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image: DW

It took Swedish startup Daniel Wellington three years to sell 1 million watches. By 2015, just four years in, the Uppsala, Sweden-based company, which was founded in 2011 by then-26-year old Filip Tysander, was bringing in $220 million in revenue, a whopping 214 percent increase from the year before. Tysander’s plan to use influencers to help him market his products to digitally-connected millennials had worked. Instagram was rife with sleek watches with nylon NATO straps, all bearing the “DW” initials.

After gracing the accounts of influencers like Kendall Jenner, Daniel Wellington’s minimalist watches – which, at a quick glance might embody some of the upscale elegance of IWC’s or Breguet’s most plain-faced models but bear significantly smaller price tags – found favor amongst millennial consumers. And now, seven years after the company got its start, the market is being inundated with counterfeit versions, which Tysander says are stripping Daniel Wellington of its ability to control the use of its trademark in the marketplace and the quality of the goods bearing its name. .

According to a new lawsuit that Daniel Wellington filed early this month in a New York federal court after purchasing a number of $100+ “Daniel Wellington” branded watches from Overstock.com, the well-known e-commerce site is on the hook for selling watches that it marketed as authentic Daniel Wellington watches but in reality, are “complete counterfeits.”

Wellington alleges that it has devoted a “significant [amount of] time, money, and effort” to promoting its brands and its products, including working “with thousands of celebrities, bloggers, and other social media influencers, who wear and post about Daniel Wellington brand watches on social media, thus exposing the watches to their millions of fans and followers,” in order to build “enormous goodwill” in its brand.

In fact, as a result of the company’s “distinguished design and immense popularity among internet-savvy youthful consumers,” Daniel Wellington alleges that it sells “millions of dollars” of watches under its trademark protected brand name each year.

By selling counterfeit Daniel Wellington watches “in a manner that indicated they [are] authentic,” Overstock’s watches “directly compete with DW’s genuine products” and are likely to cause confusion amongst consumers, who will think that Overstock’s counterfeit watches are “legitimately connected with and/or authorized by Daniel Wellington.”

More importantly, though, the inevitable influx of fakes is making it so that Daniel Wellington is unable to adequately control “its own reputation and ability to control the use of the Daniel Wellington mark and the quality of the products bearing those marks.”

The budding young brand claims, in what may very well be the first of a handful of counterfeit-specific lawsuits to come, Overstock’s behavior “has caused and will continue to cause irreparable damage to Daniel Wellington’s business and goodwill unless restrained by this Court,” and “is unjustly enriching Overstock.” As a result, the brand has asked the court to award it injunctive relief, which would immediately and permanently bar Overstock from selling the counterfeit watches (at least some of which appear to still be available on the company’s website), as well as monetary damages.

* The case is Daniel Wellington AB, v. Overstock.com, Inc., 1:18-cv-07125 (SDNY).