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Discussion Starter #1 (Edited)
This past Thursday evening, I attended the Diver's Watches Facebook Group get-together in New York. It was a good time, where I got to hang out with a number of old friends, and meet some new ones.

Notwithstanding the "dive watch" theme, one of the attendees was RT Custer, one of the founders of Vortic Watch Company, and the face of the business. That's him below, on the right.

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I've hung out with RT before. He's what we middle-aged guys call "a good kid" - clean-cut, bright, well-spoken, personable, earnest. All the things I used to be before becoming a gristled old coot. Despite the press coverage and praise his brand has gotten, he's still quite unassuming.

Many here are likely familiar with Vortic, but for those who aren't, the simplest way of describing the company is to say they take old, American-made pocket watch movements, dials, and hands, fix them up, and re-case them in cases Vortic produces in-house:

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As far as I'm aware, aside from the cases and straps, all the other components - i.e, the movement, dials and hands - are original parts, not made by Vortic. I believe they keep the branded dials with the movements, so if a dial says "Waltham", there's a Waltham movement inside.

Most of their cases are 3D printed in Colorado, but RT told me they recently started doing more with CNC machining.

Since the cases are made in the USA, and all the other parts were made in the USA, they can legally say their watches are "American Made", and as you might imagine, they've made that heritage a point of emphasis in their branding, marketing materials, and press interviews.

As we were standing there Thursday night, shooting the $hlt, I asked him how business was, and he told me they're being sued by Swatch, because they've sold watches with "Hamilton" on the dial, and/or described them as having a movement produced by "Hamilton".

Prior to the Hamilton name being bought by Swatch Group, Hamilton was arguably the largest, most successful American watch brand of the pre- and post-war era. They were once a DOD supplier of field watches to American service members.

But with the passage of time, and the quartz age, the company understandably fell on hard times, and eventually shuttered operations. The current incarnation of "Hamilton" shares only a name with the original company.

My understanding from RT is that the suit is over IP infringement, and among other charges, Swatch is alleging Vortic is "counterfeiting" by selling watches with "Hamilton" on the dial or in the product description, despite the clear disclosures that those components (dial/movement) are not made by Vortic, and were in fact original components in the Hamilton pocket-watches from which they came:

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Now, I'm not a lawyer, but I know several members here are, and I recall at least one or two specialize in IP. I would not be surprised to hear one say that from a legal standpoint, Swatch might have a real case, and this can't simply be dismissed as a "nuisance suit, without merit".

But, in my opinion, this doesn't make a lot of business sense, and I'll explain my reasoning below. I'm sure many will agree with me when I say that despite any legal "rightness" of this suit, it's morally and ethically wrong, and I hope many will agree with me that it's strategically dubious for Swatch.

I certainly get why we have IP law in place to protect company and brand trademarks, and why a company like Swatch would want to prosecute a suit against any company truly making counterfeit goods. But to call what Vortic sells "counterfeit" requires some tortured logic.

The watches aren't sold as "Hamiltons". They're sold as "Vortics". The branding on the dials was put there by the companies which made the dials.

Their disclosure of the movements' original manufacturers is in-line with industry practice, just as companies like Vintage VDB disclose when their movements were originally housed within a Rolex or Patek.

Conceivably, someone who'd never heard of the Hamilton brand might stumble on Vortic, and whether they buy a Vortic or not, they might be led to buy a Hamilton. This would seem to be nothing but upside for Swatch Group.

Where's the harm being done to Swatch Group? Can anyone credibly make the case that someone buying a Vortic might mistakenly believe they were buying a Swatch Group product, or that Vortic is somehow taking business away from Swatch?

Again, I'm no lawyer, but this seems a bit like a "selective prosecution" to me.

Vortic isn't the only company doing what they do, or saying what they say. I know of at least one other US-based company effectively doing the exact same thing, yet with less press coverage. I have spoken to the owner of that company, an hour ago, and I can confirm that he's not aware of any legal action they're facing from Swatch.

Has Swatch seen fit to contest the trademarking of the term "NATO Strap", so that Omega can legally sell their straps, which they currently brand as "NATOs"? Not that I'm aware of.

