Rolex Watch U.S.A., Inc. v. PRL USA Holdings, Inc.

Filing 61

OPINION: For the reasons stated above, both motions for summary judgment are denied. Rolex's motion to dismiss PRL's counterclaim for declaratory judgment is granted. This resolves the motions listed as items 25 and 45 on the docket. This is a public redacted version of the opinion filed under seal March 31, 2015. SO ORDERED. (Signed by Judge Thomas P. Griesa on 4/27/2015) (kl)

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DOCUMENT

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

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ROLEX WATCH U.S.A., INC.,
Plaintiff,
12 Civ. 6006

v.
OPINION

PRL USA HOLDINGS, INC.,
Defendant.

This is a trademark case concerning whether defendant PRL USA
Holdings, the company behind the brand Polo Ralph Lauren, may sell
watches and jewelry bearing the trademarks RLX RALPH LAUREN or
RALPH

LAUREN

RLX

despite

opposition

from

plaintiff,

luxury

watchmaker Rolex.
Against Rolex's opposition, PRL won a 2012 decision from the
Trademark Trial and Appeal Board (TTAB) of the United States Patent
and Trademark Office (USPTO) permitting it to register those two marks
for use on watches and jewelry. Rolex now appeals, seeking to reverse
the TTAB's decision.

PRL opposes reversal and counterclaims for

declaratory judgment affirming that it may use the marks RALPH

1

LAUREN RLX and RLX RALPH LAUREN on watches and jewelry without
infringing Rolex's trademarks.
Three motions are now before the court.

First, Rolex moves to

dismiss PRL's counterclaim for declaratory judgment.

Second, Rolex

moves for summary judgment on Count II of the complaint, which alleges
that PRL's trademarks are invalid because PRL had no bona fide
intention to use the marks in commerce at when it applied for them.
Third, PRL cross-moves for summary judgment on Count II of the
complaint, contending that PRL's trademarks cannot be voided.
For the reasons discussed below, the court grants Rolex's motion to
dismiss PRL's counterclaim.

The court denies both cross-motions for

summary judgment on Count II of the complaint.
Background

1. Procedural History
Plaintiff Rolex is the exclusive importer and distributor of Rolex
brand watches and jewelry in the United States. Defendant PRL is a
Delaware corporation and a wholly-owned subsidiary of Ralph Lauren
Corporation. PRL owns the trademark RALPH LAUREN and many
related marks.

2

On December 7, 2004, PRL filed an application with the USPTO to
register the mark RLX in International Class 14, the category of goods
covering use on watches and jewelry. On January 19, 2006, Rolex
notified PRL of its intention to oppose PRL's registration of RLX in Class
14. Four days later, on January 23, 2006, PRL filed two additional
applications with the USPTO, seeking to register RLX RALPH LAUREN
and RALPH LAUREN RLX, also in Class 14. In these applications, PRL
represented that it had a bona fide intention to use these marks in
commerce for watches and jewelry.
On February 1, 2006, Rolex filed a formal Notice of Opposition to
PRL's registration of RLX. On May 12, 2006, Rolex filed a Notice of
Opposition to PRL's registration of RLX RALPH LAUREN and RALPH
LAUREN RLX. The TTAB consolidated the oppositions on September 18,
2006.
On April 17, 2009, PRL abandoned its application to register RLX
in Class 14. On June 7, 2012, the TIAB dismissed Rolex's opposition to
PRL's applications to register the marks RLX RALPH LAUREN and
RALPH LAUREN RLX in Class 14.
On August 6, 2012, Rolex filed a complaint with this court, seeking
review of the TIAB's dismissal.

Rolex amended its complaint on
3

January 15, 2014. PRL answered and counterclaimed on January 27,
2014.
On February 26, 2014, Rolex made the present motion for
summary judgment on Count II of the amended complaint and for
dismissal of PRL's counterclaim. On September 25, 2014, PRL crossmoved for summary judgment on Count II.

