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June 1, 2005.

CARTIER, a division of RICHEMONT NORTH AMERICA, INC., et al., Plaintiffs,
SYMBOLIX, INC., d/b/a PARK CITIES JEWELERS, et al., Defendants.

The opinion of the court was delivered by: RICHARD HOLWELL, District Judge


Cartier, a division of Richemont North America, Inc., and Cartier International, B.V. (collectively "Cartier") have moved for a preliminary injunction, seeking to enjoin Symbolix, Inc. d/b/a Park Cities Jewelers ("Park Cities Jewelers), its principal, Ahmed M. Saleh, and John Does 1-5 (collectively "defendants") from altering genuine stainless steel Cartier watches by mounting diamonds at various points on the bezels and cases to simulate Cartier's more expensive white gold watches and thereafter selling the altered watches. For the reasons set forth below, the Court grants Cartier's motion and enters a preliminary injunction against defendants.


  Cartier has been developing, marketing and selling luxury watches in the United States for nearly a century. (Declaration of Ralph Destino ("Destino Decl.") ¶ 3.) Cartier owns the mark "Cartier" under United States trademark law and deploys the mark on both its watch and jewelry products. (Id. ¶ 4; Exs. A and B.) Park Cities Jewelers sells used watches, including unworn Cartier watches. (Affidavit of Ahmed M. Saleh ("Saleh Aff.") ¶ 5.)*fn1 Saleh is an officer of Symbolix Inc., which does business as Park Cities Jewelers. (Id. ¶ 1.) At the request of customers, defendants work with a jeweler to place diamonds on the pre-owned Cartier watches in connection with the sale of those watches. (Transcript of Deposition Testimony of Ahmed M. Saleh ("Saleh Dep. Tr.") at 16-17.) Defendants are not associated with Cartier in any form or fashion. (Id. ¶ 4.)

  In December of 2004, Cartier deployed a private investigator, Kathy Braunstein, to conduct an investigation into Park Cities Jewelers. (Declaration of Kathy Braunstein ("Braunstein Decl.") ¶ 1.) On December 13, 2004, Braunstein spoke to Saleh over the phone and expressed an interest in purchasing "a watch with diamonds on the bezel and case." (Id. ¶¶ 2, 3.)*fn2 Braunstein asserts that when she asked about a ladies' Cartier watch, Saleh responded that he could sell her a brand new Cartier Tank Francaise stainless steel model and add diamonds on the bezel and case for $6,000. (Id.) By comparison, Saleh said, a genuine Cartier Tank Francaise watch with diamonds would cost $14,500. (Id.) When asked whether he had made this watch on previous occasions, Saleh stated that he "had been doing it for ten years." (Id. ¶ 4.) Although Braunstein and Saleh did not finalize the terms of the deal, Braunstein called back on December 16, 2004 and discussed the purchase of a small-size, stainless steel, ladies' Cartier Tank Francaise watch, with diamonds added to the bezel and case for $5,750 without any sales tax. (Id. ¶ 5.) Saleh informed her that the work on the watch would take about one week at the longest and would be accompanied by a two-year Park Cities Jewelers' warranty. (Id.) On January 4, 2005, Braunstein called Saleh again regarding the Cartier Tank Francaise watch. (Reply Declaration of Kathy Braunstein ("Braunstein Reply Decl.") ¶ 3.) Braunstein told Saleh that Cartier did not manufacture the Cartier Tank Francaise watch in stainless steel with diamonds and that others viewing the watch might regard it as a fake. (Id. ¶ 4.) Saleh responded that the Cartier Tank Francaise model is made with stainless steel or white gold, but that diamonds are only placed by Cartier on the white gold model. (Id.) However, he reassured her that they "polished" the stainless steel to make it appear like "white gold; it looks exactly the same. They are exactly identical." (Id.) Saleh further stated that he had placed a picture of the Cartier Tank Francaise watch in stainless steel with diamonds in a recent advertisement in a Dallas newspaper around October or November of 2004 and that one could not tell the difference between the two watches. (Id. ¶ 6.)