Has Swatch filed a trade-dress suit against any of the myriad companies mimicking the distinctive design language used by any of the Swatch Group brands, in the same way Audemars Piguet successfully sued Swiss Legend for making something that looked too similar to a Royal Oak? Again, not that I'm aware of.

The act of re-casing an old dial and movement isn't too dissimilar from what many guys selling frankens on eBay are doing. The real difference seems to be that Vortic created a "real" company, with a business name, a website, a warranty, and received some press for doing it all.

In other words, their success has made them an easy target for litigation.

This seems to be a case of Swatch simply not liking the fact that another company is making money selling watches, and seeing an easy way to stop it.

Vortic is a young, small yet growing company, who I think legitimately deserves at least some credit for adding to the field of horology, and doing their part to preserve horological history. They're no threat to Swatch. They're not harming Swatch.

So, what do they do now?

For his part, RT told me they've been spending a lot on attorneys, and desperately trying to get an audience with someone, anyone at Swatch who will listen, and hear reason. He's said they're willing to pay Swatch a royalty fee for using the Hamilton name.

In the meantime, I believe they've removed all models with any mention of Hamilton from their website, but apparently, that's not good enough. It seems that Swatch is seeking damages related to past sales, which is punitive (figuratively, if not literally/legally), and will effectively put Vortic out of business, if the effort is successful.

Does anyone here know anyone who can arrange a hearing with some big cheese within the Swatch Group? Would you like to direct their attention to RT and Vortic, so a call or meeting can be arranged?

Being a natural cynic, I suspect that Swatch isn't simply "confused" about Vortic's business, and that they know exactly what they're doing. As such, I doubt they'd be moved by any impassioned appeal from RT's team.

So...here again is another example of Swatch running roughshod over smaller competitors. RT and Vortic are now just hoping to bring enough attention to the matter, and create enough social pressure to get Swatch to back off and let them be.

Ironically, while Vortic's business doesn't seem to pose any threat to Swatch, Swatch's suit of Vortic might lead to their own business and brand being damaged in the court of public opinion.

Whether that happens or not, Swatch will have already caused irreparable damage to Vortic.

EDIT/PS - RT is aware of this thread, and sent me a press release about the suit, but asked me not to simply share it publicly. He just said I could reference it for any needed facts, but otherwise, I've got the story straight in this thread.

He did tell me the case name, which allowed me to find it online. It's Hamilton International Ltd. v. Vortic LLC et al, No. 1:2017cv05575 - Document 63 (S.D.N.Y. 2018) - https://www.courtlistener.com/docket/6123973/hamilton-international-ltd-v-vortic-llc/

If the press release is any indication, it seems that their legal defense will include the same point I made above, that their business can only HELP Swatch/Hamilton's, not harm it, the way Vortic runs it, inasmuch as they're going out of their way to make clear they're not selling a Swatch company product, but the use of the Hamilton name might lead to sales for Swatch, by way of highlighting the brand's prestigious history.

Adding to the potential costs of this suit is the less-understood fact that companies involved in litigation are effectively shut out of any and all opportunities for business financing. No one is going to invest in or lend money to a company which is engaged in costly litigation.

So, Vortic not only stands to lose the suit, they are slowly being shut down by a lack of access to working and growth capital, something they really need, given the investments they've made in plant and machinery.

That makes this more than a simple case of one well-provisioned company fighting another. It's a case of one very large, very well-provisioned company deliberately adopting a "starve them out" strategy to shut down a smaller, weaker company, one no reasonable person could credibly consider to be a direct competitor.
 

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IMHO, that is really terrible. As a collector, I really appreciate what Vortic is doing and what they have brought to the industry. Many of these movements and dials would simply be destroyed if not for them. On the flip side, again as a collector, it definitely sours me on anything Swatch. They won't be getting ANY of my money in the future. It seems to me they are doing more damage to the industry, than good.
 

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I don't know any info beyond what is shared in this thread. Based on that, I'd say Swatch does have a strong case (i'm not a lawyer), and though they may be selective in their prosecution, they still have a case.

