Tiffany & Co. vs COSTCO

 In Branding, Counterfeit, Court decision, Infringement, Trademark, Trademark law, US Trademark Law

If you come across something you really want at a surprisingly low price, would you consider the fact that it might not be a genuine product, or would you buy it and be happy about making a ”great deal”? Maybe you would not buy that high-end handbag or watch from a market stand, but what if you found it in a well-known store that does sell genuine branded products at discounted prices? How do you know which brands can be bought from a reseller and which are sold exclusively in the brand’s own stores?

The famous jewelry retailer Tiffany & Company has been awarded $19.4 million after suing the wholesale company Costco for selling diamond engagement rings promoted on in-store signs as “Tiffany”. $8.25 million of the amount is for punitive damages, which are awarded only when the defendant’s behavior is found to be especially harmful.

After receiving complaints from a customer saying she was disappointed to see the jeweler selling its rings at Costco, Tiffany filed a lawsuit on Valentine’s Day 2013, accusing Costco for trademark infringement, counterfeiting, and false and deceptive business practices. Tiffany stated that since Costco wasn’t using the Tiffany trademark online, it was hard to track it down using its usual procedures.

The Tiffany setting was created by Charles Lewis Tiffany in 1886 and consists of a round brilliant diamond held in place with 6 metal prongs at equal distances around the stone. The design rapidly became extremely popular and has ever since then been one of the world’s most popular engagement rings.

Costco argued that it was using ”Tiffany” as a generic term to describe a ring’s setting and that the rings were not stamped or marked with the Tiffany name, nor were they sold in Tiffany’s distinct blue boxes or bags. While “Tiffany setting” is a common way to describe a ring with prong setting, Costco only used the word “Tiffany”.

U.S. District Judge Laura Taylor Swain brought up a study that showed that nine out of 10 consumers view Tiffany as brand identifier rather than a generic term. Since Costco does sell branded merchandise, it was likely that its customers believed they were buying an original Tiffany & Company ring to a discounted price.

The ruling permanently bans Costco from selling any product which is not made by Tiffany & Company as a “Tiffany” item without using words like “style” or “setting.”

Protecting intellectual properties is not only vital to control the perception of a brand, it can also be subject to substantial revenue in cases where rights have been infringed. In this case, Tiffany & Company emphasized the fact that it has never, nor would it ever, sell its rings at low cost stores such as the Costco chain – meaning the infringement is considered damaging.

We at Otmore are experts on intellectual property rights and can help you through every step on your journey to build a brand and protecting its value. Send us an email or give as a call to know more about our services.

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