2. Facts
PRL designs and commercializes a broad array of branded
consumer apparel and merchandise. It describes itself as a "design-led"
company.

This means that its design processes generally guide its

business decisions, not the other way around.

Thus, soon after PRL's

leadership

design,

authorizes

a

finalized

product

PRL

rapidly

manufactures, distributes, markets, and otherwise commercializes the
product. Dalla Val Decl.

at~

3.

Since 1998, PRL has sold a wide range of products bearing RLX
and related trademarks. RLX stands for Ralph Lauren Extreme, and it
denotes a line of Ralph Lauren products designed for active outdoor
activities such as skiing and hiking. Amended Complaint at
These

products

have

included

coats,

headwear,

~~

20-21.

eyewear,

and

accessories, bearing various RLX-related trademarks such as RLX, RLX
4

POLO SPORT, and RLX RALPH LAUREN.

See PRL Exs. A-E. Many of

these products displayed either RLX or RALPH LAUREN, without
displaying those two elements (RLX and RALPH LAUREN) unified into a
single trademark.

However, certain apparel products and accessories,

including ski jackets and backpacks marketed in 2004 and 2005, clearly
featured RLX RALPH LAUREN as a unitary trademark, with the RLX and
RALPH LAUREN elements integrated into a single image. PRL Exs. D, E.

Between 2004 and 2007, PRL
sold a digital watch called the "RLX Vector" or "RLX Suunto" watch.
Morgan Tr. at 11.

A prominent logo near the watch's dial proclaimed

"RLX" in capital letters, with the "RL" printed in black and the "X"
printed in red.

Rolex Ex. F. The watch also bore Suunto's mark.

Id.

Notwithstanding the RLX mark, the watch bore no mark reading "Ralph
Lauren." Id. However, the watch was sold on Ralph Lauren's website,
where the words "Ralph Lauren" were displayed at the top of each page.
PRL Ex. H.

5

PRL and Richemont signed an
agreement forming such a joint venture on January 26, 2007. PRL Ex. I.
The agreement was publicly announced on March 5, 2007. Rolex Ex. I.

__ .. _

-

--·----......
6

-·--·----Currently, PRL's joint venture with Richemont produces and sells a
line of luxury watches that bear the mark "RL." PRL Repl. at 9. None of
these watches, however, bear the RLX, RLX RALPH LAUREN, or RALPH
LAUREN RLX marks. Id.

7

Discussion

1. Motion to Dismiss PRL's Declaratory Judgment Counterclaim
In its answer to Rolex's amended complaint, PRL counterclaims for
declaratory judgment that it may sell watches and jewelry bearing the
RLX RALPH LAUREN and RALPH LAUREN RLX trademarks without
infringing Rolex's trademark rights.

Rolex's motion to dismiss that

counterclaim is now before the court.
Rolex contends that PRL's counterclaim for declaratory judgment
must be dismissed because it seeks an improper advisory opinion.

------·----·--In the

alternative, Rolex contends that even if the court has jurisdiction over
PRL's counterclaim, the court should decline to exercise such jurisdiction
because doing so would serve no useful purpose.
there is a

PRL counters that

sufficient controversy and, moreover, that declaratory

judgment would improve judicial economy by forestalling later litigation,
when PRL produces watches bearing the disputed marks.

8

Thus, the court must decide whether the declaratory judgment
sought by PRL would be a proper exercise of jurisdiction, and if so,
whether exercising such jurisdiction would be useful. Here, declaratory
judgment would be a proper exercise of jurisdiction, but the court
declines to exercise it because doing so would not serve a useful purpose
or definitively end the controversy between the parties.

a. Jurisdiction Under the Declaratory Judgment Act
The Declaratory Judgment Act, 28 U.S.C. § 2201, supplies the
basic standard goveming whether PRL's counterclaim seeks a proper
declaratory judgment or, on the contrary, an improper advisory opinion.
The Declaratory Judgment Act provides that "[i]n a case of actual
controversy within its jurisdiction . . . any court of the United States,
upon the filing of an appropriate pleading, may declare the rights and
other legal relations of any interested party seeking such declaration."
Id.

