What’s in a name? In Tiffany’s case, about $25 million dollars. That is the sum that Costco was ordered to pay for using the Tiffany & Co. name in connection with the sale of non-Tiffany brand diamond engagement rings. The famed New York-based jewelry brand and the Issaquah, Washington-headquartered multinational retail corporation have been in and out of court since February 2013 when Tiffany filed suit, alleging that hundreds – if not thousands – of Costco members bought engagement rings under the false impression that they were authentic Tiffany products.
The case has taken the form of a lengthy back-and-forth before the U.S. District Court for the Southern District of New York, including a 2015 jury trial, which resulted in a win for Tiffany. Rejecting Costco’s argument that “Tiffany” is not a protected trademark but a generic word for a ring’s setting, the jury found that Costco had made a sweet $3.7 million in profit thanks to its unauthorized use of the Tiffany brand name.
The lower court’s case came to a head in August 2017 when U.S. District Judge Laura Taylor Swain held that Tiffany & Co was entitled to at least $19.4 million in damages from Costco over the warehouse club chain's illegal sale of counterfeit diamond engagement rings bearing the "Tiffany" name. The New York federal judge determined that Tiffany deserves $11.1 million, plus interest, for Costco's trademark infringement.
On top of that, Costco was ordered to turn over $8.25 million in punitive damages, as awarded by the jury, a figure directly tied to Costco’s bad faith act of “willfully” using the trademark-protected “Tiffany” name to describe the rings’ setting style in an attempt to mislead consumers. In particular, Swain stated that Costco’s specific practice of requesting copycat designs from its vendors and then pairing the lookalike rings with signs bearing Tiffany & Co’s trademark was demonstrative of bad faith efforts.
In the midst of Costco’s appeal to the U.S. Court of Appeals for the Second Circuit, which was lodged in September 2017, the case was back before Judge Swain this week, who not only refused to reduce the dollar amount that Costco owes to Tiffany, but she actually upped the figure by nearly $6 million to cover Tiffany’s legal costs. Moreover, faced with arguments from Coscto over the propriety of the jury instructions and the allegedly improper exclusion of evidence from trial at Costco’s expense, Swain declined to order a new trial.
Still, the parties 6-year-long fight is far from over. The case will now proceed before a 3-judge panel for the Second Circuit, following a year-long hold in the appeals process while the lower court determined a number of post-trial issues.
“Costco looks forward to vindicating its rights in the appeal,” David H. Bernstein, counsel for Costco and an IP attorney at Debevoise & Plimpton LLP in New York, told Bloomberg Law on Tuesday.
*The case is Tiffany and Company v. Costco Wholesale Corporation, 0:17-cv-02798 (2nd Cir.), 1:13-cv-01041 (SDNY).