Hamilton International Ltd. v. Vortic LLC ( 2021 )

20-3369-cv
Hamilton International Ltd. v. Vortic LLC
United States Court of Appeals
for the Second Circuit
August Term, 2020
(Argued: June 3, 2021 Decided: September 14, 2021)
Docket No. 20-3369
_____________________________________
HAMILTON INTERNATIONAL LTD.,
Plaintiff-Appellant,
v.
VORTIC LLC, D/B/A VORTIC WATCH CO., VORTIC TECHNOLOGY LLC,
AND ROBERT THOMAS CUSTER,
Defendants-Appellees.
_____________________________________
Before:
LOHIER AND NARDINI, CIRCUIT JUDGES, AND CRONAN, DISTRICT JUDGE *
Hamilton International Ltd. sued Vortic LLC and its founder, Robert
Thomas Custer, for selling wristwatches that featured restored antique pocket
watch parts with Hamilton’s trademark. Following a bench trial, the District Court
entered judgment on all claims in favor of Vortic and Custer after finding that
Vortic’s use of the mark was not likely to cause consumer confusion. Hamilton
appeals that decision, primarily arguing that the District Court erroneously
applied Champion Spark Plug Co. v. Sanders, 331 U.S. 125 (1947), a case involving
trademark infringement in the context of used goods, when assessing the
sufficiency of Vortic’s disclosures. Arguing that a defendant in a trademark
*Judge John P. Cronan, of the United States District Court for the Southern
District of New York, sitting by designation.
infringement action bears the burden of demonstrating the adequacy of its
disclosures, and that its burden varies with the degree of consumer confusion,
Hamilton maintains that the District Court should have first analyzed the factors
identified in Polaroid Corp. v. Polarad Electronics Corp., 287 F.2d 492 (2d Cir. 1961),
before applying Champion. Hamilton also challenges the District Court’s factual
findings in evaluating the Polaroid factors.
We reject each of Hamilton’s arguments. In doing so, we confirm that a
plaintiff in a trademark infringement suit bears the burden of proving that a
defendant’s use of its mark is likely to mislead consumers, even when Champion is
implicated, and that no particular order of analysis is required, provided that the
district court considers all appropriate factors in light of the circumstances
presented. The District Court’s judgment is AFFIRMED.
MICHAEL ASCHEN, Abelman Frayne &
Schwab, New York, New York (Anthony
DiFilippi, on the brief), for Plaintiff-Appellant
ROBERT D. LANTZ, Castle Lantz Maricle,
LLC, Denver, Colorado; Jin-Ho King (on the
brief), Milligan Rona Duran & King LLC,
Boston, Massachusetts, for Defendants-
Appellees
CRONAN, District Judge:
Plaintiff-Appellant Hamilton International Ltd. (“Hamilton”), a large and
well-known manufacturer of watches, brought suit against Defendants-Appellees
Vortic LLC, doing business as Vortic Watch Co. (“Vortic”), and its founder Robert
Thomas Custer, alleging trademark infringement, counterfeiting, unfair
2
competition, and dilution. 1 Vortic, also a watchmaker, sold “The Lancaster,” a
watch that featured refurbished antique pocket watch parts retaining Hamilton’s
original trademark. Hamilton now appeals from a final judgment entered in favor
of Vortic and Custer in the United States District Court for the Southern District of
New York (Nathan, J.) following a one-day bench trial. See Hamilton Int’l Ltd. v.
Vortic, LLC, 486 F. Supp. 3d 657 (S.D.N.Y. 2020).
This case turns on the question of consumer confusion. The Supreme Court
in Champion Spark Plug Co. v. Sanders held that in the context of refurbished goods,
the likelihood of consumer confusion is determined by looking to the disclosures
a second-hand dealer provides to purchasers. 331 U.S. 125, 128–31 (1947). The
District Court, relying on Champion, first concluded that Vortic had fully disclosed
the watch’s restoration and lack of affiliation with Hamilton. The District Court
then considered the general factors that we have identified as informing the
likelihood of confusion in trademark infringement actions. See Polaroid Corp. v.
Polarad Elecs. Corp., 287 F.2d 492, 495 (2d Cir. 1961). Weighing both Vortic’s full
disclosure under Champion and the relevant Polaroid factors, the District Court
1 At trial, the District Court dismissed Vortic Technology LLC as a
defendant without objection.
3
found no likelihood that a significant number of ordinary prudent purchasers
would be misled by the use of Hamilton’s mark on The Lancaster.
On appeal, Hamilton challenges the District Court’s factual findings and
analysis. The District Court’s factual findings—which we review for clear error—
were supported by the trial record. The District Court correctly evaluated those
findings in light of the legal standards established in Champion and Polaroid to
conclude that Hamilton failed to prove a likelihood of consumer confusion. In
affirming the District Court, we confirm that a plaintiff in a trademark
infringement suit bears the burden of proving that a defendant’s use of the mark
is likely to mislead consumers, even when Champion is implicated, and that no
particular order of analysis is required provided that the court considers all
appropriate factors in light of the circumstances of the case. We therefore AFFIRM
the judgment of the District Court.
I. BACKGROUND
A. Relevant Facts
The following facts were established at the bench trial held on February 19,
2020.
