Horolonomics

One of the less glamorous, but nonetheless important, activities in the watch industry relates to intellectual property (IP).

Largely behind the scenes, micro mechanical engineers file patents, brand founders file trademarks and attorneys file lawsuits when they believe someone has infringed on the rights of a horological IP owner. Periodically, some of this activity is covered by the popular press, particularly when there is a lawsuit. For example, Swatch Group's unsuccessful litigation against Vortic was covered by a wide range of media outlets (and Vortic themselve documented the legal clash on YouTube and in a forthcoming book.

A somewhat recent watch market development relates to the customization of timepieces. Customization can take many forms, including "bust down" watches in which gemstones are added by an aftermarket jeweler. I first realized watch brands may not be fond of this practice in 2020 when Tony Traina covered the case of laCalifornienne in his outstanding newsletter Rescapement (Tony is now a Hodinkee editor). At the time, laCalifornienne was selling Rolexes which had been customized with colorful dials that were not part of the official Rolex catalogue (although they did evoke the factory-made Stella dials of the 1970s). Rolex took exception, filed a lawsuit, and won.

In the modern era, it seems like "whataboutism" has become an accepted form of argumentation.

I'll admit that as I wrote my own recent post on a Rolex lawsuit targeting a watch dealer selling customized (or modified) watches, my whataboutism neurons fired in my brain. I think this also happened when I read Tony's laCalifornienne article, if I'm honest. The thought went like this: "ok, sure, they're maybe infringing on Rolex IP rights, but what about Artisans de Genève?"

Artisans de Genève creates some extremely compelling modified Rolexes. You can see their work on their Instagram account. The brand has over 230,000 followers. The puzzle is: why have so many Rolex customizers been on the receiving end of lawsuits while Artisans de Genève seems to get away with similar behavior?

A lot of explanations came to mind. First, Artisans de Genève and Rolex each have an important relationship with a very high profile celebrity: Spike Lee. Lee participates as a mentor in Rolex's Perpetual Arts Initiative (a program operated by Rolex's charitable arm). Lee has also collaborated with Artisans de Genève in developing "Cool Hand Brooklyn" designs for Rolex Daytona modifications. This combination of relationships puts Rolex in a bit of a bind. I wouldn't be surprised if there were a lot of discussions around Rolex conference tables about whether suing Artisans de Genève would put Rolex's relationship with Lee in jeopardy.

Another explanation: Artisans de Genève had, somehow, figured out how to "thread the needle" of IP rights and offer watch customizations which didn't infringe Rolex's IP rights.

Perhaps the brand had done a ton of legal work and assembled a unique combination of disclaimers and warranties such that Rolex would not be able to succeed with a lawsuit. Honestly, though, I thought this was unlikely. There is very little anyone can do to justify applying a brand mark to a product when someone else holds the trademark. A number of Artisans de Genève's designs feature printing of the Rolex brand name and famed coronet on the underside of a watch's crystal. Rolex has not employed its own mark in this manner on any watch design that I am aware of. There is very strong evidence that Artisans de Geneve affixed Rolex's trademark to a product that was significantly configured outside of Rolex's manufacture. I just can't see how any disclaimer can avoid liability in that kind of situation.

A lot of my questions were answered when I read a recent post by The Fashion Law. The post described a lawsuit filed by Rolex against a watch customizer in Switzerland. The post also contained a link to a January decision by the First Court of Civil Law (a federal court in Switzerland). The original decision is in French. I used Google Translate to change everything over to English and I read the decision.

To begin, it is now clear that Artisans de Genève does not have a "free pass" for the types of customization activities that landed other businesses in court as defendants.

I should acknowledge that the court decision document is heavily redacted and does not state, anywhere, that Artisans de Genève is the defendant. However, there are a number of facts about the defendant stated in the decision which are identical to public records relating to Artisans de Genève (dates of business registration, business starts, domain name registration, and the like). Further, The Fashion Law concludes that Artisans de Genève is very very likely the defendant. I reached out to Artisans de Genève to see if they wanted to provide a statement for this post and their response did not contradict my strong belief that Artisans de Genève is the defendant in the lawsuit.

What supposedly differentiates Artisans de Genève from many other customizers is that they do not buy Rolexes, customize them, and sell them. Rather, Artisans de Genève alleges that people who already own a Rolex bring it to Artisans de Genève for customization. While this may seem to be a distinction without a difference, it may actually mean that Artisans de Genève is not violating Rolex's intellectual property rights. At issue is the idea of "exhaustion of rights in trademark." I'm not a lawyer, but my understanding is that trademark protections are strongest at the point of initial sale. Once someone has bought an item, trademark protections may not be as strong (they may have nearly "exhausted") and an owner has more lattitude in how the item is used. Exhaustion more likely holds if a modified item is not re-sold and modifications are only done for personal use. This is supposedly the work that Artisans de Genève conducts on behalf of its clients.

Except, Rolex claims they bought a modified Daytona from Artisans de Genève. Rolex has used secret buyers to investigate other watch dealers and they appear to have used the same tactic with Artisans de Genève. To quote the translation of the court decision, Rolex's secret buyer "acquired a modified model of a ROLEX Daytona watch for an amount of 32 '580 fr., this price including the supply of the original watch as well as the realization of the personalization." If this is true, then it is far less likely that Rolex's trademark is exhausted during Artisans de Genève's work on customizing watches since the customization was not done for private purposes. Rather, its appears Artisans de Genève bought a watch, customized it and then brought it to market.

In short, Artisans de Genève offered many defenses of its business practice. One seems to be that interactions with Artisans de Genève's founder (or founders) almost 20 years ago may provide some evidence that Rolex was OK with customization. A lower court did not seem to buy this defense, thought, or many of the other defenses offered by Artisans de Genève. The lower court ruled almost entirely in Rolex's favor.

The Swiss Federal Court agreed, in part, with the lower court. But it also returned the case to the lower court because some of the reasoning in the lower court decision was not as solid. It remains to be seen if Artisans de Genève will be able to successfully defend its business practice and continue to deliver attractive customized Rolex watches. There are indications, though that Artisans de Genève is planning a pivot for the future. It seems one Artisans de Genève founder filed a new trademark in September of 2022, roughly two years after Rolex filed its lawsuit. The trademark reads REBORN.

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