swatch v sturhling response

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ----------------------------------------------------------x

THE SWATCH GROUP (U.S.) INC.,

Plaintiff,

v.

STÜHRLING ORIGINAL LLC and VALUEVISION MEDIA, INC.,

Defendants.

:::::::::::

No. 2012 CIV. 2927 DLI / RLM-MJ

----------------------------------------------------------x

ANSWER AND COUNTERCLAIM OF DEFENDANTS STÜHRLING ORIGINAL LLC AND VALUEVISION MEDIA, INC. TO PLAINTIFF'S COMPLAINT

GIBSON, DUNN & CRUTCHER LLP Howard S. Hogan (HH 7995) 1050 Connecticut Ave NW Washington DC 20036-5306 Telephone: 202.887.3640 Facsimile: 202.530.9550

Akiva Shapiro (AS 7570) 200 Park Avenue, 47th Floor New York, NY 10166-0193 Telephone: 212.351.3830 Facsimile: 212.351.6340

Attorneys for Defendants STÜHRLING ORIGINAL LLC and VALUEVISION MEDIA, INC.

Case 1:12-cv-02927-DLI-RLM Document 15 Filed 01/17/13 of 29 PageID #: 71

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ----------------------------------------------------------X

THE SWATCH GROUP (U.S.) INC.,

Plaintiff,

v.

STÜHRLING ORIGINAL LLC and VALUEVISION MEDIA, INC.,

Defendants.

:::::::::::

No. 2012 CIV. 2927 DLI / RLM-MJ

----------------------------------------------------------x

ANSWER AND COUNTERCLAIM OF DEFENDANTS STÜHRLING ORIGINAL LLC AND VALUEVISION MEDIA, INC. TO PLAINTIFF'S COMPLAINT

I. ANSWER

For their answer to the Complaint of Plaintiff The Swatch Group (U.S) Inc. (“Swatch”),

Defendants Stührling Original LLC (“Stührling”) and ValueVision Media, Inc. (“ValueVision”)

(collectively, “Defendants”), by and through counsel, state as follows:

THE PARTIES

1. Defendants lack knowledge or information sufficient to admit or deny the

allegations set forth in paragraph 1 of the Complaint.

2. Defendants admit the allegations set forth in paragraph 2 of the Complaint.

3. Defendants admit the allegations set forth in paragraph 3 of the Complaint.

JURISDICTION AND VENUE

4. Paragraph 4 of the Complaint states a legal conclusion to which no response is

required. To the extent that a response is required, Defendants deny each and every allegation

set forth in paragraph 4 of the Complaint.


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required. To the extent that a response is required, Defendants deny that they are liable to

Swatch under any theory, including Trademark Infringement, Unfair Competition, and/or False

Advertising arising under the Lanham Act § 43(a), 15 U.S.C. § 1125, and/or Trademark

Infringement, unfair competition and false designation of origin and false advertising arising

under the common law and the laws of the State of New York, except to state that Swatch

purports to assert such claims.







FACTS

8. Paragraph 8 states a legal conclusion to which no response is required. To the

extent that a response is required, Defendants deny each and every allegation set forth in

paragraph 8 of the Complaint.

9. Defendants lack knowledge or information sufficient to form a belief as to the

truth of the allegations set forth in paragraph 9 of the Complaint, and on that basis deny them.



11. Defendants deny each and every allegation set forth in paragraph 11 of the

Complaint.


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Complaint.

14. Defendants deny the allegations set forth in paragraph 14 of the Complaint,

except to admit that the Hamilton Ventura watch incorporates a triangular-shaped case and bezel,

with points at 1 o’clock, 5 o’clock and 9 o’clock, and to aver that many watches by various

manufacturers have these same characteristics and that triangular watches are common in the

marketplace. Defendants deny that the appearance of the Hamilton Ventura is unique, inherently

distinctive, and/or nonfunctional. Defendants lack knowledge or information sufficient to form a

belief as to the truth of the allegation that Richard Arbib designed the Hamilton Ventura watch,

and on that basis deny it.












4










Complaint.






Complaint.









5


Complaint.

32. Defendants deny the allegations set forth in paragraph 32 of the Complaint except

to admit that the Stührling Ricochet watch incorporates a triangular case, with points at 1

o’clock, 5 o’clock and 9 o’clock, and to aver that triangular watches with these characteristics

are common in the industry.