4
Hamilton, or its predecessor, 2 has owned the “Hamilton” trademark since
1909. Prior to 1969, Hamilton manufactured pocket watches at its U.S. factory in
Lancaster, Pennsylvania. Custer founded Vortic in 2013 and, seeking to “preserve
American history,” endeavored to make a watch that would be “100% Made in
America.” App’x at 82, 369–70. Custer discovered, however, that at the time, no
active companies in the United States produced watch movements, i.e., “the gears
and springs in a system needed to tell time.” Id. at 370. As a result, Vortic salvaged
and restored parts from antique American-made pocket watches originally
manufactured in the late 1800s and early 1900s and then encased them in new
wristwatches. Those included antique parts from watches bearing Hamilton’s
trademark.
At issue is Vortic’s line of wristwatches called “The Lancaster.” Named
after the Pennsylvania city where Hamilton was originally based, The Lancaster
features restored antique pocket watch movements and front dials made by the
Hamilton Watch Company between 1894 and 1950. The Lancaster has a large
pocket watch-style knob located at the 12 o’clock position. The watch’s wrist strap
2 Before 1971, Hamilton’s predecessor, the Hamilton Watch Company,
manufactured watches in America. Hamilton is now owned by Swatch Group,
Ltd., a Swiss company.
5
and the case surrounding its movements and dial—as well as various internal
engineering parts such as the crowns, screws, and inserts—were manufactured by
Vortic or came from modern sources in the United States. Because Vortic used a
restored original front dial, Hamilton’s trademark is readily visible on the front of
the watch. The back of The Lancaster is encased in a glass cover, revealing the
watch’s movements, which feature the engraved words, “Hamilton Watch
Lancaster, PA.” The back case is surrounded by a metal ring with the words
“Vortic Watch Co.” and “The Lancaster” engraved on it, along with Vortic’s serial
number for the watch. Below is a picture of the front and back of The Lancaster:
6
App’x at 216–17.
Vortic produced and distributed fifty-eight of these watches from 2014 to
2018. Each buyer received the watch in a wooden box with a booklet that
displayed Vortic’s logo and described Vortic’s manufacturing, assembly, and
restoration process. The box also contained an original watchmaking certificate,
when available, as well as a “Vortic Watch Company Authentication Card.” That
card provided the watch’s Vortic serial number and movement serial number, and
was signed by the Vortic watchmaker who did the conversion. Vortic’s
advertisements for The Lancaster similarly emphasized the antique and authentic
nature of the watch’s parts.
B. Procedural Background
Hamilton caught wind of The Lancaster and sent Vortic a cease-and-desist
letter on July 10, 2015. Hamilton filed suit against Vortic two years later, on July
21, 2017. The Complaint alleged that Vortic, at Custer’s direction, sold The
Lancaster with Hamilton’s mark and without Hamilton’s consent or authorization,
causing confusion as to the watch’s origin and giving the false impression that the
watch was offered by, or affiliated with, Hamilton. Hamilton pleaded claims of
7
trademark infringement and counterfeiting in violation of the Lanham Act, 15
U.S.C. §§ 1114 and 1116; false designation of origin and unfair competition, also in
violation of the Lanham Act, 15 U.S.C. § 1125(a); common law trademark
infringement; and trademark infringement, dilution, unfair competition, and
injury to business under New York General Business Law section 360. Hamilton
sought injunctive and declaratory relief, as well as monetary damages.
On February 15, 2019, Hamilton moved for summary judgment on all its
claims. The District Court denied Hamilton’s motion, on September 30, 2019,
finding genuine disputes of material facts as to both disclosure under Champion
and the application of the Polaroid factors. Hamilton Int’l Ltd. v. Vortic LLC, 414 F.
Supp. 3d 612, 618–22 (S.D.N.Y. 2019). On January 10, 2020, the District Court
denied Hamilton’s motion for reconsideration of that decision. Hamilton Int’l Ltd.
v. Vortic LLC, No. 17 Civ. 5755 (AJN), 2020 WL 122908 (S.D.N.Y. Jan. 10, 2020).
C. The Bench Trial and the District Court Judgment
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 and Custer on all of Hamilton’s
claims. Hamilton Int’l Ltd. v. Vortic LLC, 486 F. Supp. 3d 657 (S.D.N.Y. 2020).
8
The District Court focused on the likelihood of consumer confusion,
applying the Supreme Court’s decision in Champion as well as the factors we
identified in Polaroid. The District Court explained that, under Champion, “[f]ull
disclosure” of the identity of the restorer and the used nature of the product
protects the seller of second-hand goods from liability for a claim of trademark
infringement. Id. at 662 (alteration in original). Accordingly, the District Court
gave “strong weight to the ‘full disclosure’ factor” under Champion, but “also
consider[ed] the traditional Polaroid variables it [found] to be applicable.” Id. at
663.
The District Court began by examining Vortic’s promotional materials and
its website, concluding that these “materials do not suggest any affiliation or
sponsorship between Vortic and Hamilton but rather convey accurately that the
restored Hamilton movements and parts are only ‘constituent[s] in the article now
offered as new and changed.’” Id. (alteration in original) (quoting Prestonettes, Inc.
v. Coty, 264 U.S. 359, 369 (1924)). The District Court then examined the watch itself.
