Cartier, Inc. v. Four Star Jewelry Creations, Inc.
| Citation | 348 F.Supp.2d 217 |
| Decision Date | 10 December 2004 |
| Docket Number | No. 01 CIV.11295.,01 CIV.11295. |
| Parties | CARTIER, INC., et. al., Plaintiffs, v. FOUR STAR JEWELRY CREATIONS, INC., et. al., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Milton Springut, David A. Kalow, Tal S. Benschar, Kalow & Springut, LLP, New York, NY, for Plaintiffs.
Robert D. Katz, Robert T. Maldonado, Arian A. Baryalai, Cooper & Dunham LLP, New York, NY, for Defendants.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
On December 10, 2001, plaintiffs Cartier and Cartier International, B.V. initiated litigation against defendants Four Star Jewelry Creations, Inc., Crown Jewelry Creations, Inc., and Globe Jewelry, Inc. alleging trade dress infringement under Section 43(a) of the Lanham Act, infringement of a registered mark under Section 32 of the Lanham Act, trademark infringement under Section 349 of the New York General Business Law, patent infringement, false designation of origin, and trademark dilution. These claims relate to Cartier's Tank Francaise, Tank Americaine, and Panthere lines of watches. On April 30, 2002 defendants filed their answer and counterclaims, denying plaintiffs' allegations and seeking a declaratory relief ruling that plaintiffs' alleged trade dress and design patents are invalid, unenforceable and were not infringed.1
On February 28, 2003, plaintiffs moved by Order to Show Cause to amend their complaint and for a preliminary injunction ordering, inter alia, cessation of further sales of a watch depicted in defendants' 2002 catalog, which plaintiffs contended infringed upon their alleged trade dress in their Pasha de Cartier watch and a registered trade mark for the associated Grille design. Defendants did not oppose Cartier's motion for a preliminary injunction as to the Pasha watches. The request was granted on May 8, 2003 and plaintiffs filed their first amended complaint five days later.
After extensive discovery, this case proceeded to bench trial beginning May 10, 2004, and closing May 25, 2004. Both parties submitted their proposed findings of fact and conclusions of law on July 26, 2004.
The following are the court's findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52(a).
Plaintiff Cartier is a division of Richemont North America ("Richemont") and the U.S. selling arm of that company. Tr. at 516.2 Plaintiff Cartier International B.V. is a Dutch company holding all of Cartier's international intellectual property rights and licenses thereto. Id. Plaintiffs are referenced hereinafter collectively as "Cartier." They sell luxury watches in exclusive boutiques, high-end department stores, and authorized retailers throughout the United States. Cartier's watches relevant to this litigation range from $2,000 to $150,000.
Defendants Four Star Jewelry Creations, Inc. ("Four Star"), Crown Jewelry Inc. ("Crown") and Globe Jewelry, Inc. ("Globe") are New York corporations owned and operated by Abraham Malek and Mike Genuth. Tr. at 617, 624, 626. Although there are three corporate defendants, they are, in effect, the same company; Crown and Four Star send out virtually identical catalogs retailing Globe's merchandise that they have purchased exclusively from Globe, Tr. at 740-41, 524-25, and all three defendants operate out of the same office on 47th Street in Manhattan. Defendants manufacture watches, bracelets, and watch attachments that they sell at wholesale prices. Tr. at 624-26. Their typical customers are "mom and pop retail stores," most of which are jewelry stores and some of which are wholesalers. Tr. at 625-26, 735-36. The average price of defendants' watches is $1,500 at wholesale. Tr. at 892.
Ruediger Albers provided expert testimony on behalf of plaintiffs with respect to the luxury watch market. Albers began his employment with the Wempe Corporation, a German jeweler and watch seller, in 1987; he is now the President of U.S. operations. He has a Masters in watchmaking and is involved in all aspects of the watch-making business, including customer service, sales, and advertising. Tr. at 12-19.
The court adopts Albers' testimony that a "luxury" watch generally has a price tag beginning at $600 or $700. Tr. at 25-26. Although one can purchase a watch that performs its time-telling function for approximately $50 or less, luxury watch consumers purchase watches that reflect their lifestyle and express their personality, social and financial status and taste. Tr. at 28-29. Most luxury watches are also "status" watches, meaning they have recognizable distinguished designs that consumers associate with the particular brand; the brand is a further indicator of craftsmanship and quality. Tr. at 31. As a result, the purchaser and wearer of a luxury watch aligns him or herself with the elite status of the watch.