Complaint.

34. Defendants deny the allegations set forth in paragraph 34 of the complaint except

to admit that fewer than 500 Stührling Ricochet watches were marketed, promoted, advertised, or

sold through channels such as Amazon.com, ShopNBC.com, and on the ShopNBC television

network prior to July 2012.


except to admit that ValueVision operates the ShopNBC television network and its website

ShopNBC.com.

36. Defendants deny the allegations set forth in paragraph 36 of the complaint except

to admit that fewer than 400 Stührling Ricochet watches were marketed, promoted, advertised, or

sold through ShopNBC.com and the ShopNBC television network prior to July 2012.

37. Defendants admit that fewer than 400 Stührling Ricochet watches were marketed,

promoted, advertised, or sold through ShopNBC.com and the ShopNBC television network prior

to July 2012, but otherwise deny each and every allegation set forth in paragraph 37 of the

Complaint.


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Complaint.


Complaint.


Complaint.


Complaint.


except to admit that on or about May 28, 2012, Lawrence Magen, President of North American

Operations for Stührling, appeared on the ShopNBC television network, and that during the

show, the host stated,

You guys could not have picked a better time to build this, because this whole triangular thing has been championed by at least two of the major power brands coming out at the Hall of Dreams, and, of course, obviously commanding much higher price points than this. If memory serves, I think there’s another motion picture release now where this is once again being touted.


Complaint.


Complaint.


Complaint.


Complaint.


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COUNT I

47. Defendants repeat and reallege their responses to the foregoing paragraphs of the

Complaint.





Complaint.

50. Paragraph 50 contains legal conclusions to which no response is required. To the


paragraph 50 of the Complaint, and aver that no consent or authorization is required to sell

triangular watches such as the Ricochet watch.


Complaint.


Complaint.


Complaint.


Complaint.


Complaint.


8


Complaint.


Complaint.


Complaint.


Complaint.


Complaint.




COUNT II


Complaint.


Complaint.


Complaint.


Complaint.


9


Complaint.


Complaint.


Complaint.


Complaint.




COUNT III


Complaint.


Complaint.



paragraph 73 of the Complaint, and aver that no consent or authorization is required to sell

triangular watches such as the Ricochet watch.


Complaint.


10


Complaint.


Complaint.


Complaint.




COUNT IV


Complaint.


Complaint.


Complaint.


Complaint.


Complaint.


Complaint.


11


Complaint.




COUNT V


Complaint.


Complaint.


Complaint.





Complaint.




COUNT VI


Complaint.


12


Complaint.





Complaint.




COUNT VII


Complaint.




COUNT VIII


Complaint.


Complaint.


Complaint.


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FIRST AFFIRMATIVE DEFENSE

1. The Complaint fails to state any claim upon which relief can be granted.

SECOND AFFIRMATIVE DEFENSE

2. Swatch does not possess any trademark rights in Swatch’s asserted trade dress.

THIRD AFFIRMATIVE DEFENSE

3. Defendants’ activities relating to the Ricochet watch do not infringe or otherwise

violate any valid rights for which Swatch is entitled to relief.

FOURTH AFFIRMATIVE DEFENSE

4. Swatch’s asserted trade dress referenced in the Complaint is neither inherently

distinctive nor has it acquired secondary meaning, and is therefore not subject to protection.

FIFTH AFFIRMATIVE DEFENSE

5. Swatch’s claims are barred by the doctrine of trademark misuse.

SIXTH AFFIRMATIVE DEFENSE

6. Swatch cannot recover against Defendants on any of its claims alleged in the

Complaint because Defendants have not engaged in any business practice that is forbidden by

any federal or state statute, regulation, rule, policy, and/or common law.


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SEVENTH AFFIRMATIVE DEFENSE

7. Swatch cannot recover against Defendants on any of its claims alleged in the

Complaint because Defendants have not engaged in any conduct that is likely to deceive or

confuse the public.

EIGHTH AFFIRMATIVE DEFENSE

8. Swatch cannot recover against Defendants on its claims alleging injury to

business reputation because its asserted trade dress is not a distinctive mark and there is no

likelihood of dilution.

NINTH AFFIRMATIVE DEFENSE

9. Defendants’ advertisements and/or marketing statements were either accurate or,

at most, puffery, and not likely to mislead or deceive any consumers, and on that basis, Swatch’s

claims regarding the contents of Defendants’ advertisements and/or marketing statements are

barred.