The District Court pointed to particular characteristics of The Lancaster which
would lead reasonable consumers to view it “as restored antique pocket watch
movement, face, and hands that have been reincorporated into a new wristwatch.”
9
Id. at 663–64. The District Court noted that The Lancaster was bigger than a
regular wristwatch, had a large knob located at the 12 o’clock position rather than
the 3 o’clock position typical for wristwatches, and the “hands, face, and
movement ha[d] a patina, style, and look that convey[ed] that they [were] restored
antiques.” Id. at 664. The District Court also found that an ordinary prudent
purchaser viewing the watch in isolation would conclude “that the Hamilton mark
is only displayed because Hamilton created the original movement, face, and
hands that have subsequently been restored.” Id. The District Court “note[d] that
‘Vortic,’ ‘Lancaster,’ and the serial number are all prominently engraved on the
case while the Hamilton mark is only visible inside the glass case, on a movement
and face that appear obviously antique.” Id.
The District Court then turned to the Polaroid factors. While the District
Court discussed all of the factors, it noted that actual confusion, the defendant’s
good faith, and the sophistication of the buyers were the only “Polaroid factors that
[were] indisputably relevant in this case.” Id. at 666–67; see Hamilton Int’l Ltd., 414
F. Supp. 3d at 621 (on summary judgment, finding only these three factors to be
relevant). The District Court found no evidence of actual confusion, discounting
the only evidence that Hamilton offered at trial—one potential customer’s email
10
to a Hamilton brand manager inquiring about a vintage Hamilton watch—because
of concerns about the reliability of that email. See Hamilton Int’l Ltd., 486 F. Supp.
3d at 667. The District Court further found that Vortic and Custer demonstrated
good faith in producing The Lancaster, crediting Custer’s testimony and
“concluding that he did not intend to cause consumer confusion but rather sought
to ‘preserve American history’ by salvaging and restoring the hearts of antique
pocket watches.” Id. (citing Custer’s testimony). Lastly, the District Court noted
the highly sophisticated nature of the customer base. Id. at 668. For an expensive
watch like The Lancaster, the District Court reasoned, potential customers “would
be particularly attuned to the disclosure provided and would almost certainly seek
out easily accessible information about the watch before making this substantial
investment.” Id.
After weighing the full disclosure under Champion and the Polaroid factors,
the District Court found no likelihood of confusion. Id. The District Court
therefore entered judgment in favor of Vortic and Custer on Hamilton’s federal
trademark infringement claim, as well as on its other claims, each of which also
required some degree of consumer confusion. Id. at 668–69.
11
II. DISCUSSION
A. Standard of Review
“In reviewing the decision of a district court following a bench trial, we
review findings of fact for clear error and conclusions of law de novo.” O’Mara v.
Town of Wappinger, 485 F.3d 693, 697 (2d Cir. 2007) (Katzmann, J.). “Under the
clearly erroneous standard, ‘the reviewing court must give due regard to the trial
court’s opportunity to judge the witnesses’ credibility.’” Process Am., Inc. v.
Cynergy Holdings, LLC, 839 F.3d 125, 141 (2d Cir. 2016) (quoting Fed. R. Civ. P.
52(a)(6)). “‘We are not allowed to second-guess the court’s credibility
assessments,’ and ‘[w]here there are two permissible views of the evidence, the
factfinder’s choice between them cannot be clearly erroneous.’” Id. (alteration in
original) (quoting Diesel Props S.r.l. v. Greystone Bus. Credit II LLC, 631 F.3d 42, 52
(2d Cir. 2011)). On the issue of consumer confusion in federal trademark
infringement actions, a trial court’s findings as to each Polaroid factor are typically
reviewed for clear error, with the court’s weighing of those factors reviewed de
novo. See Starbucks Corp. v. Wolfe’s Borough Coffee, Inc., 588 F.3d 97, 105 (2d Cir.
2009).
12
B. Hamilton’s Trademark Infringement Claim: Likelihood of Confusion
The primary question on appeal is whether the District Court properly
found in favor of Vortic and Custer on Hamilton’s federal trademark infringement
claim. A plaintiff alleging trademark infringement in violation of the Lanham Act
“must demonstrate that (1) ‘it has a valid mark that is entitled to protection’ and
that (2) the defendant’s ‘actions are likely to cause confusion with [that] mark.’”
Tiffany & Co. v. Costco Wholesale Corp., 971 F.3d 74, 84 (2d Cir. 2020) (alteration in
original) (quoting The Sports Auth., Inc. v. Prime Hosp. Corp., 89 F.3d 955, 960 (2d
Cir. 1996)). The parties do not dispute the validity of Hamilton’s trademark or that
The Lancaster featured that trademark. We therefore focus on whether the District
Court erred in finding no likelihood of consumer confusion in the watch’s use of
that trademark.
A plaintiff must show “a probability of confusion, not a mere possibility,”
affecting “numerous ordinary prudent purchasers.” Gruner + Jahr USA Publ’g v.
