Is selling a reconditioned product trademark infringement? HAMILTON v. VORTIC

Is selling a reconditioned product trademark infringement? HAMILTON v. VORTIC

Trademark law grants the user of a trademark the right to prevent others from using a trademark in a way that is likely to lead to consumer confusion.  The purpose of trademark law is to protect consumers from products of an inferior quality.  Trademarks associated with superior quality are more likely to be counterfeited or imitated because consumers gravitate towards products which bear a such a trademark.  If someone other than the trademark owner brands their products, without authorization, in a way which is likely to lead to trademark infringement that can constitute trademark infringement.  The owner of the trademark can combat trademark infringement by filing a lawsuit which requests an injunction against the infringing activity and request monetary damages for trademark infringement which has occurred.

The rights granted to a trademark owner do have some limitations.  When a trademark owner sells its product, it is generally accepted that the purchaser can resell that product with the trademark intact and not be liable for trademark infringement.  This is known as the first sale doctrine.  The rationale behind the first sale doctrine is that trademark law is intended to prevent consumer confusion, if a genuine product is being resold, consumer confusion does not exist.

The first sale doctrine has its limitations as well.  No product lasts forever, eventually parts of a product need to be replaced or the product stops working completely.  There is a healthy industry related to the reconditioning and resale of worn out products. Parts for older products can be hard to find or more expensive than the resale value of the reconditioned product so frequently modern parts are used to recondition a worn out product.  The question then becomes, how much of a product can be replaced before it is no longer the original product?  If the only part of the product left is the part which bears the trademark, does the first sale doctrine apply anymore?

HAMILTON INTERNATIONAL LTD. v. VORTIC LLC et al, 17-cv-05575 (S.D.NY 2017) is a case which involves the reconditioning and resale of an old trademarked product.  Defendant Vortic LLC (“Vortic”) is a watchmaker that specializes in restoring antique pocket watches and converting them into wristwatches.  Some of these antuiqe pocket watches were sold in the late 1800s.  One of the defendant’s watches is called “The Lancaster.” That watch is made with a restored, “Railroad-Era” movement (i.e. internal mechanism), face, and hands from pocket watches produced by the Hamilton Watch Company.  Those parts bear the Hamilton trademark which is registered with the United States Patent and Trademark Office.  The other parts of the wristwatch are produced by the defendant and the ultimate product is assembled by the defendant.  Advertisements for the defendant’s products prominently display the Hamilton trademark and note that the watches are reconditioned pocket watches.

The plaintiff learned of the defendant’s activity and filed a complaint for trademark infringement.  The plaintiff then moved for summary judgement.  The court reviewed all the plaintiff’s assertions and denied summary judgement because there is a material question of fact with respect to consumer confusion.  The court noted that the Polaroid factors, which are typically employed to determine consumer confusion, are not an exhaustive list of the factors a court may consider in a trademark infringement case.  In cases such as this one, involving modified genuine products, the Supreme Court has found whether the defendant adequately disclosed the origins of the product
to be dispositive.  Full disclosure of the fact that a product is reconditioned can prevent consumer confusion.  Because there is a question whether the defendant made an adequate disclosure and prevented consumer confusion the court felt that the case should continue to trial.

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