Upcycling and Design Protection from U.S. and E.U. Perspectives

The Rolex Case, Switzerland 

The Swiss luxury watchmaker Rolex sued a company in Switzerland that offers to customize ROLEX watches and, in the past, also offered to supply ROLEX watches and to customize them for a specific customer. The customization or personalization includes changing certain parts of the watches, giving them a new appearance, or modifying various technical features. Among other things, the company removed the watch dial so that the clockwork mechanism became visible.  

ROLEX Watch	Customized Watch

In its decision on January 19, 2024 (4 A_171/2023), the Swiss Federal Supreme Court distinguished between two different scenarios: 

1.  By offering customization services only, the defendant modifies a good for private use. Since the customized goods are handed back to their owners, the court could neither find trademark infringement nor unfair competition (private‑use customization (Swiss Supreme Court finding).
2. On the other hand, if the defendant were to offer to supply customized branded items without the trademark owner’s consent, the sale of such customized branded watches would constitute trademark infringement (unauthorized commercial supply of customized goods). The private use exception does not apply in this scenario. Additionally, the defendant was unable to rely on exhaustion of trademark rights due to the modification of the product concerned.
   
   

The Louis Vuitton Case, Korea 

In this particular case, the defendant is a professional repairer of old luxury goods. He only customized old LOUIS VUITTON bags that consumers (the original owners) provided, handing the upcycled bags back to them. In this process, the defendant completely disassembled the provided bags and used the resulting materials, sometimes adding new parts and fittings, to create new objects, such as bags and wallets.  

Louis Vuitton filed an action to obtain an injunction and damages compensation on the grounds of infringement of registered trademark rights and violation of the Unfair Competition Prevention Act. The Korean courts (both first and second instance) upheld Louis Vuitton’s requests because the contested products still bore some of Louis Vuitton’s registered trademarks. 

Original Products	Upcycled Infringing Products

The IP High Court held (2023 Na11283, Oct. 28, 2024) that the defendant’s manufacture constituted the creation of a new upcycled product, not merely a repair. Since the upcycled product was substantially altered from the original due to complete dismantling and remanufacturing, the court determined that the exhaustion of trademark rights does not apply to this case, and therefore, trademark infringement existed.   

On the likelihood of confusion, the court broadly considered the potential confusion from the perspective of the general consumer (a third party) in the future, considering that such upcycled luxury goods are typically traded in secondhand markets. 

The case was appealed and is now pending in the Supreme Court. 

The EU Design Law Perspective 

Upcycling, by its nature, does not inherently constitute an infringement of design rights or trademarks. However, infringement may arise if the original maison’s trademarks or design elements remain visible or identifiable in the upcycled product. 

If a company owns a registered design for the appearance of a specific HERMÈS scarf or ROLEX watch model, could it successfully proceed against the defendant claiming design infringement? 

Different scenarios may arise from an upcycling case: 

Scenario 1 

One scenario involves the advertising, offering for sale, and marketing of products that someone has already altered and repurposed, changing their original nature and intended use. In such cases, well-established case law holds that this conduct constitutes an infringement comparable to the legal situation in the Hermès case. 

Scenario 2 

In another scenario, the defendant only offers customization of a good for private use. Here the defendant could rely on the defense of exhaustion under Article 21 of the Community Design Regulation (CDR). Under this provision, the rights conferred by a Community design shall not extend to acts relating to a product when the product has been put on the market in the Community by the holder of the Community design or with his consent.  

As far as trademark rights are concerned, Article 15(2) of the Union Trademark Regulation (UTMR) provides for an exception from the general rule of exhaustion where legitimate reasons exist for the proprietor to oppose further commercialization of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market. However, no similar exception exists as far as exhaustion of design rights is concerned. Consequently, the regulation generally permits modification and customization of a product.  

Scenario 3 

However, the owner of the registered design may still be able to proceed against the use or sales of a modified product in two situations: 

1. The modified product may infringe another registered design of the same owner; or   
2. Some legal authors take the view that the defense of exhaustion of design rights should not apply in cases of gross distortion of the original product.  

