Is Seiko modding illegal? The Laws Behind Changing Watch Parts Part 2

Christian S., cand. iur., Eberhard-Karls-Universität Tübingen, Baden-Württemberg, Germany(1).

Introduction:

This is the second part of The Namoki Times's mini-series on the legalities of watch modding (click here to read part 1). It will feature an in-depth view into EU, US-American and international intellectual property law.

Companies and businesses invent, design and release new products every day, everywhere in the world. Every product has some sort of story to it, may it be a new release from a well-established company, like a new iPhone from Apple or a hit product from a garage-startup. Most of them have one thing in common: Someone worked hard on them and invested a lot of time and money to get them released. 

 

Innovation does not grow on trees.

 

Before we take a dive into watch modification, let’s take a step back and do a little thought experiment - imagine you are not a watch modder, not even a watchmaker; imagine you are an independent manufacturer. You achieved your lifelong dream of having your own watch brand.

 

 

Source: Pouted

 

You just released your first product, a brand-new wristwatch, that is unlike anything anyone has ever seen before. You took months to come up with a name for your company, and the name of your newly released model has been swirling around your mind for years.

It kept you motivated during those long hours in the development stages of your own in-house-movement, a super accurate automatic movement that uses a brand-new technology no one has ever used before. Designing this movement took hundreds of thousands of dollars and just as many engineering hours.

But it paid off, since your watch became an overnight sensation, and everyone is suddenly talking about you and your new company.

 

Hooray for you!

 

Now, Undertaking all of this was a huge risk, personal and financial. But the competition never sleeps. How on earth do you keep your closest competitors from ripping off your unusual design, using your trendy name and copying your innovative movement technology?

Well, in theory it’s very simple. You hire a good lawyer and go about protecting your intellectual property.

I’ve deliberately chosen three different intellectual properties, that are protected in a different way: Your companies name and the name of your model, which could be trademarked, the innovative new movement of your watch, which could be patented and finally the unusual and new design you chose for your wristwatch.

We’ll take a look at the legalities in the EU, the USA, review some interesting case-law specific to the watch industry, and discuss the legal consequences of intellectual property violations.

 

Patent Law

Let’s keep exploring the scenario we’ve painted earlier. You’ve spent hundreds of thousands of dollars on developing a new automatic movement. Ultimately it will do the very same thing any travel clock can do: Tell the time, but it will do so using a new-and-never-seen-before-way that is more accurate than any movement of any of your competitors.

 

More accurate than even atomic clocks.

 

Here is where Intellectual Property Law gets a bit philosophical: If your competitors could simply copy your superior movement-design, everyone would surely build a better watch. But if everyone could simply copy anyone’s new invention, why would anyone still bother? Who would spend the time and money to do something new, if you could simply wait for someone else to do so, and then rip them off?

 

Thomas Edison wonders about the same thing.

 

This procedure would stifle innovation and competition, which drives any capitalist economy. This principle applies universally, anywhere in the world, so lawmakers had to find a way to make investing in inventions worthwhile.

They came up with the “patent”, which is, at its core, a right to a legal monopoly on a new invention for a certain period of time(2).

Patents are territorial, so to get legal protection, you have to file for a patent in every country you want to be protected in(3). This can get quite expensive very quickly, so especially small companies and startups have to think twice about how many different patents they really need.

 

 

In most countries, including Germany(4) and the U.S.A.(5), you are entitled to a patent, if you invented something that is either entirely new or a significant technical improvement of another invention, and if this invention is of commercial usability. If these requirements are fulfilled, and a patent is issued, the patent holder is legally entitled to be the only one using this invention for up to twenty years.

Apply this to our thought experiment: If we patent our newly developed movement, none of our competitors are allowed to “rip it off”. And if they do, we can sue them for injunction, damages and legally force them to pay us an appropriate licensing fee, if they want to keep using our invention.

 

Source: a blog to watch

 

Examples in the watch world are Seikos revolutionary spring drive movements, which were first patented in 1977 (there are over 230 different patents for this technology), or Rolex’ patent on the “Perpetual”, their 360-degrees turning unidirectional winding rotor, filed in 1931.

Today they claim that they were the first to invent a self-winding “perpetual” rotor(6), which is only a half-truth at best, since the first patent for a self-winding rotor was filed by a watchmaker by the name of John Harwood – who went out of business in 1931, which meant there was no one there to exercise the patent, allowing Rolex and other competitors to swoop in and use the innovation and improve it(7).