The Supreme Court has clarified that the phrase "case of actual

controversy'' refers to the same cases or controversies that are justiciable
under Article III of the Constitution.

Medimmune, Inc. v. Genentech,

Inc., 549 U.S. 118, 127 (2007). To qualify as such a case or controversy,
the dispute must be "definite and concrete, touching legal relations of
parties having adverse legal interests"; it must be "real and substantial";
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and it must "admit of specific relief through a decree of a conclusive
character, as distinguished from an opinion advising what the law would
be upon a hypothetical state of facts." Id. (quoting Aetna Life Ins. Co. v.
Haworth, 300 U.S. 227, 240-241 (1937)). In this Circuit, "the threat of
future litigation remains relevant in determining whether an actual
controversy exists." Nike, Inc. v. Already, LLC, 663 F.3d 89, 96 (2d Cir.
2011).
Where declaratory judgment jurisdiction exists, a district court has
broad discretion overwhether to exercise it.

Muller v. Olin Mathieson

Chemical Corp., 404 F.2d 501, 505 (2d Cir. 1968).

A district court is

only required to entertain a declaratory judgment action where it will
serve a useful purpose in clarifying the legal relations in issue, or where
it will resolve the uncertainty that gave rise to the proceeding.

Starter

Corp. v. Converse, Inc., 84 F.3d 592, 597 (2d Cir. 1996). In a trademark
case, the party seeking declaratory judgment must show that it has "a
definite intent and apparent ability to commence the use of the [allegedly
infringing] marks."

Bruce Winston Gem Corp. v. Harry Winston, Inc.,

No. 09-CV-7352, 2010 WL 3629592 at *4 (S.D.N.Y. Sept. 16, 2010).

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b. Exercising the Court's Jurisdiction Over
Counterclaim Would Not Serve a Useful Purpose

PRL's

Here, PRL seeks declaratory judgment that it may commercialize
watches and jewelry bearing the marks RLX RALPH LAUREN or RALPH
LAUREN RLX without infringing Rolex's marks.

The court finds that

such declaratory judgment would fall within this court's jurisdiction, but
it would be "too abstract to serve a useful purpose" and "unlikely to end
controversy between the parties." Bruce Winston, 2010 WL 3629592 at
*4.

The requested declaratory judgment aims to resolve a dispute
between the parties as to whether PRL's use of RLX RALPH LAUREN or
RALPH LAUREN RLX on watches or jewelry would infringe Rolex's
trademark rights.

Multiple facts in the record demonstrate that this

question meets the Medlmmune standard for justiciability. First, Rolex
acknowledges it will bring an infringement action if PRL produces
watches and jewelry bearing those marks. Rolex Repl. at 11.

Second,

PRL has already offered and sold, between 2004 and 2007, a watch
bearing the RLX mark, demonstrating the reality of the controversy, as
well as PRL's ability and willingness to launch the products in question.
Morgan Tr. at 11.

Third, PRL has entered into a joint venture with

watchmaker Richemont.

PRL Ex. I.
11

---·--- ......
-

-

Both sides have vigorously pursued this litigation

at considerable expense.

All this tends to show that the parties here

have a real, substantial dispute concerning the trademarks in question,
satisfying the Medlmmune standard and establishing the court's
declaratory judgment jurisdiction.
But even where the justiciability requirement has been met, the
court has discretion whether to exercise its declaratory judgment
jurisdiction. See AARP v. 200 Kelsey Assocs., LLC, 06-CV-81, 2009 WL
47499, at *4 (S.D.N.Y. Jan. 8, 2009). Here, the court finds good cause to
decline to exercise its jurisdiction.