TENTH AFFIRMATIVE DEFENSE

10. Swatch is barred from recovery because it has not suffered any injury or damage

as a result of any act or conduct of Defendants.

ELEVENTH AFFIRMATIVE DEFENSE

11. Swatch’s claims are barred in whole or in part by the applicable statute of

limitations, waiver, and/or laches.

TWELFTH AFFIRMATIVE DEFENSE

12. Swatch is not entitled to injunctive relief because any alleged injury to Swatch is

not immediate or irreparable, and Swatch has an adequate remedy at law.


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OTHER DEFENSES RESERVED

13. Defendants expressly reserve the right to assert any other legal or equitable

defenses that may be available based on legal theories, which may or will be divulged through

clarification of the Complaint, through discovery, or through further legal analysis of Swatch’s

claims and positions in this litigation.

ANSWER TO PRAYER FOR RELIEF

Swatch’s wherefore clause states a request for relief to which no response is required. To

the extent that any response is required, Defendants deny that Swatch is entitled to the relief

requested, and the Defendants request the entry of judgment dismissing Swatch’s Complaint.

WHEREFORE, having fully answered, Defendants pray that the Court:

(a) Dismiss the Complaint with prejudice;

(b) Award Defendants their costs and expenses incurred herein; and

(c) Grant Defendants such other and further relief as it may deem just and proper.

II. COUNTERCLAIM

Pursuant to Rule 13 of the Federal Rules of Civil Procedure, Defendants Stührling

Original LLC (“Stührling”) and ValueVision Media, Inc. (“ValueVision”) (collectively,

“Defendants”), by and through counsel, bring these counterclaims against Plaintiff and

Counterclaim-Defendant The Swatch Group (U.S.) Inc. (“Swatch”), and allege as follows:

THE PARTIES

1. Stührling is a limited liability company with its principal place of business at 449

20th Street, Brooklyn, New York.


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2. ValueVision is a Minnesota corporation with its principal place of business at

6740 Shady Oak Road, Eden Prairie, Minnesota and operates the ShopNBC television network

and website, available at www.ShopNBC.com.

3. In its Complaint, Swatch alleges that it is a Delaware corporation with its

principal place of business at 1200 Harbor Boulevard, 7th Floor, Weehawken, New Jersey.

JURISDICTION AND VENUE

4. This Court has subject matter jurisdiction over these counterclaims pursuant to 28

U.S.C. §§ 1331, 1338(a), 1367(a), and 2202.

5. This Court has personal jurisdiction over Swatch because Swatch has submitted

itself to the personal jurisdiction of this Court by commencing this action.

6. Venue is proper in this District under 28 U.S.C. § 1391 because Swatch filed its

Complaint in this District and thus has consented to venue in this Court, and because a

substantial part of the events giving rise to the Counterclaim occurred in this District.

FACTUAL BACKGROUND

7. Stührling is a manufacturer of premium watches which sells over 600 different

types of watches and has designed and developed thousands of watch models.

8. ValueVision operates ShopNBC and ShopNBC.com to afford consumers an

opportunity to purchase premium products.

9. Neither Stührling nor ValueVision has an interest in or incentive to cause

consumer confusion.

10. This Counterclaim is brought to protect Defendants against Swatch’s assertion

that the common triangular shape and arrangement exhibited in its Hamilton Ventura watch

constitutes a protectable trade dress. Swatch claims that Defendants’ advertisement and sale of


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the Stührling Ricochet, a triangular-shaped watch, constitutes trademark infringement, unfair

competition, and false advertising, despite the fact that triangular-shaped watches are common in

the industry. Swatch’s attempt to monopolize the use of the triangular watch case is unsupported

by law, defies common sense, and would unduly restrict the design options available to

competitors in this market.

11. On information and belief, Swatch has no registrations with the U.S. Patent and

Trademark Office that encompass the trade dress that it has asserted in this action.

12. Triangular watches that bear the same design elements that Swatch claims as its

trade dress are used by multiple watch merchants. At least a dozen manufacturers currently sell

watches making use of the same design elements that Swatch asserts to be protected.

13. As can be seen in below, a number of watches by various manufacturers bear the

overall look and feel of the Hamilton Ventura watch, including protruding angles at the same

hours on the watch and the location of the crown.