 

Trademark Law

Keeping up the scenario from earlier: We gave our newly developed brand and model fancy names and stylish logos. We also decided to rock a brand color: a lavish turquoise, that no other watch company uses. It has become synonymous with our brand overnight.

 

Source: Masters in Time

 

We can protect all of these things by registering trademarks. One respectively for the brand- and model names themselves, as a written word, one for the logo and one for the color.

Trademarks are everywhere: The word “Rolex” is trademarked, so is their crown logo, so is “Submariner”8 or “Oyster- Perpetual”, so is “Omega”, so is the brown color on the UPS trucks, so is “Tiffany-Blue”9, even the McDonalds-Chime is trademarked, you know the one at the end of one of their ads.

 

 Even phrases can be trademarked, like the phrase "Choose Your Own Adventure." Source: Ed to Save the World

 

But why is everything trademarked? Well, for multiple reasons: Trademark law can be described as the law of “building and defending a brand”(10), because it serves multiple purposes.

First and foremost: trademarks exist to tie a certain product to a certain brand(11). A black divers watch with a steel bracelet and a black ceramic bezel could be built by anyone, but you know it’s manufactured by Rolex in Geneva, because of that crown on the dial. Because it says it’s a Rolex. You won’t confuse a Submariner with a Rolex Logo on it with a Steinhart Homage, for example.

 

Source: Rolex Forums

 

Secondly: trademarks exist to ensure a certain level of quality-guarantee to the customer(12). To keep with the “Submariner” example: you will certainly know that a black divers watch that wears a crown logo and a “Submariner” badge will be manufactured to the upmost standards, as all Rolex watches.

Trademarks also serve a “communication and advertising” purpose, the “Rolex” and “submariner” trademarks somewhat “speak” to the customer and transport all the value and image of the brand that owns the trademark(13).

To summarize: a trademark is registered to protect the image of the trademark holding company and ensure the trust of the customer in the quality and origin of a product.

 

Source: Reddit

 

This is exactly what “fakes” use to their advantage. Take cheap black divers watch with a cyclops and a stainless-steel bracelet and print a crown to the dial and most people will think it’s a real submariner. This only confirms the idea, why trademarks are needed, since it demonstrates, that people associate certain words or images to a brand and its reputation.

This is also why the counterfeit industry is the second largest illegal industry in the world, right behind the drug-trade(14).

 

Source: Statista

 

Now that we established why there are trademark protections, how do we go about obtaining some ourselves? Well first and foremost we will need a trademark to even protect.

As described earlier a trademark can be a word, a logo, a color and even a sound. It just has to be able to be documented and archived in some way and it has to be able to differentiate a product from different and competing products.

We won’t get a trademark registered, if it closely resembles a similar product and therefore runs at a risk of confusion. Simplified: We won’t get any protection if we try to register “ROWLECKS” as a trademark for a watch company, since it sounds too similar to “Rolex”.

 

Nor will you be able to trademark Seyko. Source: Reddit

 

We can however register “Submariner” for scuba diving gear or an actual submarine model. Rolex may not like it and will certainly try to sue us, but legally they won’t be able to do anything about it, since no one will confuse a literal submarine-U-boat with a dive watch, even if they have the same name.

Our trademark is protected from the very moment it gets registered. Trademarks are also territorial, but there are ways and protocols to streamline the registration process in many countries all at once, since you can register a trademark at the “European Intellectual Property Office” (EUIPO) in Alicante, Spain to gain protection in the entire EU, or file for a registration with the “World Intellectual Property Organisation” in Geneva, Switzerland to register your trademark in many countries all over the world at once.

 

Source: IP Leaders

 

To summarize: trademarks exist to secure the investments companies make into their brand, products and images, and to protect the customer from confusing one product with the product of another manufacturer.

Great! We now know why we need a trademark, and how we can get one. But how do we know if our competitors violated our trademark, and even more important: what can we do about it?

Trademark infringements can come in different “flavors” – so to say. You can infringe trademark by directly applying a trademarked logo to your own product without permission of the trademark owner. This would be the most blatant violation, since you are literally producing a “fake”.

You can also infringe trademark rights by using (for example) a logo that is close enough to a registered trademark, that you could associate your brand with the other brand, or even confuse it. This “7-Eleven” logo is a good example:

 

 

(15)

 

The red seven with a strike-through text clearly resembles the famous japanese super-market chains logo. In laymen’s terms you could call the red “Super 7” logo “off-brand”.

