Hamilton Int'l Ltd. v. Vortic LLC

• Decision Date: 30 September 2019
• Docket Number: 17-CV-5575 (AJN)(OTW)
• Citation: 414 F.Supp.3d 612
• Parties: HAMILTON INTERNATIONAL LTD., Plaintiff, v. VORTIC LLC, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

414 F.Supp.3d 612

HAMILTON INTERNATIONAL LTD., Plaintiff,

v.VORTIC LLC, et al., Defendants.

17-CV-5575 (AJN)(OTW)

United States District Court, S.D. New York.

Signed September 30, 2019

Michael Aschen, Anthony A. Coppola, Anthony James DiFilippi, Jeffrey A. Schwab, Abelman Frayne & Schwab, New York, NY, for Plaintiff.

Robert David Lantz, Castle Lantz Maricle Murray, LLC, Denver, CO, Benjamin Natter, Seth Natter, Natter & Natter, New York, NY, for Defendants.

OPINION & ORDER

ALISON J. NATHAN, District Judge:

This litigation concerns allegations that a watch sold by Defendant Vortic LLC ("Vortic"), as well as advertisements for that watch, infringed on Plaintiff Hamilton International Limited's ("Hamilton") trademark. Before the Court is Plaintiff's motion for summary judgment on its infringement, counterfeiting, dilution, and unfair competition claims. Also before the Court is Defendants' motion to strike, Defendants' motion to transfer, and Plaintiff's sealing motion.

For the reasons stated below, all motions are denied.

I. BACKGROUND

Defendant Vortic LLC ("Vortic") is a watchmaker that specializes in restoring antique pocket watches and converting them into wristwatches. Affidavit of Robert Custer ("Custer Aff.") ¶ 8-9, Dkt. No. 101. One of Vortic's watches is called "The Lancaster." It is made with a restored, "Railroad-Era" movement (i.e. internal mechanism), face, and hands from pocket watches produced by the Hamilton Watch Company. See Defendant's Counter Statement Pursuant to Rule 56.1 ("Def. Counter 56.1") ¶ 11, Dkt. No. 102; Declaration of Michael Aschen ("Aschen Dec."), Exh. 2, Dkt. No. 84-2. The other parts of the wristwatch are produced by Vortic and the ultimate product is also assembled by Vortic. Id. "Hamilton" is visible on both the front and back of the watch. Id. In order to produce a Lancaster, Vortic modifies the movement mechanism and must, at least some of the time, use parts from multiple antique Hamilton pocket watches. Aschen Dec., Exh. 3 at 75:7-76:15, 82:3-82:5, Dkt. No. 84-3. Hamilton, which is still in existence, became aware of The Lancaster in July of 2015 and allegedly sent Vortic a cease and desist letter. See Def. Counter 56.1 ¶ 34. On July 21, 2017, Hamilton launched this action against Vortic and the company's founder, Robert Custer. Dkt. No. 1.

II. MOTION FOR SUMMARY JUDGMENT

Summary judgment may not be granted unless all of the submissions taken together "show[ ] that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A fact is "material" if it "might affect the outcome of the suit under the governing law," and is genuinely in dispute if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Roe v. City of Waterbury , 542 F.3d 31, 35 (2d Cir. 2008) (quoting Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). "[I]n making that determination, the court is to draw all factual inferences in favor of the party against whom summary judgment is sought, viewing the factual assertions in materials such as affidavits, exhibits, and depositions in the light most favorable to the party opposing the motion." Rodriguez v. City of New York , 72 F.3d 1051, 1061 (2d Cir. 1995). However, "[w]hen opposing parties tell two different stories, one of which is blatantly contradicted by the record, so that no reasonable jury could believe it, a court should not adopt that version of the facts for purposes of ruling on a motion for summary judgment." Scott v. Harris , 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007).

In seeking summary judgment, the initial "burden is upon the moving party to demonstrate that no genuine issue respecting any material fact exists." Gallo v. Prudential Residential Servs. , 22 F.3d 1219, 1223 (2d Cir. 1994). Where the non-moving party would bear the burden of proof at trial, "the burden on the moving party may be discharged by ‘showing’—that is, pointing out to the district court—that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett , 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the movant "demonstrates ‘the absence of a genuine issue of material fact,’ the opposing party must come forward with specific evidence demonstrating the existence of a genuine dispute of material fact" to survive summary judgment. Brown v. Eli Lilly & Co. , 654 F.3d 347, 358 (2d Cir. 2011) (citation omitted) (quoting Celotex Corp. , 477 U.S. at 323, 106 S.Ct. 2548 ).

A. Trademark Infringement

A "plaintiff in a trademark infringement action must show that defendant (1) without consent, (2) used in commerce, (3) a reproduction, copy or colorable imitation of plaintiff's registered mark, as part of the sale or distribution of goods or services, and (4) that such a use is likely to cause confusion." Gruner + Jahr USA Publ. v. Meredith Corp. , 991 F.2d 1072, 1075 (2d Cir. 1993) (citing 15 U.S.C. § 1114(1)(a) ). The only element that can reasonably be subject to dispute in this case is whether there is a likelihood of confusion.

