On Sept. 8, a New York federal court handed Tiffany & Co. an unequivocal victory in its two-year-old trademark battle with Costco, ruling that Tiffany setting is not a generic term, and the warehouse club was guilty of counterfeiting by selling unauthorized engagement rings with Tiffany marks.

Tiffany first filed suit against Costco on Feb. 14, 2013,  after a customer alerted Tiffany that a Costco store in Huntington Beach, Calif., was selling rings marked as Tiffany that were not produced by the company. Costco said the wording referred to the rings’ Tiffany settings and asked the court to declare Tiffany setting a generic term.

But Judge Laura Taylor Swain wrote that for a term to be ruled generic, it must primarily serve as a generic descriptor. Tiffany, however, also refers to the retailer, she said, citing a Tiffany-funded study (disputed by Costco) that found that 9 out of 10 consumers think of the retailer when presented with the name Tiffany.

The home of the blue box also prevailed on the counterfeiting and trademark infringement claims, as Swain ruled that Costco’s labeling of the products as Tiffany confused consumers.

“Tiffany has provided several emails and photographs demonstrating Costco’s efforts to copy Tiffany designs, as well as side-by-side images of Tiffany and Costco rings which highlight the similarity of the products,” she continued.

She also found that Tiffany has more rigorous quality standards than Costco, meaning the former could be harmed the association. For instance, one customer “was brought to tears when the diamond fell out of the ring she purchased at Costco because she believed that she had purchased a genuine Tiffany ring,” she wrote.

Costco also argued that it dressed the rings in generic packaging that does not call to mind Tiffany. But the judge ruled that “Costco has offered no evidence that the stamping of these rings with generic marks has done anything to alleviate confusion; rather, at least six customers who purchased these ‘generically’ stamped rings were confused as to their source.”

She said Tiffany was entitled to a jury trial to determine damages, though she granted Costco’s motions to deny Tiffany immediate monetary relief.

Costco did not respond to a request for comment at press time. In a statement, Tiffany senior vice president, secretary and general counsel Leigh Harlan said that “this decision further validates the strength and value of the Tiffany mark and reinforces our continuing efforts to protect the brand.”

Rob Bates

JCK News Director