These “resemblance” cases are more difficult to explain and generalize, since ultimately the decision if a competitors logo/word/color/etc. is “close enough to bear a significant resemblance” to the protected trademark is up to a judge, resulting in a convoluted case-law.

Rolex, for example, once tried to sue the German coffee-company-turned-lifestyle-brand “Tchibo” for injunction, because Tchibo sold a wristwatch that looked very close to a Rolex Datejust – for round about $ 50 USD.

This case is a difficult example, since they claimed Tchibos watch looked too similar, which overcuts into design-protection law, but Rolex also claimed their “Datejust” watches had such an iconic look to them, that this look also deserved to be a protected trademark, by notoriety, since everyone ties the look of a Datejust – fluted bezel, cyclops and jubilee bracelet to the Rolex Brand name.

The judges did not share this view and Tchibo was acquitted. In my opinion they were correct, since – sure – the design is definitely Rolex, but the look of a product shouldn’t be trademarked, since a design can be protected for a fixed time period, but a trademark can be upheld (in theory) forever. But this case demonstrates that Rolex does not take their intellectual property rights lightly.

 

(16)

 

So what can we do about it? I would advise you to lawyer up, because trademark violations (at least in the EU) are privately enforced. This means that the trademark holder has to find out about the violation and then sue the violating party for civil damages, and licensing fees.

In the EU the standard procedure is, that the holder has their lawyers send the other party a cease-and-desist letter first.

This procedure can vary, especially if the violating party is a business and earns money with trademark infringements.

This doesn’t mean that the trademark laws are toothless tigers: In most countries trademark violations are also a criminal offense, even a felony. Germany for example punishes trademark violations with a hefty fine or even with up to three years in prison. The maximum sentences goes up to a minimum of three months and a maximum of five years, if the accused commercially violated trademark law(17). In the USA manufacturing and trafficking counterfeit good is also considered a felony(18).

 

Design

Finally let’s talk about designs. Design law is distinctively more abstract, since design is a form of art, and therefore very diverse, sometimes hard to grasp and very individual.

 

Source: Design.Google

 

A design is defined as the two- or three-dimensional appearance of a product. To be worthy of protection, a design has to be new and unlike any other already existing design19.

This is fairly easy for fashion makers for example, because an otherworldly and bold jacket from the likes of Gucci or Jean-Paul Gaultier will be so lavish, that you would never confuse it with any old jacket. For watches though, things get a bit more difficult.

You see, a black divers watch is a black divers watch. A Tag Heuer Aquaracer looks very similar to the all-famous Rolex Submariner from a few feet away.

Also, there’s a limited amount of things you can do to a wristwatch designwise: Most need a case, at least two hands, a glass and a strap of some sorts and any possible design is constricted by these factors. This means that most watch-designs can’t really be protected.

 

Gerald Genta - Swiss watch designer and artist. Source: GQ-Magazine

 

Notable exceptions were the Audemars Piguet Royal Oak and of course the Patek Philippe Nautilus, both designed by star-designer Gerald Genta(20). But these two really were outerworldly when they were introduced in the 1970s.

The protection of a design begins with the registration at the patent office and lasts for a number of years, 14 in the U.S.A. and up to 25 in the EU.

 

Application to the watch-modification scene

Let’s apply all the legal principles to the topic at hand: The watch-modding-community.

Starting with patent law: most modders neither have the skill nor the resources to produce their own movements. Most watch manufacturers don’t have the skill or resources to produce their own movements, to be fair. So unless you plan on starting that and then wildly copying patented technologies, you won’t run into any legal troubles.

The same principle applies to designs. If you want to use an homage watch case or produce a dial, check with your local patent offices database if the design is protected. It most likely won’t be.

Now for the most pressing topic: does a modder infringe trademark law by using parts that are labelled with protected logos? Well, it depends.

People strive to build watches that don’t come prebuilt from the factory, modify something to make it their own. This also includes building watch models that don’t exist at all.

 

Source: #Seikomod on IG

 

First of all: If you simply swap a crystal or hands or a bezel on your own watch, you won’t violate any laws. Most countries follow the principle: “You can do whatever you want with your property, as long as you don’t endanger anyone else or break any laws”. Simply swapping parts around doesn’t violate anything.

The only parts that are usually “branded” on a watch are the caseback and the dial. Short throwback: the only people allowed to use a trademark are the rights holders and licensed manufacturers.

