on their sign.

dx009 · Jan 21, 2020

jaspers
Well, maybe Doxa genuinely flagged it as counterfeit. Or it was someone randomly trolling you. It'd be strange for a brand like Doxa to purposefully restrict NOS sale of discontinued models, but hey-ho, some times firms do strange things. Did you manage to sell it elsewhere?

Yes, I had to sell it elsewhere. The watch was in no way counterfeit. They don't even make fakes of that model. Oh well, it's in the past.