The Second Circuit applies the landmark, multifactor test from Polaroid Corp. v. Polarad Electronics Corp. when determining the likelihood of confusion in trademark cases. See 287 F.2d 492 (2d Cir. 1961). This analysis looks to "the strength of his mark, the degree of similarity between the two marks, the proximity of the products, the likelihood that the prior owner will bridge the gap, actual confusion, and the reciprocal of defendant's good faith in adopting its own mark, the quality of defendant's product, and the sophistication of the buyers" as relevant variables. Id. at 495. The touchstone when considering the Polaroid factors is the existence of "a probability of [consumer] confusion, not a mere possibility." Streetwise Maps v. VanDam, Inc. , 159 F.3d 739, 743 (2d Cir. 1998). In other words, "whether numerous ordinary prudent purchasers are likely to be misled or confused as to the source of the product in question because of the entrance in the marketplace of defendant's mark." Playtex Prods. v. Georgia-Pacific Corp. , 390 F.3d 158, 161 (2d Cir. 2004) (quotation omitted).

However, the Polaroid factors are not "mechanical" nor are they exhaustive. Guthrie Healthcare Sys. v. ContextMedia, Inc. , 826 F.3d 27, 37 (2d Cir. 2016) (quoting Nabisco, Inc. v. Warner-Lambert Co. , 220 F.3d 43, 46 (2d Cir. 2000) ). As the Second Circuit has cautioned repeatedly, "depending on the complexity of the issues, ‘the court may have to take still other variables into account.’ " Savin Corp. v. Savin Group , 391 F.3d 439, 456 (2d Cir. 2004) (quoting Polaroid , 287 F.2d at 495 ). 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. See Champion Spark Plug Co. v. Sanders , 331 U.S. 125, 67 S.Ct. 1136, 91 L.Ed. 1386 (1947) ; Prestonettes, Inc. v. Coty , 264 U.S. 359, 44 S.Ct. 350, 68 L.Ed. 731 (1924) ; see also Nora Bevs., Inc. v. Perrier Grp. of Am., Inc. , 269 F.3d 114, 119 (2d Cir. 2001) ("Although no one factor is necessarily dispositive, any one factor may prove to be so.").

In Champion , the defendant sold repaired and reconditioned used spark plugs that were initially manufactured by the plaintiff. See 331 U.S. at 126, 67 S.Ct. 1136. The Supreme Court held that the defendant could continue to display the plaintiff's trademark on his sparkplugs, so long as the sparkplugs also had "Repaired" or "Used" conspicuously stamped on them and their packaging indicated that the defendant had done the restoration. Id. at 127, 130, 67 S.Ct. 1136. The Court explained that in such circumstances, "[f]ull disclosure" was "all the protection to which [the plaintiff] was entitled." Id. at 130, 67 S.Ct. 1136. Since the sparkplugs were second-hand goods and consumers would naturally expect a used or repaired good to be inferior, conspicuously labeling the goods as used or repaired constituted full disclosure. Id. It was otherwise permissible for the goods to retain the Champion trademark even if it means that the defendant benefits from plaintiff's goodwill or "gets some advantage from" plaintiff's mark. Id. The Court did caution that it would be possible to imagine a case "where the reconditioning or repair would be so extensive or so basic that it would be a misnomer to call the article by its original name, even if the words ‘used’ or ‘repair’ were added." Id. at 129, 67 S.Ct. 1136. In those circumstances, more disclosure would be required in order to justify continued use of the plaintiff's mark. The sparkplugs in Champion , though, were not so modified.

Courts in this Circuit have likewise found the adequacy of disclosure, or lack thereof, to be dispositive when determining the likelihood of confusion caused by a modified genuine product. See, e.g. , H.L. Hayden Co. v. Siemens Medical Systems, Inc. , 879 F.2d 1005, 1022-24 (2d Cir. 1989) ; Cartier v. Aaron Faber, Inc. , 396 F. Supp. 2d 356, 359 (S.D.N.Y. 2005) ; Bumble Bee Seafoods, L.L.C. v. UFS Indus., Inc. , No. 04-cv-2105, 2004 WL 1637017, at *2-*5, 2004 U.S. Dist. LEXIS 13897 at *6-*15 (S.D.N.Y. July 20, 2004) ; Eastman Kodak Co. v. Photaz Imports , 853 F. Supp. 667, 674 (W.D.N.Y. 1993), aff'd mem. , 28 F.3d 102 (2d Cir. 1994). These decisions look to Champion as a substitute or crucial supplemental factor to a traditional Polaroid likelihood of confusion analysis. "Full disclosure" thus matters if it prevents "numerous ordinary prudent purchasers" from being "misled or confused as to the source of the product." Champion , 331 U.S. at 130, 67 S.Ct. 1136 ; Playtex Prods. , 390 F.3d at 161.

In determining the likelihood of confusion, the Court will therefore give strong weight to the "full disclosure" factor, while also considering the traditional Polaroid variables it finds to be applicable. S...