The key ingredients to retailing and manufacturing a successful luxury watch are brand name and watch design. Tr. at 156-57. Part and parcel of this endeavor is to maintain limited distribution networks throughout the U.S. such that the watches are only sold to select retailers. Tr. at 61-62. If a brand becomes too commonplace or overexposed, it cheapens the image and lessens customers' incentive to purchase such an expensive timepiece. Tr. at 62.
As a preliminary matter, adopting Cartier's terminology, a watch "family" consists of several watches with the same basic design but often with variations in size, strap, bracelet, dials, metals used, or diamond settings. Even with these variations, the court's review of the various families reveals that there is a common appearance to all watches within a family. Tr. at 40; PX 73 at 24-31. Each specific variation in the family is known as a "model" and is identified by a specific reference number. Tr. at 24-31. Occasionally, Cartier will market an "animation"; this is a change in the product offered for a period of time to enhance the product's image and add variety to the family. Tr. at 522. For example, Cartier will offer a family of watches that previously had a white dial around the face with a rose-colored dial framing the face, or a family that previously did not have diamonds with a diamond setting. Id.
Cartier charges defendants with infringing the designs of four families of Cartier watches: Panthere, Pasha, Tank Americaine, and Tank Francaise. For each of these families, Cartier's statement of the elements and combinations thereof that constitute its trade dress are in the Amended Complaint, paragraphs 18, 19, 22, 23, 27, 28, 30, 31, and 34; Tr. at 397.
The Panthere trade dress consists of the combination of the following design features: a square face with rounded corners; a square bezel or metal frame with rounded corners and screw tips at 1, 2, 4, 7, 8, 10 and 11 o'clock; an outer frame composed of four segments, with the two segments of the outer frame which are horizontal to the frame being rectangular, and the other two pieces of the outer frame which are vertical relative to the case extending horizontally around the corner of the bezel and then vertically away from the case at each corner (both the inner and outer frames may or may not be decorated with jewels); an octagonal winding crown with "cabochon" (i.e., rounded) stone; art deco Roman numerals inclining to conform to the angle-direction of the watch hands at such time as the hands are juxtaposed to that numeral; a "chemin-de-fer" (i.e., railroad) chapter ring or minute guide between the center of the dial and numerals, with every fifth minute indication being thicker and bolder; and a metal bracelet (a watch band made of metal) consisting of five rows of interlocking rectangular links (with the rectangles being approximately three-and-a-half times as long as wide, with the wider side vertical to the watch face), with the links staggered such that the first, third and fifth rows are staggered one-half a rectangle length to the second and fourth rows.
The Panthere is offered in gold, steel, and pavee (i.e., paved with diamonds). Tr. at 533. Currently, Cartier does not include a Panthere watch in its line with a leather strap, although ten years ago Cartier offered a gold Panthere watch with a leather band. Tr. at 108. Such Panthere watches may still be sold by Cartier dealers and boutiques who continue to have them in stock, at auctions, trunk shows, and charity sales. Tr. at 555-56.
The trade dress for the Pasha watch family consists of the combination of the following design features: a round and thick watch case (i.e., deep) with a thick outer metal bezel surrounding the watch face that slopes downward from the inside of the case to the outside; a removable, screw down cap that covers a central crown, such that in looking at the watch from the front, there are three metals rings of increasing thickness with engraved striations, a fourth thick metal ring, and a cabochon end, with a sapphire or colored stone or rounded stainless-steel dome, all of which is attached to the watch with a chain link; single horned extensions at the top and bottom of the watch case connecting it to the strap, such that the strap fits between the extensions with only one single extension on each side; a lug that extends through the strap/bracelet and the single horned extension with pyramid-shaped caps; Arabic numerals in curly font. On models with a metal bracelet, the bracelet consist of H-shaped links alternating with rectangular shaped links, the width of the H-shaped link being half that of the rectangular link. Some models within the family contain two smaller crowns positioned above and below the central crown. They are capped with non-removable caps, similarly designed to the central cap, and end in matching...
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