Since Rolex filed a lawsuit against laCalifornienne for the upstart brand’s colorful, custom Rolex offerings back in November, we’ve been waiting for a response from the Los Angeles-based company. Launched three years ago, laCalifornienne has made a name for itself with its brightly-colored Rolex and Cartier watches, which are sold by high-end retailers like Farfetch, Goop, and a number of other boutiques around the world. It seems the success finally caught the eye of Rolex, who brought a suit alleging these watches are counterfeit and infringe on Rolex’s trademarks.

On January 15, laCalifornienne submitted an answer to Rolex’s complaint filed in the Central District of California. As expected, laCalifornienne has denied the claims brought by Rolex. These denials, include, among others claims, that:

• laCalifornienne operated to “advertise, promote, and offer for sale merchandise bearing counterfeit copies” of Rolex’s registered trademarks;

• laCalifornienne’s actions included “replacing the original watch crystals; refashioning bezels; and altering the dials by ‘stripping the paint and finish from the original watch face dials and repainting and refinishing them in vibrant colors’”;

• laCalifornienne’s watches no longer attained the aesthetic, performance, or function to the same quality standards of original Rolex watches; and

• laCalifornienne’s use of Rolex’s trademarks creates the impression that its products and services emanate from Rolex or are authorized or approved by Rolex, causing confusion among consumers and irreperable harm to Rolex.

Stating these facts in its original complaint, Rolex brought three causes of action: counterfeiting, trademark infringement, and false designation of origin and unfair competition, all in connection with the advertising, promotion, and service and sale of watches that are “not genuine products of Rolex.”

What is a ‘counterfeit’ Rolex?

As we mentioned in our initial coverage of this case, Rolex makes every attempt to articulate its unusually broad definition of what qualifies as a “counterfeit” Rolex. For example, when Rolex takes a watch in for servicing from a customer, it’s notorious for dressing it down and giving it the full treatment to ensure it’s up to Rolex snuff. This might mean replacing a dial, bezel, hands, or movement parts as needed to get it running to Rolex specs. To every vintage enthusiast’s horror, it also means polishing the case to get it that factory shine.

Rolex also uses this internal servicing and warranty policy to its own (legal) advantage. It’s keen to point out that if any third party fiddles with a Rolex, that voids the warranty (and Rolex will therefore refuse any servicing), because Rolex can no longer ensure the watch will live up to the brand’s superlative standards. Third parties getting under the hood of a Rolex compromises the very quality the brand has come to stand for.

Of course, much of this is Rolex fluffing its own reputation. If anyone says they’re buying a Rolex for its accuracy as a timekeeping device in 2019, they’re likely lying. This is even more so the case with a customized and colorful Rolex from laCalifornienne. No one is buying a watch with the “pink and blue magic hour skies of California” and then adjusting it in five places to make sure it meets COSC specifications. They’re fashion pieces. In its complaint, Rolex touted its own branding in an attempt to make a point about counterfeiting and trademark infringement. And, it might just work.

A introduction to nominative fair use

In addition to denying the claims brought against it, laCalifornienne raised six affirmative defenses (essentially, saying “yes, maybe we did this, but it’s OK because…”). While some of these affirmative defenses are more legalese than substantive (for instance, alleging that Rolex failed to mitigate any damages that it allegedly suffered and reserving the right to raise additional defenses), there is one potentially interesting defense they’ve raised, called “nominative fair use”.

The nominative fair use doctrine provides an affirmative defense to trademark infringement, allowing someone to use the trademark of another as a reference to describe the other (trademarked) product and compare it to their own. Lucky for laCalifornienne, California’s Ninth Circuit — whose legal interpretations control in this case and would ultimately hear any appeal — has been “enamored of nominative fair use”. The Ninth Circuit originally articulated the nominative fair use doctrine in New Kids on the Block v. News America Publishing, 971 F.2d 302 (9th Cir. 1992). In that case, two newspapers were running a poll asking readers to vote on their favorite “New Kid” from the eponymous band. The Ninth Circuit found the use permissible, crafting the novel “nominative fair use” doctrine that applies in instances where the defendant is using the plaintiff’s trademark merely to refer to the plaintiff’s product. In these limited instances, the court stated that the traditional likelihood of confusion test for trademark infringement makes way for a special three-pronged test. As originally formulated, the nominative fair use defense stated that one party may use another party’s trademark if three requirements are met:

• the product in question cannot be readily identified without use of the trademark;

• only so much of the mark is used as is reasonably necessary to identify the product; and

• the defendant must do nothing that would suggest sponsorship or endorsement by the trademark holder

However, the Ninth Circuit has since overruled this position, now saying that a nominative fair use defense “need only show that it used the mark to refer to the trademarked good,” at which point the “burden then reverts to the plaintiff to show a likelihood of confusion.” Toyota Motor Sales, U.S.A., Inc. v. Tabari, 610 F.3d 1171 (9th Cir. 2010). In other words, in this case, the nominative fair use defense works to shift the burden from laCalifornienne back to Rolex to disprove laCalifornienne’s defense.

The nominative fair use doctrine has long been a legal hot potato, with different jurisdictions devising different tests and scenarios. As such, a circuit split has developed among the various U.S. Appeals Courts, with some adopting an approach similar to California’s Ninth Circuit and some taking other approaches. As recently as 2017, the Supreme Court declined to hear a case regarding nominative fair use, which would have been the court’s first on the issue.

What’s next?

Essentially, by invoking the nominative fair use defense, laCalifornienne is trying to say that it was allowed to use Rolex’s trademarks because it’s merely using them to reference Rolex’s products. Rolex’s retort will be that laCalifornienne was doing much more than that, attempting to trade on and profit from Rolex’s trademarks.

Meanwhile, it’s not clear laCalifornienne is totally confident in its own defense. Since Rolex filed its suit back in November, you’d be hard pressed to find laCalifornienne publicizing its Rolexes: they haven’t posted a Rolex photo on their Instagram since, limiting themselves to colorful Cartier Tanks instead.

We’ll have more as this fascinating case develops.

The case is: Rolex Watch U.S.A., Inc. v. Reference Watch LLC d/b/a laCalifornienne; Courtney Ormond; and Leszek Garwacki, 2:19-cv-09796 (C.D. Cal).