Meredith Corp., 991 F.2d 1072, 1077 (2d Cir. 1993). This “includes confusion of any
kind, including confusion as to source, sponsorship, affiliation, connection, or
identification.” Star Indus., Inc. v. Bacardi & Co., 412 F.3d 373, 383 (2d Cir. 2005)
(quoting Guinness United Distillers & Vintners B.V. v. Anheuser-Bush, Inc., 64
13
U.S.P.Q.2d 1039, 1041 (S.D.N.Y. 2002)); see Gottlieb Dev. LLC v. Paramount Pictures
Corp., 590 F. Supp. 2d 625, 634 (S.D.N.Y. 2008) (“The hallmark of infringement is
the likelihood of confusion by the buying public between the plaintiff’s goods or
services and that of the defendant.” (first citing Fed. Express Corp. v. Fed. Espresso,
Inc., 201 F.3d 168, 174 (2d Cir. 2000); and then citing Estee Lauder Inc. v. The Gap,
Inc., 108 F.3d 1503, 1508–09 (2d Cir. 1997))). To prove confusion, a plaintiff may
show that the public believed “the owner of the mark actually produced the item
and placed it on the market,” or that the public believed “the mark’s owner
sponsored or otherwise approved the use of the trademark.” Star Indus., Inc., 412
F.3d at 383–84 (internal quotation marks and citation omitted).
We have identified a non-exhaustive list of factors for district judges to
analyze when considering whether a mark’s use is likely to cause confusion. See
Polaroid Corp., 287 F.2d at 495. These so-called Polaroid factors are: (1) “the strength
of [the] mark”; (2) “the degree of similarity between the two marks”; (3) “the
proximity of the products”; (4) “the likelihood that the prior owner will bridge the
gap”; (5) “actual confusion”; (6) “the reciprocal of defendant’s good faith in
adopting its own mark”; (7) “the quality of defendant’s product”; and (8) “the
14
sophistication of the buyers.” Id.; accord Starbucks Corp., 588 F.3d at 115; Star Indus.,
Inc., 412 F.3d at 384.
1. The District Court’s Application of Champion
We begin with Hamilton’s argument that the District Court erred in
applying Champion to assess whether there was a likelihood of consumer
confusion. The District Court identified and applied the Polaroid factors, focusing
on the ones that it found particularly relevant in this action. See Hamilton Int’l Ltd.,
486 F. Supp. 3d at 666–68. But the District Court also correctly recognized that
application of these non-exhaustive factors is not a “mechanical process,” and
“depending on the complexity of the issues, ‘the court may have to take still other
variables into account.’” Id. at 662 (first quoting Guthrie Healthcare Sys. v.
ContextMedia, Inc., 826 F.3d 27, 37 (2d Cir. 2016); and then quoting Savin Corp. v.
Savin Grp., 391 F.3d 439, 456 (2d Cir. 2004)); accord Arrow Fastener Co. v. Stanley
Works, 59 F.3d 384, 400 (2d Cir. 1995) (“No single factor is dispositive, and cases
may certainly arise where a factor is irrelevant to the facts at hand.”). Thus, while
Polaroid articulated general standards to apply in assessing consumer confusion,
particular situations may call for a more refined analysis. In its 1947 decision in
Champion, the Supreme Court identified one such situation.
15
In Champion, a manufacturer of spark plugs with the trademark
“Champion” sued a second-hand dealer who collected used “Champion” plugs,
refurbished them, and sold them. 331 U.S. at 126. The Supreme Court found it
permissible for the reused plugs to retain the “Champion” trademark, despite the
second-hand dealer lacking authorization to use that trademark, because of
disclosures made by that seller. Id. at 129–30. The Court determined that the
retention of the “Champion” logo would not mislead consumers, because the
plugs were “nevertheless Champion plugs and not those of another make,” and
contained the words “Used” or “Repaired” stamped on the plugs, which “serve[d]
the requirements of full disclosure.” Id. at 128–30. In reaching this result, the
Court explained that while “inferiority is expected in most second-hand articles,”
any “[i]nferiority is immaterial so long as the article is clearly and distinctively
sold as repaired or reconditioned rather than as new.” Id. at 129–30. Citing its
prior decision in Prestonettes, 3 the Court explained that it “is wholly permissible”
3 In Prestonettes, the plaintiff sold toilet powder and perfume. 264 U.S. at
366. The defendant purchased the plaintiff’s powder, added “a binder to give it
coherence,” and sold the substance in a metal case. Id. The defendant also bought
the plaintiff’s perfume and repackaged it in smaller bottles for resale. Id. at 366–
67. The district court allowed the defendant to continue selling both products, as
long as it attached certain clarifying labels which included the plaintiff’s
16
for a second-hand dealer to obtain an advantage from the trademark, “so long as
the manufacturer is not identified with the inferior qualities of the product
resulting from wear and tear or the reconditioning by the dealer.” Id. at 130. “Full
disclosure,” the Court explained, “gives the manufacturer all the protection to
which he is entitled.” Id. The Champion Court cautioned, however, that “[c]ases
may be imagined 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
though the words ‘used’ or ‘repaired’ were added.” Id. at 129. The takeaway from
Champion is that, when a used “genuine product” is resold after being refurbished,
the seller’s disclosures and the extent of a product’s modifications are significant
factors to consider in whether that seller is liable for trademark infringement.
trademarked name. See id. at 367. The Supreme Court found no trademark
violation in the sale of goods labeled as such. Specifically, the Court determined
that the defendant “by virtue of its ownership had a right to compound or change
what it bought,” and as long as the packaging truthfully disclosed that it contained
the plaintiff’s product, no trademark infringement occurred in the sale even if the
packaging used the plaintiff’s trademarked name. Id. at 368–69. The Court
explained that a trademark does not “prohibit the use of the word or words,” and
“[w]hen the mark is used in a way that does not deceive the public we see no such
sanctity in the word as to prevent its being used to tell the truth.” Id. at 368. The
defendant’s use of the trademark “to say that the trade-marked product is a
constituent in the article now offered as new and changed,” id. at 369, was
therefore permissible.