Under such circumstances, Rolex "rightly objects
to the use of a declaratory judgment action to construct the future
framework of the interaction between the parties in the absence of a
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specific dispute about an imminent activity." Bruce Winston, 2010 WL
3629592 at *6.

Any declaratory judgment would risk making false

assumptions about PRL's eventual course of action in commercializing
the disputed products, and thus provide no resolution to the dispute.
Furthermore, Rolex has raised legitimate concerns about whether the
parties can litigate questions of infringement or dilution (in connection
with the declaratory judgment claim) without evidence flowing from the
products' existence in the markets.
Taken together, these concerns cause the court to decline to
exercise its declaratory judgment jurisdiction. Rolex's motion to dismiss
PRL's counterclaim is accordingly granted.

2. Summary Judgment on Count II of the Complaint
Also before the court are cross-motions for summary judgment.
Rolex claims it is entitled to summary judgment on Count II of the
complaint, which alleges that PRL's registrations of RLX RALPH LAUREN
and RALPH LAUREN RLX are void because PRL lacked bona fide intent
to use those marks when it applied for them in January 2006. PRL also
seeks summary judgment on Count II, contending that PRL did have
bona fide intent to use the marks.

13

Summary judgment is appropriate when the record, viewed in the
light most favorable to the nonmoving party, reveals that there is no
genuine issue as to any material fact and that the moving party is
entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). An issue
as to a material fact is genuine if "the evidence is such that a reasonable
jury could return a verdict for the non-moving party."
Liberty Lobby, Inc., 477 U.S. 242, 248 (1987).

Anderson v.

In demonstrating the

existence of a genuine issue of material fact, the nonmoving party may
not rest upon mere allegations or conclusory statements, but must go
beyond the pleadings with proper documentary evidence.

See Davis v.

New York, 326 F.3d 93, 100 (2d. Cir. 2002).
On receipt of cross-motions for summary judgment, the court must
evaluate each motion on its merits. See Heublein, Inc. v. United States,
996 F.2d 1455, 1461 (2d Cir. 1993). After reviewing the record, the court
denies both motions.

a. The Disputed Trademarks are Void Unless PRL Intended
to Use Them in Commerce at the Time of Application
In January 2006, PRL applied to register the trademarks RLX
RALPH LAUREN and RALPH LAUREN RLX for use on watches and
jewelry. The USPTO granted the applications, and the TIAB later upheld
them over Rolex's opposition.
14

Nonetheless, pursuant to Lanham Act§ 1(b), 15 U.S.C. § 1501(b),
these applications are void unless, at the time of filing the application,
PRL had a "bona fide intention to use the mark[s] in commerce" on the
goods at issue (here, watches and jewelry). Id. A bona fide intention in
this context means "an actual,

subjective state of mind" under

"circumstances showing . . . good faith."

See Aktieselskabet AF 21

November 2001 v. Fame Jeans Inc., 525 F.3d 8, 21 (D.C. Cir. 2008).
Moreover, "an opposer may defeat a trademark application for lack of
bona fide intent by proving the applicant did not actually intend to use
the mark in commerce or by proving the circumstances at the time of
filing did not demonstrate that intent." Id.
Whether such intent existed at the time of application is an
objective determination based upon all the circumstances. Lane Ltd. v.
Jackson International Trading Co., 33 U.S.P.Q. 2d 1351, 1356 (T.T.A.B.
1994). The TTAB has also held that "the absence of any documentary
evidence on the part of an applicant regarding such intent is sufficient to
prove that the applicant lacks" the required intent to use the trademark
in commerce. Commodore Electronics Ltd. v. CBM Kabushiki Kaisha, 26
U.S.P.Q. 2d 1503, 1993 WL 156479 at *4 (T.T.A.B. Feb. 3, 1993).