I agree wholeheartedly that seeking past damage and an unwillingness to sit with Vortic who are willing to pay a royalty fee and has taken corrective actions, is punitive.
 

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I see your points and I tend to agree with you on everything from a practical basis. However, when this sort of thing moves from hobby to business, you have to have your head on a swivel for these kinds of attacks. Having said that, I don't think selling a "new" product with another company's trademarked name on it is wise, even if the name was put on the item 90 years ago. I suspect if they had counsel previously, they would have been warned about this.
I don't think swatch is confused. The lawyers have to pursue trademark infringement without bias or trying to define gray areas. The way it's been explained to me is that the rights holders are legally obligated to do this "scorched earth" tactic, or you forfeit rights in the future.
 

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In 2014 an indie game company (Stoic Studios) was sued over the name of their title 'Banner saga' (based on Norse legends). The 'aggrieved party' were the hugely wealthy King Games (who made Candy Crush Saga). A bit like the 'NATO' thing, King wanted to copyright the word 'Saga' (I know - WTF?). Furthermore, Stoic's game was a sort of story-based myth-themed game, not a mobile phone twitch-fest involving confectionary.

Law, huh?

Anyhow, the sides came to an agreement in the end (here's a link to the story https://www.polygon.com/2014/4/17/5624980/king-settles-trademark-disputes-with-the-banner-saga-developer ). But an interesting thing happened among the gaming community, which was King's name became dirt. If you think watch-people are uptight, clannish and obsessive, then you've never met the gaming community. They're like the Luminari meets the French Resistance. For a while, King was almost as loathed as Electronic Arts (EA), who hold the unofficial title of Most Evil Gaming Company Ever.

OTOH, Stoic reminded me a little of Mr. Custer - committed, passionate and respected among their peers. And Banner Saga was a good game.

Now, who knows what sort of tangible effect the online opprobrium of King had? I suppose only the protagonists know, and it's easy to overstate the self-importance of online influencers (4Chan, for example, take credit for Donald Trump's presidency). But King went pretty quickly from an uber-aggressive approach to a settlement.

If Swatch's legal team go for a microbrand like this, then who's next?

Maybe Swatch need to be called out for what they're doing here (bullying). I hate bullies, especially when they're trying to squash hard-working young people trying to make an honest living. What about you?
 

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Discussion Starter #8 (Edited)
In 2014 an indie game company (Stoic Studios) was sued over the name of their title 'Banner saga' (based on Norse legends). The 'aggrieved party' were the hugely wealthy King Games (who made Candy Crush Saga). A bit like the 'NATO' thing, King wanted to copyright the word 'Saga' (I know - WTF?). Furthermore, Stoic's game was a sort of story-based myth-themed game, not a mobile phone twitch-fest involving confectionary.

Law, huh?

Anyhow, the sides came to an agreement in the end (here's a link to the story https://www.polygon.com/2014/4/17/5624980/king-settles-trademark-disputes-with-the-banner-saga-developer ). But an interesting thing happened among the gaming community, which was King's name became dirt. If you think watch-people are uptight, clannish and obsessive, then you've never met the gaming community. They're like the Luminari meets the French Resistance. For a while, King was almost as loathed as Electronic Arts (EA), who hold the unofficial title of Most Evil Gaming Company Ever.

OTOH, Stoic reminded me a little of Mr. Custer - committed, passionate and respected among their peers. And Banner Saga was a good game.

Now, who knows what sort of tangible effect the online opprobrium of King had? I suppose only the protagonists know, and it's easy to overstate the self-importance of online influencers (4Chan, for example, take credit for Donald Trump's presidency). But King went pretty quickly from an uber-aggressive approach to a settlement.

If Swatch's legal team go for a microbrand like this, then who's next?

Maybe Swatch need to be called out for what they're doing here (bullying). I hate bullies, especially when they're trying to squash hard-working young people trying to make an honest living. What about you?
^This is essentially my underlying point.

Prior to the internet, big companies were much less accountable for their bad behavior. But with the internet, and especially with social media and forums, there's power for the people to wield, if they so will it.