While the purchaser’s proprietary interest in the unrestricted use and modification of the object generally prevails, in extreme cases the designer’s interest in preserving the integrity of his aesthetic creation may prevail. 

The U.S. Design Law Perspective 

Many IP rights could potentially be at issue with regard to modified and upcycled products, but the following analyzes only design patent rights.  

For scenarios 1 through 3 laid out in the above EU section, one must consider the patent exhaustion doctrine and related case law. The patent exhaustion doctrine establishes that after a patentee sells a patented product, the patentee’s rights over that product are exhausted, meaning the patentee forfeits any further control over the product or its use.  

The U.S. Supreme Court analyzed an example of the exhaustion doctrine in Impression Prods., Inc. v. Lexmark Int’l, Inc., 137 S. Ct. 1523 (2017). In this case, Lexmark owned patents covering the cartridges used in their printers. However, after selling cartridges to customers, customers would use them and then often send their empty cartridges to third-party remanufacturers that would refill the cartridges and resell them.  

Lexmark sued the remanufacturers alleging infringement of their patents directed to the cartridges. However, the Supreme Court held that any Lexmark patent rights in the cartridges were exhausted when the company first sold them, and therefore, the third-party remanufacturers’ acts did not constitute infringement. This case confirms that after a sale of a patented product, the purchaser is free to use, repair, or resell the item without infringing the original patent rights.    

However, under the exhaustion doctrine, U.S. courts have distinguished between a permissible repair of a product and an impermissible reconstruction. Repair involves restoring a product to its original state, whereas reconstruction is considered the creation of a new product, which can infringe on the original patent. The Federal Circuit has consistently held that even substantial repairs are allowed, provided they do not effectively result in the manufacture of a new item. See Sandvik Aktiebolag v. E.J. Co., 121 F.3d 669, 674 (Fed. Cir. 1997); Molding Systems Ltd. v. R & D Tool Engineering Co., 291 F.3d 780, 787 (Fed. Cir. 2022); Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336, 346 (1961).  

Furthermore, regarding products that are made by combining components of previously sold products, the Federal Circuit decision in Automotive Body Parts Ass’n v. Ford Glob. Techs., LLC, 930 F.3d 1314 (Fed. Cir. 2019) is instructive. In Automotive Body Parts, Ford owned two design patents for its F-150 truck—one for the design of the hood and one for the design of the vehicle head lamp.  

The Automotive Body Parts Association (ABPA) argued that Ford’s design patents should only be able to be enforced in the initial market for sale of the F-150, and that the doctrines of patent exhaustion and repair parts should prevent Ford from enforcing its design patents against replacement parts made by the ABPA.  

However, the Federal Circuit held that because Ford protected designs of particular components of the FORD F-150, as opposed to the truck as a whole, these doctrines did not apply to the component parts. Therefore, making new replacement hoods, for example, constituted infringement of Ford’s design patent covering the same. 

In view of the above case law, the patent exhaustion doctrine would apply to scenario 2, just as it does in the EU; for example, theoretical design patents that originally covered the initially sold ROLEX watches would not be able to be asserted against the modified/customized ROLEX watches. However, scenarios 1 and 3 could still result in design patent infringement, similar to the EU, if the resulting design were found to be substantially similar to the patented design. 

For example, if the modified ROLEX watches infringed other design patents that did not originally cover the initially sold ROLEX watches, those could still be infringed as the patent exhaustion doctrine would not apply to them. Also, in the Hermès and Louis Vuitton cases, repair does not seem to be taking place, and it appears that completely new products are being created, which would be considered impermissible reconstructions, and thus, susceptible to potential patent infringements.  

Finally, following the line of reasoning in Automotive Body Parts, if one of the components included in the upcycled HERMÈS or LOUIS VUITTON products is specifically protected by a design patent, similar to Ford’s replacement hood, selling it may constitute infringement of the component design patent. 

Although every effort has been made to verify the accuracy of this article, readers are urged to check independently on matters of specific concern or interest. The opinions expressed in this feature are those of the authors and do not purport to reflect the views of INTA or its members.

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