Court Confirms What All Women Know – Tiffany is Not Generic
Sep. 30, 2015|By Molly Rogers
After two years of litigation, in September 2015, a U.S. federal court judge in the Southern District of New York handed Tiffany & Co. a major win on summary judgment, holding that Costco Wholesale knowingly infringed the luxury jeweler’s trademark when it sold diamond engagement rings under the “Tiffany” name. From 2007 to 2012, Costco sold engagement rings in its members-only warehouse clubs next to signs describing the rings as “Tiffany” or “Tiffany Set” or having a “Tiffany Setting.” Upon learning of this practice, Tiffany & Co. sued Costco under the federal Lanham Act and New York state law for trademark infringement, trademark dilution, counterfeiting, unfair competition, and false advertising. Costco acknowledged that its rings were not Tiffany-made but argued that the term “Tiffany” had become generic through its extensive use by jewelers to describe a particular six-pronged ring setting. Costco also argued that engagement-ring shoppers (who are deliberate in making the all-important purchase) were not confused by the signage, given that the Costco rings were not inscribed with a Tiffany stamp, accompanied by Tiffany paperwork, or sold in the coveted—and trademarked—Tiffany Blue packaging.
The Court soundly rejected Costco’s arguments regarding customer confusion, given the strength of the Tiffany brand and the testimony of six Costco customers who believed that they had purchased authentic Tiffany rings. Critically, the Court found that Costco had not proffered any evidence showing a lack of customer confusion (and the Court has now separately ruled that Costco will be barred from presenting any such evidence at trial). The Court also held that “no rational finder of fact could conclude that Costco acted in good faith in adopting the Tiffany mark” given evidence that Costco made “explicit efforts to copy Tiffany’s designs” to offer more upscale goods in its warehouse clubs.
The Court also rejected Costco’s argument that the Tiffany mark was invalid because it had become generic, like the terms Murphy Bed and Pilates method. Generally, the question of whether a mark has become generic is an issue of fact that cannot be resolved before trial. But in this case, although Costco presented significant evidence that the term “Tiffany” had a generic meaning, the Court still ruled in Tiffany’s favor, finding that Costco had not presented any evidence to refute that the primary significance of the Tiffany mark to the relevant public is identification of the Tiffany brand.
Costco filed an immediate appeal of the district court’s ruling to the Second Circuit, but the appeal was dismissed as premature. A jury trial is scheduled for January 2016 to determine the damages that Costco must pay. The district court judge has already ruled that Tiffany & Co. will be allowed to seek punitive damages but cannot recover Costco’s profits from the sale of memberships or goods other than the rings at issue.