Trademark Infringement Ruled Following Costco’s Selling Of Counterfeit Tiffany Rings
Trademark Infringement by Costco – the largest US warehouse club chain, was ruled by a Manhattan federal judge recently. Costco has allegedly sold counterfeit diamond engagement rings using the luxury retailer Tiffany’s name on the ring’s case signs.
Recently, we wrote about another high profile trademark infringement disputes E-Commerce Giants Sued For Online Selling Of Counterfeit Goods. Costco was selling counterfeit goods as well, but just not online.
Trademark Infringement Case
The famous dispute ironically dates back to the Valentine’s Day of 2013 when Tiffany & Co filed a lawsuit against Costco, saying the chain’s customers have bought hundreds (or maybe even thousands) of engagement rings in the erroneous belief that they were authentic Tiffany products.
The recent ruling had Costco send a letter to customers who bought the rings offering a full refund if they were unsatisfied. It would be interesting to know how they were able to trace all their client’s personal details and communicate this effectively.
Likelihood Of Confusion
Costco tried to argue that Tiffany’s trademark was invalid because, as reported by the American Genius, it prevented anyone from describing the ring setting. Nevertheless, after roughly 30 months, the judge found that Costco’s actions violated Tiffany’s brand by wilfully infringing its trademarks. The federal court judge, Laure Taylor Swain explained that “Despite Costco’s arguments to the contrary, the court finds that, based on the record evidence, no rational finder of fact could conclude that Costco acted in good faith in adopting the Tiffany mark”.
Following this judgment, Tiffany can now take Costco before a jury to seek damages. These might include a recovery of the profits made following the sale of all engagement rings as well as punitive damages (i.e. deterring Costco from engaging in similar conduct again).
What’s In A Name?
Following Robert M. O’Connell’s interesting analysis, there are a few tips that everyone should bear in mind when it comes to choosing names for businesses and products.
1) Distinctive Names
Tiffany & Co was founded by Charles Lewis Tiffany in 1837 and since then it has become the world’s best known jeweller. The general rule under US trademark law is that one cannot protect a surname as a trademark as this would be unfair to others and restrain them from using that name simply because their surnames coincide. However, a name acquires distinctiveness through long-term exclusive use and establishes itself as a brand. It is then easy for consumers to recognize this name and relate it to the goods or services in question. The name, which previously was simply a surname, is now equivalent to a particular brand and gains a secondary meaning as a mark which could be protected. This is also how Tiffany has got so many marks protected and why Costco was not able to claim that monopoly over a surname should be invalidated.
2) The Power Of A Name
How this lawsuit came to be is through a person shopping at one of Costco’s stores in California who complained to Tiffany that she was disappointed to see a warehouse club chain offering Tiffany diamond engagement rings for sale and promoting the offer with signs. In the information era, where nothing can be left hidden, one should be very careful how one labels products or promotes a business. Otherwise, the result could be paying a lot of damages and hefty legal fees. Costco tried to argue that the word Tiffany has already become the generic word for the ring setting in question and this is the meaning they used to promote and sell their product. Tiffany & Co., on the other hand, proved its success by introducing a survey where 9 out of 10 respondents submitted they recognize Tiffany not merely as a generic word, but as a brand. It is astonishing how powerful a name could be and from one moment onwards, it could start “working for you”.
The Tiffany and Costco case continues and another hearing is set for 30 October. The judge directed both sides to “make good faith efforts to settle the outstanding issues”. We will be following the development to find out how much Costco will have to pay for using this “generic word”.
The case is Tiffany & Co v Costco Wholesale Corp., case number 1:13-cv-01041, in the U.S. District Court for the Southern District of New York.