15

No court in this Circuit has addressed a motion for summary
judgment concerning a trademark applicant's bona fide intent to use a
trademark. However, cases from other Circuits and from the TTAB offer
guidance. Numerous courts have emphasized that the factual question
of an applicant's intent is usually ill-suited to summary judgment. See
Copelands' Enterprises, Inc. v. CNV, Inc., 945 F.2d 1563, 1567 (Fed. Cir.
1991); Honda Motor Co. v. Winkelmann, 90 U.S.P.Q. 2d 1660, 2009 WL
962810 at *2 (T.T.A.B. Apr. 8, 2009). This is understandable because
issues of intent are, in general, difficult to prove. But the TTAB and at
least one district court have concluded that summary judgment for a
trademark opposer is appropriate where an applicant has failed to
produce documentary evidence of bona fide intent, and lacks an
explanation for that failure. See City of Carlsbad v. Shah, 666 F. Supp.
2d 1159, 1165 (S.D. Cal. 2009) (citing Honda Motor Co., 2009 WL
962810 at *4). Here Rolex proceeds on that theory, contending that PRL
lacks any documentary evidence of its bona fide intent.
Accordingly, the court should grant Rolex's motion for summary
judgment if (1) Rolex shows an absence of objective documentary
evidence of PRL's intent to use the marks in commerce at the time of
application, and (2) PRL provides no valid explanation as to why it has
16

produced no such evidence. See Honda Motor Co., 2009 WL 962810 at
*2.

This is a high hurdle.

Indeed, to avoid summary judgment, PRL

need not produce a "smoking gun" document that extinguishes all doubt
as to its intent to use the trademarks in commerce. And where there is
not an absence of objective documentary evidence, all the circumstances
are relevant to the determination of PRL's intent. See The Wet Seal, Inc.,
v. FD Management, Inc., 82 U.S.P.Q. 2d 1629, 2007 WL 458529 at *14
(T.T.A.B. 2007).1
PRL's motion for summary judgment also faces a high hurdle.
There would be little precedent for granting summary judgment in favor
of an applicant on the issue of bona fide intent. And the court is mindful
that "as a general rule, the factual question of intent is particularly
unsuited to disposition on summary judgment." Copelands' Enterprises,
945 F.2d at 1567. Nonetheless, PRL's motion should be granted if the
uncontested facts and circumstances establish that PRL had a bona fide
intent to use the marks when it applied for them.

See Research 1n

Motion Ltd. v. NBOR Corp., 92 U.S.P.Q. 2d 1926 (T.T.A.B. 2009).
Wet Seal affirms the significance of an applicant's conduct in business and capacity to
commercialize the disputed trademarks: "Merely because applicant may not have taken
steps to actually launch or introduce a particular product does not mean that applicant
otherwise had no intention to develop or market the product .... [A]pplicant had the
capacity to market and/or manufacture shampoos and color products, having produced
them in the past under different marks, which would tend to affirmatively rebut any claim
by opposer regarding applicant's intent."
1

17

b. Neither Party is Entitled to Summary Judgment on Count
II

The parties have completed discovery and PRL has had ample
opportunity to present documentation of its intentions concerning the
disputed marks at the time of registration. Voluminous exhibits, such as
PRL's catalogs and product designs, have been introduced into evidence.
However, the parties disagree as to what this evidence reveals about
PRL's intent.

i. Rolex's Motion for Summary Judgment
To begin with, Rolex rightly emphasizes that the question in this
case is whether PRL had bona fide intent to use the marks at issue on
the goods at issue.

