US district judge Laura Taylor Swain’s ruling on 14 August stated that the court “holds Costco liable for trademark infringement and trademark counterfeiting with respect to engagement rings sold under certain signage that referenced the mark ‘Tiffany’ as a standalone term”.
Swain also “permanently” prevented Costco from using the word ‘Tiffany’ with the absence of the term ‘setting’, ‘set’ or ‘style’ to sell rings not made by the renowned jeweller.
The judge’s ruling added that Tiffany & Co was entitled to US$11.1 million (AU$13.9 m) in compensatory damages – three times the amount of Costco’s profits from the sales of the rings in question – and US$8.25 million (AU$10.4 m) in punitive damages.
Tiffany & Co senior vice president and general counsel Leigh Harlan said the decision sent a strong warning to any business attempting to infringe on the retailer’s trademark.
“Judge Swain’s decision validates the strength of the Tiffany trademark and the value of our brand, and most importantly, sends a clear and powerful message to Costco and others who infringe the Tiffany mark,” Harlan said.
“We brought this case because we felt a responsibility to protect the value of our customers’ purchases and to ensure that Costco‘s customers were not misled about their purchases. It is critically important that the Tiffany name not be used to sell any engagement ring that is not our own,” she added.
One more appeal
It seems, however, that the legal feud is not over. A Costco statement released on the same day as Swain’s latest ruling announced that the decision would be appealed.
“Costco respectfully submits that the ruling is a product of multiple errors in pre-trial, trial, and post-trial rulings and intends to appeal,” the statement read.
“Notably, Tiffany & Co did not claim in the lawsuit that it lost a single sale to Costco as a result of any sign. This was not a case about counterfeiting in the common understanding of that word – Costco was not selling imitation Tiffany & Co rings,” it added.
A four-year struggle
As previously reported by Jeweller, Tiffany & Co filed an initial lawsuit against Costco in February 2013 after reportedly being notified the retailer was falsely selling diamond engagement rings under the name of ‘Tiffany’.
Costco made a counterclaim that stated it was not implying the selling of genuine Tiffany & Co rings but rather using the generic industry term ‘Tiffany’ with ‘setting’ in its labelling.
Both parties returned to court in April 2013, with Tiffany & Co stating the retailer had not used the word ‘setting’ in labelling or advertising.
The court allowed the case to proceed in January 2014, finding there was a “genuine factual dispute” over Costco’s claim ‘Tiffany’ was a generic industry term for a pronged ring.
On 29 September 2016, the court ordered Costco to pay Tiffany & Co US$5.5 million (AU$7 m) – which increased to $11.1 million (AU$13.9 m) in the latest ruling. On 5 October 2016, in the second part of the two-phase damages trial, the court found that Tiffany & Co was entitled to an additional US$8.25 million (AU$10.4 m) in punitive damages. This figure remained unchanged in the most recent ruling.
According to Tiffany & Co’s most recent financial report, the company operated 312 stores globally, including 85 in the Asia-Pacific, 124 in the Americas, 54 in Japan, 44 in Europe and five in the United Arab Emirates.
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