Hamilton International Ltd. v. Vortic LLC
13 F.4th 264 (2021)
Rule of Law:
In trademark infringement suits involving refurbished genuine goods, the plaintiff bears the burden of proving a likelihood of consumer confusion, and courts may consider both the 'full disclosure' standard from Champion Spark Plug Co. v. Sanders and the Polaroid factors without a specific order of analysis.
Facts:
- Hamilton International Ltd. (or its predecessor) has owned the 'Hamilton' trademark since 1909 and manufactured pocket watches in Lancaster, Pennsylvania, prior to 1969.
- Robert Thomas Custer founded Vortic LLC in 2013 with the stated goal of 'preserving American history' by making '100% Made in America' watches.
- Vortic salvaged and restored parts from antique American-made pocket watches, including those originally manufactured by the Hamilton Watch Company between 1894 and 1950, which bore Hamilton’s trademark.
- Vortic encased these restored antique pocket watch movements and front dials into new wristwatches, creating a line called 'The Lancaster,' named after Hamilton's original manufacturing city.
- The Lancaster wristwatches prominently displayed Hamilton's trademark on the front dial and engraved words 'Hamilton Watch Lancaster, PA' on the movement visible through a glass back, while also engraving 'Vortic Watch Co.' and 'The Lancaster' on the metal ring of the back case.
- Vortic produced and distributed fifty-eight of these watches from 2014 to 2018.
- Each buyer of a Vortic watch received it in a wooden box with Vortic's logo, a booklet describing Vortic's manufacturing, assembly, and restoration process, and a 'Vortic Watch Company Authentication Card' identifying Vortic's and the movement's serial numbers.
- Vortic's advertisements for The Lancaster consistently emphasized the antique and authentic nature of the watch's parts and Vortic’s restoration work.
Procedural Posture:
- Hamilton International Ltd. sent Vortic LLC a cease-and-desist letter on July 10, 2015.
- Hamilton filed suit against Vortic LLC and Robert Thomas Custer in the United States District Court for the Southern District of New York on July 21, 2017, alleging trademark infringement, counterfeiting, unfair competition, and dilution.
- On February 15, 2019, Hamilton moved for summary judgment on all its claims.
- The District Court denied Hamilton’s motion for summary judgment on September 30, 2019, finding genuine disputes of material facts regarding both disclosure under Champion and the application of the Polaroid factors.
- The District Court denied Hamilton’s motion for reconsideration of that decision on January 10, 2020.
- The District Court held a one-day bench trial on February 19, 2020.
- On September 11, 2020, the District Court issued its Findings of Fact and Conclusions of Law, entering judgment in favor of Vortic LLC and Robert Thomas Custer on all of Hamilton’s claims.
- Hamilton International Ltd. (Plaintiff-Appellant) appealed the District Court’s judgment to the United States Court of Appeals for the Second Circuit, with Vortic LLC and Robert Thomas Custer as Defendants-Appellees.
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Issue:
Does a plaintiff in a trademark infringement action involving refurbished genuine goods bear the burden of proving consumer confusion, and is a district court required to analyze the Polaroid factors before applying the 'full disclosure' standard from Champion Spark Plug Co. v. Sanders?
Opinions:
Majority - Cronan, District Judge
No, a district court is not required to follow a specific order of analysis between Polaroid factors and Champion disclosures in trademark infringement cases involving refurbished goods, and the plaintiff (Hamilton) bears the burden of proving consumer confusion. The Second Circuit affirmed the District Court's decision, clarifying that the plaintiff in a trademark infringement suit bears the burden of proving a likelihood of consumer confusion, even when the Champion Spark Plug Co. v. Sanders doctrine is involved. The court also confirmed that no particular order of analysis is required between Champion's full disclosure standard and the Polaroid factors, provided the district court considers all appropriate factors in light of the circumstances. The court found no clear error in the District Court's factual findings that Vortic's extensive disclosures, both in promotional materials and on the watch itself, adequately conveyed that 'The Lancaster' watches contained refurbished antique Hamilton parts and were not affiliated with modern Hamilton. The unique physical characteristics of the watch (larger size, 12 o'clock knob, antique patina, and prominent Vortic branding) further supported the finding that ordinary prudent consumers would perceive it as a restored antique. The court distinguished Champion's 'full disclosure' (relevant to the initial likelihood of confusion analysis) from 'disclaimers' proposed at the remedy stage (where the burden shifts to the defendant after infringement is found). The court upheld the District Court's finding of no actual confusion, Vortic's good faith, and the high sophistication of buyers, all of which weighed against a likelihood of confusion under Polaroid. Furthermore, the court found no error in the District Court's weighing of other Polaroid factors, noting that similarity of marks and product proximity did not support confusion given the context of the disclosures and the distinct market for antique watches.
Analysis:
This case solidifies the application of the Champion doctrine in the Second Circuit, confirming that the burden of proving a likelihood of consumer confusion remains with the plaintiff, even when refurbished genuine goods are at issue. It provides crucial clarity that courts are not bound by a rigid order when considering Champion disclosures alongside Polaroid factors, emphasizing a holistic approach to consumer confusion. This decision potentially broadens the permissible scope for sellers of refurbished or customized genuine goods, as long as 'full disclosure' of the product's nature and lack of affiliation is clearly communicated, and underscores the importance of concrete evidence of actual confusion for plaintiffs.