The marks at issue are RLX RALPH LAUREN and

RALPH LAUREN RLX, and the goods at issue are watches and jewelry.
Rolex contends that many of the documents PRL has produced-such as
catalogs from 2004 and 2005 showing that PRL commercialized various
jackets and skiwear bearing the trademark RLX RALPH LAUREN-do not
demonstrate that PRL intended to use that mark on the goods at issue.
Similarly, Rolex contends that PRL's sale of the RLX Suunto watch,
between 2004 and 2007, does not demonstrate PRL's intent to use the
marks at issue on watches, because that watch bears the mark RLX
unaccompanied by the words "Ralph Lauren."
18

Rolex is mistaken. The RLX RALPH LAUREN catalogs and the RLX
Suunto watch constitute documentary evidence that PRL intended, at the
time of its trademark applications, to use the marks at issue on the
goods at issue. The catalogs and the watch prove numerous facts that
support PRL's intent. For example, the catalogs show that RLX RALPH
LAUREN and RALPH LAUREN RLX were not ad-hoc trademarks invented
to claim intellectual property, but rather existing trademarks that PRL
was already commercializing, at the time of the application, on products
such as ski apparel and accessories.

Additionally, the catalogs show

that PRL had commercialized similar trademarks on a wide range of
products, from sunglasses to socks.

The brand concept behind this

family of trademarks could have easily and organically embraced watches
and jewelry. These catalogs further show that RLX was a versatile mark
that PRL frequently combined with other words to form unitary
trademarks such as RLX POLO SPORT and RLX RALPH LAUREN.
The commercialization of the RLX Suunto watch between 2004 and
2007 also demonstrates that PRL intended to produce watches as part of
the RLX family of merchandise. This is not conclusive proof that PLR
intended to use RLX RALPH LAUREN or RALPH LAUREN RLX on
watches or jewelry. But it does show that the manufacture of watches or
19

jewelry bearing those marks lay within PRL's immediate capability, and
that such goods would have fit coherently into PRL's line of RLX
products.
PRL's joint venture with watchmaker Richemont adds to the
evidence that PRL intended to commercialize watches bearing the
disputed marks at the time of the application.

The joint venture was

consummated in January 2007, and had been the subject of plans and
negotiations for some time before that date. It is therefore a significant
indicator that PRL intended to commercialize watches bearing a range of
PRL's trademarks, likely including the disputed marks, at the time of
application in 2006.

20

Thus, Rolex has failed to show an absence of documentary evidence
of PRL's bona fide intent to use.
intent.

PRL may lack irrefutable proof of its

But this does not amount to a failure to produce "objective

documentary evidence of PRL's intent to use the marks in commerce at
the relevant time." See Honda Motor Co., 2009 WL 962810 at *2. PRL
has, moreover, produced meaningful documentary evidence of its bona
fide intent to use the trademarks, see Aktieselskabet, 525 F.3d at 21,
and Rolex fails to show on all the circumstances that PRL lacked the
requisite intent. See The Saul Zaentz Company dba Tolkein Enterprises
v. Joseph M. Bumb, 2010 WL 2191890 at *4 (T.T.A.B. May 18, 2010). A
genuine issue of material fact clearly exists as to whether PRL applied for
the disputed trademarks without intending to commercialize them on
watches and jewelry, and summary judgment must be denied to Rolex.

ii. PRL's Motion for Summary Judgment
Although Rolex is not entitled to summary judgment in its favor,
neither is PRL. The central issue of fact-whether or not PRL had bona
fide intent to use the marks at the time of application-remains a matter
of genuine dispute. PRL's evidence of its intent is mostly circumstantial,
and well short of conclusive. It is noteworthy, for example, that PRL has
not been able to produce stronger evidence of its intentions to
21

commercialize the new marks, in the form of an email, a business plan,
or a product design contemporaneous to the application.

For these

reasons and others, a reasonable finder of fact could conclude that the
registrations were made without bona fide intent to use.

Summary

judgment is denied to PRL.
Conclusion
For the reasons stated above, both motions for summary judgment
are denied. Rolex's motion to dismiss PRL's counterclaim for declaratory
judgment is granted. This resolves the motions listed as items 25 and 45
on the docket.
This is a public redacted version of the op1n10n filed under seal
March 31, 2015.

SO ORDERED.
Dated: New York, New York
April 27, 2015
Thomas P. Griesa
United States District Judge

22