It's disheartening to me whenever I see someone starting the usual "public shaming" thread when a small business inconveniences them in some small way, considering how difficult it can be to get people to offer more than a [*shrug*] when the opportunity arises to rally around a truly worthy cause such as this.

Maybe the online enthusiast community isn't large enough to seriously damage Swatch's business, but it has to be large enough to do enough damage to get Swatch's attention, and make them re-think this suit.

I don't buy the explanation that they (Swatch) "must" do it, or else risk losing their legal footing to pursue more legitimate IP infringement cases in the future.

This isn't a scenario involving a company making anything new with a Swatch brand name or logo on it, and claiming it came from Swatch. Vortic isn't putting any effort into confusing the consumer. Quite the contrary, they're going to great lengths to educate the consumer about what they're buying, and the history behind it.
 

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If there ever needed to be more proof that Hamilton is nothing but a re-badged zombie name, then here it is. Throwing under the bus the one small player that is restoring historically significant Hamilton movements and preserving Hamilton historical relevance in the states...


Sigh.
Seagull steals microbrand designs, Hamilton tries to sue them into oblivion. And so it goes.
 

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I don't think swatch is confused. The lawyers have to pursue trademark infringement without bias or trying to define gray areas. The way it's been explained to me is that the rights holders are legally obligated to do this "scorched earth" tactic, or you forfeit rights in the future.
I think 92gli's thoughts here might be what's going on, as this type of lawsuit has come up before. My initial reaction is "f*** Swatch," but paying consideration to the other posts about how this makes little economic sense for them, maybe that's the actual case - it makes little sense other than to ensure they don't lose their IP claim.

Nintendo has done this in the past as well, often settling for allegedly next to nothing (settlements were sealed, so it's hard to know for sure), because they didn't want the money, just the IP claim for future use. If Swatch comes to the table on the licensing fee or settles for next to nothing, then this might be the case. Else, I'll go back to "f*** Swatch" and be down to buying from just 1 major and all micros from here on.

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Discussion Starter #12
So, here's the thing about that "Swatch MUST do this" theory...

I don't see how it holds water, if we also believe Swatch isn't at all confused about what Vortic is doing. If they understand that Vortic isn't producing counterfeit products, then they would see they DON'T need to sue.

AND, if the thinking is, "maybe they just want the suit on record, to get Vortic to stop selling any watches with Hamilton on the dial, and they don't really want to harm Vortic beyond that", well, they had their chance to behave that way, and didn't.

Vortic has already stopped selling watches which make any use of the Hamilton name. And, Vortic has already had their attorneys respond to the Swatch complaint. If Swatch just wanted Vortic to stop, they stopped. If Swatch was interested in money, they'd ask for an amount Vortic could pay.

They don't appear to be pursuing this because they have to, nor do they appear to only be interested in stopping Vortic from using the name, or paying to use it the way Vortic had been. They appear to be interested in shutting down a small company, not because they perceive the company to be a threat (how could they?), but simply because they CAN.

And...to what end would Swatch do that, if we're not satisfied to simply think the company is run by a bunch of sadistic pricks?

Uhm...I imagine it's part of a larger effort to intimidate any and all competitors. It shows that Swatch can do whatever it wants, to whomever it wants, with impunity.

Imagine you're the guy running a Swatch competitor, considering some formal complaint or appeal to the Swiss industry authorities, as part of an effort to get them to break up the Swatch monopoly, or force Swatch to loosen their grip on Nivarox and ETA, so that other companies can survive.

Are you going to think twice about openly tangling with Swatch, and perhaps consider any other remotely-viable alternatives?

I imagine you might.
 

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As so often is the case, everyone has a point. DisneyDave, for example, is probably correct in that this is a classic IP play - like a check-box move. "Ah, company 'a' used IP 'b' if you don't sue them then Poindexter versus Kraft might come into play." So the attorneys see a potential problem coming down the track and decided to squash it immediately (hey, they get paid by the hour).

But, and this is where Chris has a point too, lawyers don't just freelance - their work has to be signed off at a corporate level. Are you really telling me that the suits up at Swatch didn't think "Poindexter versus Kraft *and* scare the poop out of anyone who might want to even plant a little toe in our sand-pit? Yeah, why not?"