17
Hamilton argues that the “reconditioning or repair” that went into The
Lancaster was so extensive that the District Court erred in applying Champion in
the first place. According to Hamilton, The Lancaster is not “a modified genuine
Hamilton product,” but rather a “new watch that contains various Hamilton parts.”
We find no error in the District Court’s determination that the facts as found at
trial brought this case under Champion.
The District Court determined, with ample support from the evidence
adduced at trial, that Vortic used genuine, original parts from pocket watches
made by Hamilton, refurbished and repaired them, and modified them into a
wristwatch. The only modification to the original movements was the
replacement of a lever which makes it easier for users to change the time.
Describing this as an “apparently slight modification,” the District Court noted
that Hamilton failed to put forth any reason why such a modification would have
been “particularly significant to consumers or . . . somehow material to a
likelihood of confusion.” Hamilton Int’l Ltd., 486 F. Supp. 3d at 665. And after
inspecting the watch, as well as viewing photographs of the watch, the District
Court concluded that a consumer would view The Lancaster as an antique pocket
watch modified into a wristwatch rather than an entirely new product. Id. at 664
18
(“[T]he Court finds that the watch obviously presents to a viewer as restored
antique pocket watch movement, face, and hands . . . reincorporated into a new
wristwatch. . . . [T]he hands, face, and movement have a patina, style, and look
that convey that they are restored antiques.”). In light of those findings, which
were supported by the trial evidence and were not clearly erroneous, the District
Court properly analyzed Hamilton’s federal trademark infringement claim under
the framework laid out in Champion.
2. Champion’s Interaction with the Polaroid Factors and the Burden of Proof
Hamilton also takes issue with the sequence in which the District Court
considered Champion and Polaroid. Hamilton argues that the District Court erred
by failing to first determine the likelihood of confusion under the Polaroid factors
before turning to the “full disclosure” analysis under Champion. Hamilton
contends that a defendant bears the burden of showing that Champion’s “full
disclosure” standard is met, and that the weight accorded this burden can only be
determined by first measuring the level of confusion through an analysis of the
Polaroid factors.
We conclude that the District Court did not err in declining to require Vortic
to prove the effectiveness of its disclosures under Champion. Initially, it is worth
19
noting that Vortic did in fact offer proof that its disclosures were effective: Custer
testified that the company has never been contacted by anyone confused as to
Hamilton’s affiliation with Vortic’s watches, and Hamilton offered no evidence to
the contrary that the District Court found reliable. But more importantly, in a
trademark infringement case, the plaintiff bears the burden of proving a likelihood
of consumer confusion in the alleged infringer’s use of the mark. See, e.g., Star
Indus., Inc., 412 F.3d at 383 (“To prevail in a trademark infringement action under
the Lanham Act, a plaintiff must prove, in addition to protectability of the mark,
‘a probability of confusion, not a mere possibility,’ affecting ‘numerous ordinary
prudent purchasers.’” (quoting Gruner + Jahr, 991 F.2d at 1077)). The District Court
correctly looked to Champion and at the disclosures made by Vortic in determining
whether Hamilton met that burden.
Hamilton’s reliance on decisions where we placed the burden on a
defendant to prove the effectiveness of proposed disclaimers is misplaced. See
Charles of the Ritz Grp., Ltd. v. Quality King Distribs. Inc., 832 F.2d 1317 (2d Cir. 1987);
Home Box Office, Inc. v. Showtime/The Movie Channel Inc., 832 F.2d 1311 (2d Cir.
1987). Hamilton appears to conflate “full disclosure” under Champion, which is
relevant to an initial finding of likelihood of confusion, with an infringer’s
20
proposed “disclaimers” proffered at the remedy stage of a trademark infringement
action to assist the court in fashioning the appropriate injunctive relief. It is in that
latter situation, after a finding of trademark infringement, that the burden of
showing the sufficiency of a disclaimer shifts to the defendant. See, e.g., Charles of
the Ritz Grp. Ltd., 832 F.2d at 1324; Home Box Office, 832 F.2d at 1315–16. 4 As we
explained in Home Box Office, it was appropriate to place the burden on the
defendant at that point because the defendant had “no right to use the mark unless
and until it [could] demonstrate that . . . its use will no longer constitute an
infringement.” 832 F.2d at 1316 (emphasis added). In contrast here, however,
there had been no finding that Vortic infringed on Hamilton’s trademark because
of the absence of a showing by Hamilton of consumer confusion.
