The legal action stems from a 14-month contract Theron signed with Raymond Weil in 2005, which stated that she must only wear Raymond Weil timepieces during public events, especially when the paparazzi is present.
In 2006 during a film festival in Austin, Texas, Theron was snapped at a press conference wearing a Christian Dior watch, with photos appearing in newspapers across the country the next day.
Theron fought the initial claims, stating simple oversight rather than a deliberate breach of her contract.
However, last week a New York judge ruled that Theron was guilty of repeatedly ignoring the terms of her contract with Raymond Weil, citing several other instances of breach, including a separate advertising contract with Christian Dior and a Montblanc billboard in Geneva.
Judge Colleen McMahon told the courts: "By wearing a Christian Dior watch at the film festival, Theron breached her covenant not to 'wear publicly any watches other than Raymond Weil.
"Theron recognises as much, calling her decision to wear the watch 'regrettable'. It was more than 'regrettable' it was a clear breach of the agreement."
Both sides have been ordered to reappear before the courts in November for a pre-trial settlement. Should both parties fail to reach an agreement, the case will go before a jury next year.
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