Add your classic Swiss business mindset (think the Borg, but more aggressively self-interested) and I think you see where I'm coming from.
 

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Discussion Starter #14 (Edited)
RT is aware of this thread, and sent me a press release about the suit, but asked me not to simply share it publicly. He just said I could reference it for any needed facts, but otherwise, I've got the story straight in this thread.

He did tell me the case name, which allowed me to find it online. It's Hamilton International Ltd. v. Vortic LLC et al, No. 1:2017cv05575 - Document 63 (S.D.N.Y. 2018) - https://www.courtlistener.com/docket/6123973/hamilton-international-ltd-v-vortic-llc/

If the press release is any indication, it seems that their legal defense will include the same point I made above, that their business can only HELP Swatch/Hamilton's, not harm it, the way Vortic runs it, inasmuch as they're going out of their way to make clear they're not selling a Swatch company product, but the use of the Hamilton name might lead to sales for Swatch, by way of highlighting the brand's prestigious history.

Adding to the potential costs of this suit is the less-understood fact that companies involved in litigation are effectively shut out of any and all opportunities for business financing. No one is going to invest in or lend money to a company which is engaged in costly litigation.

So, Vortic not only stands to lose the suit, they are slowly being shut down by a lack of access to working and growth capital, something they really need, given the investments they've made in plant and machinery.

That makes this more than a simple case of one well-provisioned company fighting another. It's a case of one very large, very well-provisioned company deliberately adopting a "starve them out" strategy to shut down another, one no reasonable person could credibly consider to be a direct competitor.
 

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Discussion Starter #15
To add to the above post...

I didn't realize the first link I posted wasn't to the suit itself, but some follow-on finding regarding the plaintiff's (Swatch's) attorneys playing games with conference attendance, which I'll get to in a moment. I've edited both the OP and my post above with what I think are better links to a legal database showing the history of filings related to the case.

I didn't realize the link was wrong until I scanned the PDF file found there (at the original link I posted - https://law.justia.com/cases/federal/district-courts/new-york/nysdce/1:2017cv05575/477925/63/), but now that I have, it only reinforces the appearance that Swatch is just playing games in order to slowly bleed Vortic dry in legal and travel costs.

Again, I'm not a lawyer. Maybe one will chime in and explain all this in a way that casts Swatch Group in a better light. Until then, my layman's impression is that they're not interested in stopping another company from damaging their business in any way, nor do they seem at all interested in reaching any sort of settlement, since they haven't offered any settlement terms, and seem to be deliberately stalling the progress of the negotiations.

But, form your own opinions. Just skim that PDF at the link above. Explain to me how else you could interpret Swatch lawyers no-showing on not one but two scheduled meetings, in defiance of the court's order for them to attend the second one in person, and effectively saying that there could be NO settlement terms other than those proposed in the company's initial position, without being approved by the company's board of directors.

Why on earth would a company agree to send their legal representative to a settlement conference, if that representative didn't have any authority to negotiate any settlement?

If they were interested in reaching a settlement, why no-show on two settlement meetings in a row?

The original representative, Mr. Haller, was to travel to the meetings from Switzerland. When the court fined Swatch for his non-attendance, they sent a new representative, Ms. Raveloson, who apparently lives in NY.

Uhm...if you have a representative in NY, wouldn't you have them attend the settlement meetings in NY, if you wanted to reach a settlement? Why name your Zurich attorney as your representative, if the guy's not going to fly to NY, or even be in the office to answer the phone for a scheduled call?
 

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Well, this is pretty scummy from the Swatch Group IMO. I'm no lawyer, but I agree with the sentiment that this just seems to be bullying. I've been a fan of the more affordable Swatch Group brands (Tissot, Longines), but I think I'd seriously reconsider purchasing from them again. Or if I even keep wearing their watches.