4 Our decisions following Home Box Office and Charles of the Ritz Group have
continued to hold that a defendant must justify the effectiveness of its proposed
disclaimers at the remedy stage, after a finding of a substantial likelihood of
confusion. See, e.g., Weight Watchers Int’l, Inc. v. Luigino’s, Inc., 423 F.3d 137, 143–
44 (2d Cir. 2005) (explaining that where “an infringer attempts to avoid a
substantial likelihood of consumer confusion by adding a disclaimer, it must
establish the disclaimer’s effectiveness” (citations and footnote omitted));
ProFitness Physical Therapy Ctr. v. Pro-Fit Orthopedic & Sports Physical Therapy P.C.,
314 F.3d 62, 70–71 (2d Cir. 2002) (remanding for the district court to discern the
severity of consumer confusion and require the defendant to “justify the remedy”).
21
Furthermore, our precedents confirm that a court is not required to consider
factors relevant to likelihood of confusion in any set order. A court’s analysis
under Polaroid is a flexible one: “The application of the Polaroid test is not
mechanical, but rather focuses on the ultimate question of whether, looking at the
products in their totality, consumers are likely to be confused.” Kelly-Brown v.
Winfrey, 717 F.3d 295, 307 (2d Cir. 2013) (internal quotation marks and citation
omitted). In the context of trademark infringement cases involving the resale of
refurbished goods, Champion informs that consumer confusion analysis. Both
Polaroid and Champion are thus aimed at discerning whether a consumer would be
misled by the defendant’s use of the plaintiff’s trademark. There is no hard and
fast order in which a court must undertake that analysis.
In sum, the District Court properly placed the burden of proving trademark
infringement on Hamilton, and correctly analyzed the relevant considerations
under Polaroid and Champion.
3. The District Court’s Findings Under Champion and Polaroid
We turn next to Hamilton’s challenges to the District Court’s findings under
Champion and Polaroid. We find no error, clear or otherwise, in either.
22
In conducting its Champion analysis, the District Court identified several
ways that Vortic disclosed that The Lancaster contained refurbished original parts
and was not affiliated with Hamilton. For example, a magazine advertisement
explained that Vortic’s watches are “custom fabricated using railroad era,
American made pocket watch movements to create timeless, one-of-a-kind
wristwatches for individuals with contemporary vision.” App’x at 368, 373; see
Hamilton Int’l Ltd., 486 F. Supp. 3d at 663. Another advertisement explained: “All
of the components (movement, dial, hands) between the two Gorilla Glass crystals
are ~ 100 years old, and started their life in a Railroad-Era pocket watch made by
the Hamilton Watch Company. The watches were made in Lancaster
Pennsylvania in the late 1800’s and early 1900’s.” App’x at 375; see Hamilton Int’l
Ltd., 486 F. Supp. 3d at 663. Vortic’s website further stated that the company “uses
vintage movements whose case has been scrapped for its precious metal value,
and meticulously restores the inner workings in order to build a completely
custom watch around it.” App’x at 375; see Hamilton Int’l Ltd., 486 F. Supp. 3d at
663. 5
Hamilton argues that the advertisements from Vortic’s website were not
5
admitted into evidence at trial and should not have been considered by the District
23
In addition to these promotional materials, the District Court cited the watch
itself in assessing the adequacy of Vortic’s disclosures. Relying on its own
examination of The Lancaster, the District Court explained that the watch—with
its larger size, the 12 o’clock knob position, and the general look of its parts as
restored antiques—“obviously presents to a viewer as restored antique pocket
watch movement, face, and hands that have been reincorporated into a new
wristwatch.” Hamilton Int’l Ltd., 486 F. Supp. 3d at 664. The District Court further
found that The Lancaster “would convey to any ordinary prudent purchaser that
the watch was made by Vortic and that the Hamilton mark is displayed only
because Hamilton created the original movement, face, and hands that have
Court. The record shows that Vortic’s counsel, without objection, expressed his
intention to enter pictures of the website as exhibits into the evidence. It appears,
however, that these documents were inadvertently left out of the record. By
considering these exhibits, the District Court clearly found them to be both
admissible and relevant, and Hamilton fails to provide any substantive grounds
for why this evidence should have been excluded. In any event, we conclude that
any error on this issue was harmless because the District Court could have
considered the contents of the advertisements as they were directly quoted in
Custer’s sworn affidavit—which was admitted into evidence without objection—
and because the District Court found that other advertisements in the record
satisfied the full disclosure factor. See Tesser v. Bd. of Sch. Dist., 370 F.3d 314, 319
(2d Cir. 2014) (“[A]n evidentiary error in a civil case is harmless unless [the
appellant demonstrates that] it is likely that in some material respect the
factfinder’s judgment was swayed by the error.” (second alteration in original)
(internal quotation marks and citation omitted)).
24
subsequently been restored,” “not[ing] that ‘Vortic,’ ‘Lancaster,’ and the serial
number are all prominently engraved on the case while the Hamilton mark is only
visible inside the glass case, on a movement and face that appear obviously
antique.” Id.These factual findings, all firmly grounded in the record, fully supported
the District Court’s conclusion that Vortic adequately disclosed the origin of The
Lancaster and its lack of affiliation with Hamilton. And the District Court properly
weighed Vortic’s full disclosure heavily in its consumer confusion analysis. See id.
at 663 (explaining that it would “give strong weight to the ‘full disclosure’ factor”).
