Melrose.com LLC, a web-only retailer of luxury men’s watches, is no longer in business, as a federal judge in California has sided with Rolex in its lawsuit that accused Melrose of trademark counterfeiting.

“Melrose and Rolex settled the case amicably out of court and I’ve left the industry,” says founder Krishan Agarwal. 

U.S. District Court Judge Fernando M. Olguin ruled in September that Melrose was unauthorized in its “use of marks identical to or substantially indistinguishable from one or more of the Rolex Registered Trademarks on altered Rolex watches,” according to court documents. “Such unauthorized use is likely to cause consumers and the public to mistakenly believe that Melrose’s altered Rolex watches are genuine Rolex watches or are authorized, sponsored, or approved by Rolex, when, in fact, they are not.”

The judge ruled in a lawsuit Rolex Watch U.S.A. Inc. filed July 26, 2012, in the U.S. District Court for the Central District of California. Rolex alleged Melrose made unauthorized use of the Rolex trademark crown image in several places on the site, and made false or misleading statements, including in Google search ads, which read, “Rolex watches for sale at USA’s #1 Rolex store.”

Rolex gathered evidence for its lawsuit by having executives order three Rolex watches from the Melrose.com site in early 2012, according to Rolex’s complaint filed in court. Rolex said it found that many parts of the watches were not genuine, and that Melrose’s watches bore counterfeit copies of the Rolex trademark.

The judge ruled that Melrose’s actions constituted, “trademark counterfeiting under 15 U.S.C. 1114, trademark infringement under 15 U.S.C. 1114, and false designation of origin, false description, and unfair competition under 15 U.S.C. 1125,” court documents show.

The judge ordered Melrose and its founder Krishan Agarwal to permanently take down the Melrose.com web site and any others containing the term “Melrose.” The company was also ordered to pay Rolex $8.5 million in damages; hand over the domain name Melrose.com and all international versions of the site; and deliver to Rolex all watch heads bearing its name.

Melrose.com is No. 614 in the 2013 Internet Retailer Second 500 Guide. When the guide was published in early July of this year, Melrose.com was still operating.

Founded in 2008, Melrose.com brought in an estimated $12.5 million in online sales in 2012, up from $10.6 million in 2011.

Rolex did not respond to a request for comment about the judgment.

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