Judge Orders Costco to Pay Tiffany More Than $19 Million

(IDEX Online) – A federal district court judge has ordered retail giant Costco to pay Tiffany & Co more than $19 million for selling generic diamond engagement rings that Tiffany says were marketed using its famous name.

The rings had a pronged setting that Costco claimed is “commonly known as a ‘Tiffany’ setting,” however, some of the display cases simply described the rings as “Tiffany” instead of “Tiffany setting” or “Tiffany style.”

Judge Laura Taylor Swain ruled that Tiffany should receive $11.1 million as profits for trademark infringement, plus interest, and $8.25 million in punitive damages, which was awarded by a jury in October.

Judge Swain also ordered Costco to permanently refrain from using “Tiffany” as a stand-alone term when selling the jewelry items in question.

Tiffany sued in 2013 after it discovered that Costco salespeople were responding to customer inquiries by calling certain solitaire diamond rings “Tiffany” rings.

Judge Swain wrote that the salespeople “were not perturbed when customers who then realized that the rings were not actually manufactured by Tiffany expressed anger or upset.”

“Tiffany has never sold nor would it ever sell its fine jewelry through an off-price warehouse retailer like Costco,” the lawsuit said.

Costco said in a statement that it plans to appeal the ruling, which it described as “a product of multiple errors in pretrial, trial, and post-trial rulings.”

“This was not a case about counterfeiting in the common understanding of that word – Costco was not selling imitation Tiffany & Co. rings,” Costco said, adding that the rings were not marked with the Tiffany name, or sold using Tiffany’s trademark blue boxes.

Judge Swain was unimpressed with the Costco approach, however. “Costco’s upper management, in their testimony at trial and in their actions in the years prior to the trial, displayed at best a cavalier attitude toward Costco’s use of the Tiffany name,” wrote.

Tiffany jewelry is available only at Tiffany stores apart from a limited collaboration with Net-a-Porter, Tiffany commented.

“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,” the company added.