Hamilton relies on three cases from other Circuits to argue that no
disclosures could be adequate when watches are “extensively modified.” See Rolex
Watch, U.S.A., Inc. v. Michel Co., 179 F.3d 704 (9th Cir. 1999); Rolex Watch USA, Inc.
v. Meece, 158 F.3d 816 (5th Cir. 1998); Bulova Watch Co. v. Allerton Co., 328 F.2d 20(7th Cir. 1964). To the extent Hamilton claims that these decisions found Champion
inapplicable to modified watches, we disagree. All three cases applied Champion’s
reasoning to find that alterations made to the watches at issue resulted in new
products, and that, under the facts presented, no disclosure could adequately
dispel the likelihood of consumer confusion stemming from the modifications.
25
The courts in Michel Co. and Bulova Watch Co. cited Champion before looking
to the record to decide whether there was adequate disclosure. See Michel Co., 179
F.3d at 710 (explaining that the defendant’s disclosure did not “convey[] basic
changes that have been made to the watch” and that “the face of the watch” at
issue could not “support a more adequate legend”); Bulova Watch Co., 328 F.2d at
24 (noting that “[i]t is obvious that the area of the exposed portion of the dial of
the cased 6 ¾ X 8 ligne movement is such [that] no appropriate and readable
legend could be placed thereon which would satisfy the disclosure requirements
the facts and circumstances here demand”). Likewise, although the court in Meece
did not cite Champion, it echoed Champion’s reasoning when it relied on “case law
interpreting the Lanham Act as prohibiting a party from making changes in
integral parts of a product and then selling the modified product under the
original trademark without full disclosure.” Meece, 158 F.3d at 825 (emphasis
added). And, just as in Bulova Watch Co. and Michel Co., the Meece court’s finding
of trademark infringement was tied to the circumstances of that case. See id.(basing its decision on “[c]onsider[ation] . . . of [all] the evidence and, especially,
the district court’s findings regarding the likelihood of confusion with respect to
secondary purchasers”).
26
Thus, these decisions have little persuasive weight where, as here, adequate
disclosures could be provided. For these reasons, we find no error in the District
Court’s factual findings or its conclusion that Vortic’s disclosures were adequate
under Champion.
Nor was there any clear error in the District Court’s factual findings as to
the Polaroid factors. In light of its determination that Vortic provided full
disclosure under Champion, the District Court found three Polaroid factors to be
particularly significant in this case: actual confusion, the defendant’s good faith in
adopting the mark, and the product’s customer base. Most of Hamilton’s
arguments on appeal as to these factors amount to disagreement with the District
Court’s credibility determinations. It is axiomatic, of course, that “[c]lear error
review mandates that we defer to the District Court’s factual findings, particularly
those involving credibility determinations.” Phoenix Glob. Ventures, LLC v. Phoenix
Hotel Assocs., Ltd., 422 F.3d 72, 76 (2d Cir. 2005). And we do so here.
The District Court first found that Hamilton failed to proffer any proof of
actual confusion after declining to credit Hamilton’s sole evidence on this point:
an email from a prospective customer stating that her friend was “looking for a
vintage Hamilton as per attached.” App’x at 229–31. Hamilton attached to the
27
exhibit pictures of two advertisements for The Lancaster, contending that they
were attached to that email. Yet Hamilton’s authenticating witness was unable to
confirm at trial whether those advertisements were indeed attached to the email
and, after observing this witness testify at trial, the District Court discounted this
evidence. Similarly, the District Court’s finding that Custer and Vortic did not act
in bad faith was supported by Custer’s trial testimony describing his intent in
founding Vortic and manufacturing The Lancaster. Nor do we accept Hamilton’s
unsupported proposition that continued sales of The Lancaster after Vortic’s
receipt of a cease-and-desist letter necessarily demonstrates bad faith. See W.W.W.
Pharm. Co. v. Gillette Co., 984 F.2d 567, 575 (2d Cir. 1993) (“[A]doption of a
trademark with actual knowledge of another’s prior registration of a very similar
mark may be consistent with good faith.” (quoting Lang v. Ret. Living Publ’g Co.,
949 F.2d 576, 584 (2d Cir. 1991))). Finally, the District Court’s finding as to the
sophistication of the relevant consumer base was grounded in uncontroverted
evidence that the average price of Vortic’s watches ranged from $1,500 to $5,000,
as well as Custer’s testimony describing Vortic’s customers as “college-educated
men . . . with above-average income,” most of whom “own multiple
wristwatches.” App’x at 113, 375; see Star Indus. Inc., 412 F.2d at 390 (explaining
28
that proof of consumer sophistication is not limited to “expert opinions or
surveys,” and “a court is entitled to reach a conclusion about consumer
sophistication based solely on the nature of the product or its price”).
We also find no error in the District Court’s determination that the other
Polaroid factors were less relevant in this case. Cf. Arrow Fastener Co., 59 F.3d at 400(“[I]t is incumbent upon the district judge to engage in a deliberate review of each
factor, and, if a factor is inapplicable to a case, to explain why.”). 6 But regardless,
the District Court considered each of the five remaining Polaroid factors and
properly weighed them in accordance with the trial evidence.
6
Indeed, the District Court’s decision to place less emphasis on certain
Polaroid factors is consistent with Champion. The defendant in Champion used the
plaintiff’s exact trademark, and the Supreme Court noted that while “inferiority is
expected in most second-hand articles,” it is “immaterial so long as the article is
clearly and distinctively sold as repaired or reconditioned rather than as new.”