14. Below is a true and correct image of a watch marketed by Seiko Watch

Corporation. The watch below has a triangular case, with points at 1 o’clock, 5 o’clock and 9

o’clock, and a crown at the 3 o’clock position.


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15. Below is a true and correct image of a watch marketed by TechnoMarine S.A.

The watch below has a triangular case, with points at 1 o’clock, 5 o’clock and 9 o’clock, and a

crown at the 3 o’clock position.

16. Below is a true and correct image of a watch that is, on information and belief,

licensed by the popular science fiction television program Doctor Who and marketed to

consumers. The watch below has a triangular case, with with points at 1 o’clock, 5 o’clock and 9

o’clock, and a crown at the 3 o’clock position.


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17. Below is a true and correct image of a watch marketed by Timex Group USA,

Inc. The watch below has a triangular case .

18. Below is a true and correct image of a watch marketed by Sheffield Watch

Company. The watch below has a triangular case, with scalloping along two of the edges of the

case.


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19. Below is a true and correct image of a watch marketed by Charles-Hubert, Paris.

The watch below has a triangular case, with points at 1 o’clock, 5 o’clock and 9 o’clock, and a

crown at the 3 o’clock position.

20. On information and belief, there are and have been other watches marketed by

companies other than Swatch and available to consumers in the United States that similarly make

use of watch design that Swatch claims to be its exclusive trade dress.

21. It was in the context of a market that includes all of the watches shown above that

Stührling introduced the Ricochet watch in 2012.

22. The differences between the Stührling Ricochet and the Hamilton Ventura are

obvious and include the highlight colors, the design of the hands, the design of the dial, the tick

marks that denote the hours and minutes, and the overall shape and angles of the triangle.

23. To avoid any possibility of confusion with any other manufacturer’s watch, the

Stührling Ricochet clearly states “Stührling”:

• across the face of the watch;

• on the back of the watch;


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• on the inside of the watch band;

• all over the packaging in which the watch is sold; and

• all over the advertising that accompanies any sale of the watch.

24. Below is a true and correct image of the packaging in which the Stührling

Ricochet is offered to the public. “Stührling” is written all over the packaging, including across

the top cover of the packaging, on the inside of the watch box, and on the cleaning cloth included

with the packaging.


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25. Below is a true and correct image of the Stührling Ricochet as offered to the

public through Amazon.com. “Stührling” is stated all over the advertising that accompanies the

watch, as well as across the face of the watch itself as displayed for sale.


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26. Below is a true and correct image of the Stührling Ricochet as offered to the

public on ShopNBC. “Stührling” is stated prominently on screen as well as across the face of the

watch itself as displayed for sale.

27. As a result, no consumer was able to view the Stührling Ricochet watch without

also seeing the prominently displayed and stylized “Stührling” mark and logo, not only on the

watch itself, but also in marketing materials and at points of sale, including on ShopNBC.

28. Stührling ceased all sales of the Stührling Ricochet in July 2012.

29. The Hamilton Ventura and the Stührling Ricochet watches were not sold in close

proximity. The Stührling Ricochet was sold primarily on ShopNBC, during segments where

only Stührling watches were sold and the watches and program were clearly branded as


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Stührling, and through Stührling’s own website and distribution channels (where the watches

were similarly branded as Stührling).

30. On information and belief, the Hamilton Ventura is and at all times relevant has

been sold primarily by authorized Swatch distributors who do not carry Stührling watches.

31. On information and belief, during the time that the Stührling Ricochet was

available on the market, there was no actual confusion of the two watches, nor has there been

any instance of actual confusion since.

32. Defendants had no intent to cause any confusion with the Hamilton Ventura

watch, and on the contrary have ensured that consumers see the Stührling name whenever they

see the Ricochet watch.

33. Although the Complaint selectively—and misleadingly—quotes from a May 2012

ShopNBC broadcast that featured the Stührling Ricochet, in full context, it is clear that the host

was not trying to suggest that the Ricochet was featured in the film Men in Black III, as Swatch

alleges was inferred, or that it was a Hamilton Ventura watch. The host’s full statement makes

clear that he was commenting on the popular triangular case design, and that he specifically

distinguished the Stührling Ricochet from the more expensive brands using that design:

You guys could not have picked a better time to build this, because this whole triangular thing has been championed by at least two of the major power brands coming out at the Hall Of Dreams, and, of course, obviously commanding much higher price points than this. If memory serves, I think there’s another motion picture release now where this is once again being touted.