If someone produces a dial that – for example – says “Seiko” this is automatically a trademark infringement, if the producer isn’t legally allowed to print the protected trademark onto the dial. There are multiple popular dials in circulation that are not exactly legal:

 

 

All three of these dials have one thing in common – they were produced in some factory in China and are certainly not licensed Seiko/Red Bull products.

The Seiko(21) logo and the “Charging Bulls”(22) are both protected trademarks, so producing these dials is a trademark violation, buying and importing them is a trademark violation, and using and selling them are a trademark violation. They would be perfectly legal without the “bulls” or the “Seiko” logo.

This means that all of these three actions are illegal and punishable on the legal basis outlined earlier. Is it very likely? Well at least to get sued by the Seiko Holdings K.K. isn’t really, because Seiko does not seem to really care about the modding community or fake dials at all. But customs officers care very much, and since many modders export to all over the world, using fake dials has to be strongly advised against.

Is it even possible to use any dial that says “Seiko” on it?

 

Like these ones?

 

Yes, of course! To any rule there is an exemption, and coming back to the general rule, that everyone should be able to do with their property however they please, global trademark law found the corresponding ruling: any trademark protected sign, logo, etc. can be used however, after it has been sold. It simply has to have been produced by a licensed manufacturer(23).

This means, that you can buy an original (OEM/Genuine) Seiko dial and build whatever you want. You can also buy a genuine Rolex Dial and slap it onto some ETA Movement, you’d have a so called “frankenwatch” but a perfectly legal one (as long as you don’t try to sell it as original, that would be fraud). You can also buy aftermarket dials that are either sterile (don’t have a logo at all), or dials by third party manufacturers like namokiMODS or dlwwatches, who all produce dials with their very own logos.

The takeaway of all of this is: Modding is not a crime but violating intellectual property law is. You now have a good grasp on the legal basics, since we went about as “in-depth” as any layman could ever go. There is nothing left to write about anymore, so get a few dials and have fun.

 

References and footnotes:

1 The Author is a pre-bar law student at Eberhard-Karls-University of Tübingen, Germany. He has passed his pre-bar university specialization exam on antitrust-, trademark-, and intellectual property law.

2 Fitzner in BeckOK Patentrecht, Vor §§ 1-25, Rn. 4 (Stand: 24.09.2021).

3 https://www.dpma.de/english/patents/protection_outside_germany/index.html (24.09.2021).

4 § 1 Patentgesetz (PatG).

5 35 U.S.C. § 131

6 https://www.rolex.com/about-rolex-watches/1926-1945.html (25.09.2021).

7 Ilias Yiannopoulos, “The Rolex Oyster Myth”  https://journal.hautehorlogerie.org/en/the-rolex-oyster-myth-i/ (25.09.2021).

8 https://register.dpma.de/DPMAregister/marke/registerHABM?AKZ=001456169&CURSOR=1 (25.09.21)

9 https://www.tiffany.com/policy/trademarks-copyrights/ (25.09.2021)

10 https://ec.europa.eu/growth/industry/policy/intellectual-property/trade-mark-protection_en (25.09.2021)

11 European Court of Justice, GRUR 2003, 55 (48) – “Arsenal FC”.

12 European Court of Justice, 18.06.2209, C-487/07 “L’Oreal”, Rn. 58.

13 European Court of Justice, 23.05.2010, C-236/06 “Google France” referencing C-487/07 “L’Oreal”.

14 https://www.forbes.com/2010/06/04/biggest-illegal-businesses-business-

crime_slide.html?sh=186d5c5f760a (25.09.2021).

15 http://www.ryancruzlaw.com/intellectual-property/use-caution-when-creating-a-company-logo-to-avoid- trademark-infringement/ (25.09.2021).

16 https://uhrforum.de/threads/tchibo-geschichtsuhr-royal-kult.230511/ (25.09.2021).

17 § 143 I, II MarkenG

18 18 USC § 2320

19 § 2 DesignG (GER)

20 AP: US Design Patent 3756017

21 https://register.dpma.de/DPMAregister/marke/registerIR?AKZ=1376338&CURSOR=20 (26.09.2021)

22 https://register.dpma.de/DPMAregister/marke/registerIR?AKZ=791989&CURSOR=13 (26.09.2021)

23 § 24 MarkenG, 17 USC § 109 “first sales doctrine” i.c.w. Surpreme Court of the US, “Prestonettes Inc. v. Coty”, 264 U.S. 359 (1924).