## Facts

- Cartier and related Richemont luxury-watch and jewelry brands owned federally protected trademarks used on high-end watches and timepieces.
- Defendants acquired genuine, trademarked watches on the secondary market.
- Defendants arranged for third-party jewelers to mount diamonds and make other aesthetic changes to the watches.
- Some diamond settings were done in ways intended to look like more expensive versions sold by the trademark owners.
- After modification, the watches still displayed the plaintiffs’ original trademarks.
- The modified watches were placed with major auction houses (including on consignment) for sale to consumers.
- The watches did not carry clear, conspicuous labeling telling buyers that the diamond work and other modifications were performed by independent jewelers rather than by, or with authorization from, the trademark owners.
- Plaintiffs sued under the Lanham Act for trademark infringement and false designation of origin, and sought partial summary judgment on liability and a permanent injunction.
- Defendants argued that resale of genuine goods is protected (first-sale doctrine) and that plaintiffs could not obtain monetary relief absent notice of registration, willfulness, or proof of actual confusion.

## Issues

1. Whether defendants infringed plaintiffs’ trademarks under 15 U.S.C. §§ 1114(1) and 1125(a) by selling genuine watches that were materially altered with diamonds while retaining the original marks and without clear disclosure of the alterations.
2. Whether the first-sale doctrine bars Lanham Act liability when genuine goods are materially changed after leaving the trademark owner’s control.
3. Whether plaintiffs’ claims for monetary relief were foreclosed at the summary-judgment stage based on alleged lack of registration notice or the asserted need to prove willful deception or actual confusion.
4. Whether a permanent injunction should issue after liability is established on summary judgment.

## Decision

- The court granted plaintiffs’ motion for partial summary judgment on Lanham Act liability.
- The court held that defendants’ post-sale diamond modifications were material and, when sold under plaintiffs’ marks without adequate disclosure, created a likelihood of consumer confusion as to whether the alterations were performed, authorized, or approved by the trademark owners.
- The court rejected defendants’ reliance on the first-sale doctrine because materially altered goods sold under the original marks without non-misleading disclosure are not treated as “genuine” for trademark purposes.
- The court entered a permanent injunction barring defendants from selling or offering for sale materially altered watches bearing plaintiffs’ trademarks in a manner likely to cause confusion about authorization, sponsorship, or approval.
- The court declined to dispose of plaintiffs’ monetary-remedy theories at summary judgment based on defendants’ notice/willfulness/actual-confusion arguments, treating those points as affecting remedies rather than negating liability.

## Legal Principles

- The first-sale doctrine does not protect the resale of trademarked goods that have been materially altered after leaving the trademark owner’s control when the altered goods are sold under the original marks without clear, non-misleading disclosure of the changes.
- Material differences—especially changes that affect appearance, perceived quality, value, or the trademark owner’s quality-control expectations—can render goods “non-genuine” and support a finding of likely confusion under §§ 1114(1) and 1125(a).
- Lanham Act liability turns on likelihood of confusion; proof of actual confusion is helpful but not required to establish infringement.
- Arguments about registration notice, willfulness, and similar mental-state questions generally bear on the availability or measure of certain monetary awards, not on whether infringement occurred.
- Permanent injunctive relief is appropriate where infringement is established and continued sales of altered, branded goods threaten ongoing consumer confusion and harm to trademark goodwill.

## Conclusion

The court held that defendants’ sale of genuine luxury watches that had been materially modified with diamonds, while still bearing plaintiffs’ trademarks and lacking clear disclosure of the modifications, was likely to mislead purchasers into believing the alterations were authorized by the trademark owners; it granted summary judgment on liability, issued a permanent injunction against further infringing sales, and left disputes about the scope of monetary relief for later proceedings rather than treating them as a bar to liability.


Cartier v. Aaron Faber, Inc., 512 F. Supp. 2d 165 (2007)