34. This statement makes clear that the “triangular thing” is a common design

element that is a feature of multiple watch brands. The Hamilton Ventura is not even identified

(and, in light of the many brands selling triangular watches, may not even have been implicitly

referenced), nor is the motion picture release identified.


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35. Purchasers of luxury watches are extremely sophisticated buyers who will not be

confused by two watches that share only the same basic shape and are in other material respects

different.

FIRST COUNTERCLAIM: DECLARATORY JUDGMENT

36. Defendants repeat and reallege each of the foregoing paragraphs as though fully

set forth herein.

37. An actual controversy exists between Swatch and Defendants. Swatch’s

allegations that the shape of its Hamilton Ventura watch constitutes trade dress, and that the

Stührling Ricochet watch infringes that alleged trade dress, have created a definite and concrete

dispute between the parties, who have adverse legal interests. The parties’ dispute is real and

substantial, and calls for a decree of conclusive character.

38. The substantial controversy between Swatch and Defendants is of sufficient

immediacy and reality to warrant the issuance of a declaratory judgment. A judicial declaration

is necessary to settle this dispute and to clarify the parties’ respective rights.

39. Swatch’s alleged trade dress is invalid and unprotectable in that it is not

distinctive, has not acquired secondary meaning, and is aesthetically functional.

40. Defendants’ sale of Stührling Ricochet watches is not likely to cause confusion,

deception, or mistake among consumers as to the source, sponsorship, affiliation, or

authorization of the watches, and specifically is not likely to cause confusion among consumers

vis-à-vis Swatch or any of Swatch’s products.

41. Defendants are entitled to a declaratory judgment of their rights, specifically that

the manufacture, promotion, advertisement, and sale of Stührling Ricochet watches do not


26

violate any trade dress rights of Swatch under 15 U.S.C. § 1125 or as a matter of New York state

law.

42. Swatch’s assertion of protected trade dress and its claims against Defendants are

utterly without merit and appear to be in bad faith. These facts make this case “exceptional”

pursuant to the Lanham Act, § 35(a), 15 U.S.C. § 1117(a), entitling Defendants to recover

reasonable attorneys’ fees.

WHEREFORE, Defendants pray that the Court:

(a) Dismiss the Complaint with prejudice;

(b) Deny any and all relief requested by Swatch;

(c) Declare that Swatch’s asserted Hamilton Ventura trade dress is unenforceable as a

matter of law;

(d) Declare Defendants’ manufacture, advertisement, and sale of Stührling Ricochet

watches do not infringe any trade dress of Swatch’s in that Swatch’s alleged trade dress is not

protectable and there is no likelihood of any actionable confusion under the Trademark Act;

(e) Award Defendants their costs and expenses incurred herein;

(f) Award Defendants their reasonable attorneys’ fees pursuant to 15 U.S.C.

§ 1117(a); and

(g) Grant Defendants such other and further relief as it may deem just and proper.


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Dated: January 17, 2013 Respectfully submitted,

/s Howard S. Hogan Howard S. Hogan (HH 7995) GIBSON, DUNN & CRUTCHER LLC 1050 Connecticut Avenue, N.W. Washington, DC 20036-5306 Telephone: 202.955.8500 Facsimile: 202.467.0539

Akiva Shapiro (AS 7570) GIBSON, DUNN & CRUTCHER LLC 200 Park Avenue, 47th Floor New York, NY 10166-0193 Telephone: 212.351.3830 Facsimile: 212.351.6340

Attorneys for Defendants STÜHRLING ORIGINAL LLC and VALUEVISION MEDIA, INC.


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CERTIFICATE OF SERVICE

I hereby certify that on January 17, 2013, the foregoing Answer and Counterclaim was

filed with the Clerk of the Court and served on the following parties using the CM/ECF system:

Jess M. Collen [email protected]

Joshua Paul [email protected]

Thomas Phillip Gulick [email protected] Attorneys for Plaintiff THE SWATCH GROUP (U.S.) INC.

/s Akiva Shapiro Akiva Shapiro


swatch v sturhling response

Documents

complaint of plaintiff

valuevision media

defendants lack knowledge

plaintiffs complaint

legal conclusion

x answer

state of new york

swatch purports