But the thing is, I really don't think Swatch Group cares about the "bad publicity" this may cause. Why? Because this probably won't hurt them much. We're enthusiasts, sure. And we add to Swatch Group's bottom line. But I seriously doubt their bottom line would see much of a dent based on us. Swatch Group composes... what, something like sixteen brands? From super-affordable kids watches to insanely-priced status symbols made from unobtainium. The average shopper, looking for a sub-$1000 watch will still likely consider a Swatch Group watch because they neither know about this nor care much. And the high-end folks are also likely to continue giving them business, for the same reasons.

It's poopy, and I'm very unlikely to give them my business in the future, but I'm not sure we can make a huge difference. I'd like to be proven wrong, though. So maybe this time I will be...
 

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Too bad for Vortic and as far as Swatch goes, Oh well the rich get richer.

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The Vortic dudes look like nice guys, but are you telling me that they built their watches with the trademarked name of a well known and currently-in-business unrelated company on their freaking dials???

No lawyer here, but I wouldn't need one to know that's a really bad idea. I'm not at all surprised that the Swatch powers-that-be are in no mood to be be cool about it.

In contrast, RGM has been using old Hamilton movements since at least 2000 without apparent interference from Swatch:

RGM Model 222-RR

The difference? It doesn't say Hamilton on the dial.
 

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The Vortic dudes look like nice guys, but are you telling me that they built their watches with the trademarked name of a well known and currently-in-business unrelated company on their freaking dials???

No lawyer here, but I wouldn't need one to know that's a really bad idea. I'm not at all surprised that the Swatch powers-that-be are in no mood to be be cool about it.

In contrast, RGM has been using old Hamilton movements since at least 2000 without apparent interference from Swatch:

RGM Model 222-RR

The difference? It doesn't say Hamilton on the dial.
Vortic simply re-uses the old original dial that matches the old movement that they are also reusing. Unless RGM is de-branding the movement, it seems to be essentially the same use of “Hamilton” to this layman.




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Discussion Starter #20 (Edited)
The Vortic dudes look like nice guys, but are you telling me that they built their watches with the trademarked name of a well known and currently-in-business unrelated company on their freaking dials???

No lawyer here, but I wouldn't need one to know that's a really bad idea. I'm not at all surprised that the Swatch powers-that-be are in no mood to be be cool about it.

In contrast, RGM has been using old Hamilton movements since at least 2000 without apparent interference from Swatch:

RGM Model 222-RR

The difference? It doesn't say Hamilton on the dial.
It's a fair point to say that the Vortic guys might have foreseen the potential problems in using those brands, or to suggest they should have gotten better legal counsel.

I'm not exactly making a counter-argument, but I do think this situation raises some interesting, somewhat existential sort of questions.

They didn't produce dials with "Hamilton" on them. They just used existing dials which were produced by Hamilton, and already bore the Hamilton name on them.

They didn't make a movement and call it a "Hamilton" movement. They just used existing movements produced by Hamilton, and stated as much in the product descriptions on their website.

How does Richard Rawlings get to sell a "Gas Monkey Garage" car with Ford/Chevy/Dodge running gear? They're basically selling an assembly of parts, some they produced themselves, in that garage, and some made by Ford/Chevy/Dodge. And in many cases, they're leaving the branding on those cars.

How is that any different than Vortic selling a Hamilton dial and movement in a case they made themselves, and calling it a "Vortic"?

Again, the suit includes allegations of counterfeiting, and yet, the company hasn't produced any components bearing the name "Hamilton", only used components which bear that name because they were in fact produced by Hamilton.

The company isn't selling the watches as "Hamiltons". They're selling them as "Vortics".

How do the above actions resemble "counterfeiting"?

Has Swatch gone after "Watchco" for assembling '60's Seamasters, using all original Omega parts? No? Why not? They're surely crossing more boundaries than Vortic, no? And Omega is apparently well aware of it, judging by the reports that they've confiscated pieces their authorized repair folks have taken in for servicing.

I'm not saying that using Swatch-brand dials was a good idea. Being a bit more deliberate now, in my middle-age, then I was in my 20's, I might be a bit more hesitant to do what they were doing. But surely we can see the inherent ambiguity in what they've been doing, enough to understand if they thought they weren't in serious jeopardy of being slapped with an IP infringement case.
 
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