  Thereafter, Vanessa Halvorsen, an administrative assistant employed at plaintiff's law firm, posed as a relative of Braunstein and contacted Saleh, who transferred her call to another employee named Reza on January 20, 2005. (Declaration of Vanessa Halvorsen ("Halvorsen Decl.") ¶¶ 2-4.) Halvorsen told Reza she wanted to purchase a stainless steel Cartier Tank Francaise watch with diamonds. (Id. ¶ 4.) In response to Halvorsen's request, defendants purchased an unworn stainless steel Cartier watch from International Watch Company, located in Miami; the watch did not, at that time, contain diamonds. (Saleh Dep. Tr. at 25, 48.) Defendants shipped the watch to America's Diamonds, located in Los Angeles, and requested that the watch be polished and encrusted with diamonds. (Id. at 48, 56.) America's Diamonds placed diamonds on the watch, polished the watch and sent it back to defendants in Dallas. (Id. at 50.) Defendants then shipped the watch without an accompanying Park Cities Jewelers' receipt to Halvorsen after she faxed her personal information including her credit card information and driver's license. (Id. ¶ 5.)

  Ralph Destino, Chairman Emeritus of Cartier, inspected the watch received by Halvorsen and noted the "marked inferiority in the aesthetic appearance as compared to comparable genuine diamond-set Cartier watches." (Destino Decl. ¶ 8.) According to Destino, Cartier does not set diamonds on its stainless steel watches but rather exclusively places them on the higher-end white and yellow gold watches, including the Cartier Tank Francaise watch. (Id.) In Destino's opinion, the "combination of diamonds with stainless steel is not one offered or sold by Cartier; such a combination of a relatively inexpensive metal with expensive diamonds, appears incongruous and is certainly an aesthetically different watch from those sold and promoted by Cartier." (Id.) Moreover, he discerned that "the setting of the diamonds was done in a sloppy manner, resulting in a cheap, shoddy looking item." (Id.)

  On February 24, 2005, plaintiffs sent defendants a letter a "cease and desist" letter demanding that defendants discontinue the advertising, promotion and sale of any altered Cartier watches. (Declaration of Milton Springut ("Springut Decl."), Ex. A.) By letter dated March 4, 2005, defendants' counsel responded, representing that while defendants purchase diamond-encrusted watches from various sources that may be factory originals or "aftermarket," defendants do "not alter, add, modify or recondition timepieces." (Id., Ex. C.) This denial was flatly contradicted by Saleh's subsequent deposition testimony. (Saleh Dep. Tr. at 16-17.) On April 5, 2005, plaintiffs moved by ex parte order to show cause why a preliminary injunction enjoining defendants from their infringing activities should not be entered before this Court. That same day, the Court granted the order to show cause. The Court subsequently heard oral argument on plaintiffs' motion for a preliminary injunction on April 21, 2005.


  I. Preliminary Injunction

  A party seeking a preliminary injunction must demonstrate "(1) irreparable harm in the absence of the injunction and (2) either (a) a likelihood of success on the merits or (b) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in the movant's favor." MyWebGrocer, LLC v. Hometown Info, Inc., 375 F.3d 190, 192 (2d Cir. 2004) (internal citations and quotations omitted); Fed.R.Civ.P. 65.

  To prevail under § 1114 of the Lanham Act, a plaintiff asserting trademark infringement claims must show that the 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 Jahn USA Pub. v. Jahr Printing and Pub. Co., 991 F.2d 1072, 1075 (2d Cir. 1993) (citing 15 U.S.C. § 1114(1)(a)). Where a protected mark is implicated, such as is the case here, Cartier may simply show a "likelihood of confusion" in order to establish both a "likelihood of success on the merits and irreparable harm." New Kayak Pool Corp. v. R & P Pools, Inc., 246 F.3d 183, 185 (2d Cir. 2001). Defendants have not seriously contested the first and third elements — e.g., that they altered and sold genuine stainless steel Cartier watches without Cartier's permission. The remaining issues, therefore, are whether defendants' activity in reselling altered, stainless steel Cartier watches constitutes the unlawful exploitation of plaintiffs' trademark "in commerce" and is likely to cause confusion.

  A. Use in Commerce

  Defendants argue that "[t]he Lanham Act does not apply in the narrow category of cases where a trademarked product is repaired or modified at the request of the customer" and not offered for sale to the general public. (Defs.' Opp'n Mem. at 3-4.) In other words, defendants appear to assert that they are entitled to modify and sell genuine stainless steel Cartier watches in response to specific requests by individual customers. Plaintiffs respond that the Lanham Act applies to defendants' sale ...

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