Counterfeit Prevention in the Watch Industry

When Ben Madison chose Big Daddy Watches as the name of his business, he unknowingly described the conditions under which preowned watch dealers operate (Ben Madison is a fictional name to protect the identify of someone who is presumed innocent).

An exhibit from one of the lawsuits showing trademark-infringing items which accompanied a counterfeit watch sale.

Two recent lawsuits make it very clear: there is a Big Daddy, named Rolex, that stealthily watches independent watch dealers. Until I read the lawsuits, one filed against Madison and another filed against Dan Jenkins (also a fictional name), I had no idea how much effort Rolex expends when it comes to fighting fakes in the preowned market. So, I thought I would share what I learned.

The Madison and Jenkins lawsuits show that there are at least two fronts along which Rolex fights counterfeits. In many ways, Rolex employs similar tactics regardless of the nature of the counterfeit. But there are also important government allies in certain circumstances, particularly in the case of the Madison lawsuit. So lets begin there.

According to Rolex's lawsuit, on January 9, 2018, US Customs and Border Protection (USCBP) seized four watches. Inspectors concluded that they were fake Rolexes. USCBP reached out to Rolex USA and notified them of the seizure and that the agency believed Rolex's trademark was violated by the fakes. Rolex had the opportunity to obtain the alleged fakes by paying $100 per watch. USCBP also supplied the names and addresses of the sender and the recipient. Rolex sent a cease and desist letter to Madison (the presumed buyer of the watches), but he apparently persisted in sourcing fakes. The brand alleges that they received three more notices from USCBP between 2018 and 2022, suggesting that Madison attempted to import three more fake watches.

At some point, Rolex decided that they would collect intelligence on Madison's online profile.

Photo of a counterfeit or modified watch that Rolex claims Madison promoted on TikTok.

They surveiled his web page, established sometime around October, 2021, and noted that he employed a crown icon which strongly resembled Rolex's trademarked crown. They also allegedly found accounts for Madison on Instagram, Facebook, TikTok and YouTube. Rolex uncovered posts of suspected counterfeit watches which were promoted for sale on these accounts. Rolex notified each online platform of the posts featuring counterfeit products. The platforms removed those posts. Instagram even disabled Madison's account.

I actually laughed out loud at Madison's alleged response to his Instagram ban. He turned to Facebook to protest the loss of his Instagram account. He wrote "hey my Face book friends, who are on Instagram, my Instagram account has changed to XXXX please follow me again my previous page got suspended due to haters". Clearly, this was a stunning oversimplification of the matter. In reality, a multinational company with billions in sales was suspicious of international counterfeit in their product. I'm not sure the term "haters" applies under those circumstances.

Rolex's investigation extended beyond letters and online sleuthing. The brand's investigator made a "Test Purchase" of two "Rolex Datejusts" for $750 (total) and paid for the watches via CashApp. They received the watches along with boxes, papers and bags which infringed upon Rolex's trademark. Rolex sent the watches to a watchmaker and verified that the watches were fake. The brand asked the court to find Madison liable for attorney's fees, investigative costs, and up to $2,000,000 for each mark that was counterfeited.

Let's next turn to the lawsuit against Dan Jenkins. At issue is also the sale of counterfeit watches, although in this case the fakes were initially manufactured by Rolex and then modified. Rolex surveiled Jenkin's social media accounts and selling platforms Jenkins used. These included eBay, Walmart and Vestaire Collective. The brand's investigators identified a number of watches they believed to be fake and continued their investigation.

As in the case of Madison, Rolex bought some timepieces that seemed dodgy.

Photo of the modified watch bezel, the cutout compromising waterproofness is visible on the bottom of the bezel.

These included a watch described as a "Mens Rolex Datejust 36MM Blue MOP Dial Diamond Watch 3.0 Ct." Here, the sums involved were much larger. Rolex allegedly paid $6,999.99 for this watch. They inspected the watch and discovered that it was orginally sold by Rolex as a "Datejust model 1603/0, which was an all Case stainless-steel watch with a steel, engine turned bezel." The dial was replaced with a dial Rolex did not manufacture. The crown was attached with glue on the fake dial. The bezel was a replacement containing sub-standard gems with a "carve out" on the underside. Under pressure testing, this-carve out allegedly created a failure of water resistance.

On May 17, 2023, Rolex's investigator actually visited Jenkins' brick and mortar store.

Photo of a glued-on crown, not the OEM affixment method.

This is particularly striking since the lawsuit was filed a short two months later. The investigator bought at "Ladies Rolex Datejust watch" for $6,300.00, bringing the grand total spent on this investigation to at least $13,000. Rolex inspected the watch and concluded it was sold as a "Ladies Date model 6916/3." The dial was counterfeit and described the watch as a "Datejust" when it should have been marked "Date." The dial was also marked "Superlative Chronometer Officially Certified," which, according to the lawsuit, was not accurate because Rolex does not attest to chronometer certification on OEM dials for this reference. The bezel had the same low-grade diamonds and carve-out which caused the watch to fail a pressure test for water resistance. In addition, the bracelet was not manufactured by Rolex, although the clasp was.

As a consequence of this alleged countefeit, Rolex asked the court to hold Jenkin liable for "(a) an amount representing three times Rolex’s damages and/or Defendants’ profits, whichever is greater, or, at Rolex’s election, statutory damages; and (b) reasonable attorneys’ fees, costs including investigative fees, and pre-judgment interest". Rolex also noted that, online, Jenkins proferred assurances that the Rolex watches he sold were genuine. For this reason, Rolex made false advertising claims against Jenkins.

What's clear from these two lawsuits is that Rolex expends significant funds and effort directed towards pursuing and punishing counterfeiters in the secondary market. These lawsuits are the result of coordination with federal authorities, a dedicated legal team, productive investigators, and watchmakers who can uncover the truth when it comes to inauthentic products. Collectors and auctioneers are often aware of the authentication services offered through brand heritage departments. What is perhaps less well-known is Rolex's direct, hands on, effort to prevent fake products from circulating in the first place. This undoubtedly helps explain one reason why Rolex is so highly regarded as a brand. In fact, Rolex noted in one of their lawsuits that "Rolex Watches are known to retain and/or increase in value, and the purchase of a pre-owned Rolex Watch is highly regarded in the watch industry as a smart and reliable investment. Rolex Watches are built to last and customers view Rolex Watches as heirlooms that can last several lifetimes" (I was quite surprised that Rolex's lawyers cited this "investment" basis for buying watches). Rolex's work on anticounterfeit protects the brand's reputation, protects authorized dealers from losing business, and protects collectors from falling prey to fakes. Undoubedtly, Rolex's anticounterfeit work is one of the key reasons the brand has been so successful.

The lawsuits described in this post are filed under 1:23-cv-03391-TCB and 3:23-cv-00810-BAJ-RLB.

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