331 U.S. at 129–30. Accordingly, the Court suggested that as long as there was full
disclosure as to the refurbished nature of the item, factors such as the strength of
the mark, similarity between marks, and quality of the products would be less
relevant. Similarly, while a traditional Polaroid analysis instructs that closer
competitive proximity of the products leads to a greater probability of consumer
confusion, the analysis in Champion suggests that in the context of second-hand
goods, similarity of the products could work to a defendant’s advantage. See id. at
129 (emphasizing as critical to the Court’s holding that “[t]he repair or
reconditioning of the plugs d[id] not give them a new design”).
29
While the District Court determined that Hamilton’s mark was “relatively
strong,” it found that the other factors supported entering judgment in favor of
Vortic and Custer on Hamilton’s federal trademark claim. Relying on the
disclosures that it discussed in its Champion analysis, the District Court properly
concluded that the “similarity of the marks” factor did not support a finding of
confusion given the context in which the mark appeared on The Lancaster. See
Hamilton Int’l Ltd., 486 F. Supp. 3d at 666; Star Indus. Corp., 412 F.3d at 386 (holding
that the similarity of products factor is not to be analyzed in isolation, but instead
includes a consideration of “the context in which” the trademark is found (internal
quotation marks and citation omitted)); Estee Lauder Inc., 108 F.3d at 1511 (finding
that although the defendant used the plaintiff’s trademark on similar products,
this factor did not weigh toward confusion because “each product [was] labeled
to show which company is its source”).
Nor do we find any error in the District Court’s analysis of the “proximity
of the products” factor. Hamilton argues that it competes in the same marketplace
as Vortic, i.e., the watch market, and the District Court therefore should have
found this factor to militate in favor of a likelihood of confusion. The District Court
found, however, that the relevant market was one for antique or refurbished
30
watches. This finding was supported by Custer’s testimony that Vortic catered to
consumers interested in antiques related to American history, and Hamilton failed
to provide any evidence that it sold similar types of watches or that both
companies sold their products in the same channels of commerce. See Cadbury
Beverages, Inc. v. Cott Corp., 73 F.3d 474, 480 (2d Cir. 1996) (specifying that courts
must look to the “structure of the relevant market,” which includes an analysis of
“the class of customers to whom the goods are sold, the manner in which the
products are advertised, and the channels through which the goods are sold”
(quoting Vitarroz v. Borden, Inc., 644 F.2d 960, 967 (2d Cir. 1981))).
With regard to “the likelihood that the prior owner will ‘bridge the gap,’”
Hamilton failed to provide any evidence that it intended to enter Vortic’s market
by manufacturing and distributing restored watches with antique parts. Finally,
the District Court weighed the trial testimony and found that Hamilton failed to
demonstrate that The Lancaster was of a lower quality than Hamilton’s products.
Hamilton relied on a single online post in which Custer suggested that The
Lancaster was not for everyday use because “wearing [the watches] on the wrist
will jar them more than usual.” App’x at 208–11. Custer, however, was
extensively questioned about this post at trial, and testified that it was made
31
during an early phase of The Lancaster’s production and before any watches were
sold to consumers. And Hamilton did not provide any proof as to the durability
of their own products as a comparison. See Hormel Foods Corp. v. Jim Henson Prods.,
Inc., 73 F.3d 497, 505 (2d Cir. 1996) (explaining that this factor looks to whether the
defendant’s product is inferior or equal in quality to the plaintiff’s product).
As the above discussion demonstrates, a common theme emerged from the
bench trial: Hamilton—which bore the burden of establishing confusion—failed
to come forward with any reliable evidence showing that consumers were likely
to be misled. We find no clear error in the District Court’s factual findings in
connection with its analysis under Champion or in connection with the Polaroid
factors. We further conclude that the District Court correctly applied Champion
and Polaroid to these factual findings to conclude that there was no likelihood of
consumer confusion.
C. Hamilton’s Remaining Claims
As the District Court noted, its analysis of Hamilton’s trademark
infringement claim under the Lanham Act necessarily compelled judgment in
favor of Vortic and Custer on Hamilton’s remaining claims. This is because each
of those claims required some showing of a likelihood of consumer confusion. See
32
15 U.S.C. § 1114(1)(a) (federal counterfeiting claim requiring the plaintiff to show
that the use of the counterfeit mark is “likely to cause confusion, or to cause
mistake, or to deceive”); Starbucks Corp., 588 F.3d at 114 (enumerating the six-factor
test for dilution by blurring under New York law, with the factors resembling the
Polaroid factors and similarly focusing on confusion); 15 U.S.C. § 1125(a) (federal
unfair competition claim presenting same standard as federal trademark claim);
Car-Freshner Corp. v. Am. Covers, LLC, 980 F.3d 314, 335 (2d Cir. 2020) (explaining
that a New York “unfair competition claim turn[s] on a likelihood of consumer
confusion”). Having found no likelihood of consumer confusion, the District
Court properly concluded that Vortic and Custer were entitled to judgment on
these claims as well.
III. CONCLUSION
For the foregoing reasons, the District Court’s judgment is AFFIRMED.
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