Posted on March 13, 2013
The Tiffany-Costco lawsuit has taken an unexpected turn—one Tiffany can’t be too happy about. Costco has asked a federal judge to rule whether Tiffany setting is a generic term.
The question of whether Tiffany setting is a legally allowed descriptor is certainly relevant to JCK readers, since some people do use it. Tellingly, Tiffany’s response to me focused more on the specific case—how Costco described the disputed rings—rather the the question of whether Tiffany setting is generic, which it likely doesn’t want to discuss. (Why would it?)
For perspective, I turned to some IP and trademark attorneys, and most had a pretty similar take on things.
First off, most think this is a case that is well worth watching. “It’s between two companies that are very reputable,” says David Weild, partner at Edwards Wildman. “Tiffany accused Costco of counterfeiting, which is quite a serious change.”
The question will be, as Weild put it: “Because something has a Tiffany setting, do you think it’s a ring or diamond from Tiffany?”
Making things a little more complicated are the specifics of this case. “This case would be very different if Costco said in the small descriptive print this is a Tiffany-style ring,” says David L. Ter Molen, partner at Freeborn & Peters. “From my perspective, there is no doubt a company can sell something as a Tiffany-style setting, because if you go into, say, a Kay Jewelers, you are not going to be confused over whether something is a Tiffany ring with that description. By contrast, Costco sells hundreds of branded items and on occasion gray market items. So from Tiffany’s perspective there is a real increase in potential confusion.”
“There is no indication that Tiffany & Co.’s font was used at any Costco location, and the photos in Costco’s exhibit 2 reveal that the packaging is about as far from Tiffany’s robin’s-egg blue as can be,” he says. “Assuming all of the rings at issue were sold in this manner, there is simply no plausible ‘likelihood of confusion’ at the time of sale on which to base a claim of trademark infringement.”
Secondly, it is possible that a judge could hold that Tiffany setting is a generic term, which has happened with many proprietary words and phrases in the past, including escalator, margarine, and, more recently, palates.
To avoid this, Peter Berger, a partner with Levisohn Berger who has many jewelry clients, says Tiffany will have to show it’s gone after people who have used the term Tiffany setting. “Brands have to show they are policing the trademark for it to be upheld,” he says.
In the end, it will likely come down to how consumers view the mark, says Richard LaBarge, partner at Marshall, Gerstein & Borun.
“It’s not uncommon to do consumer surveys in cases like this,” he says. “I would expect one or both sides would present consumer surveys into evidence. Costco is also going to say, ‘It’s not just us, everyone in the industry is doing it.’ They have things like the dictionary listings and competitor ads that they have already put into evidence.”
Still, most of the lawyers felt that Tiffany was running quite a risk here.
“I wouldn’t be surprised if the case settles,” says LaBarge. “Costco does have some pretty good evidence that Tiffany setting is a generic term, and I’m sure Tiffany doesn’t want that ruling out there.”
Agrees Weild: “Tiffany has to ask: Is this case sufficiently important to put its trademark at risk? It never helps to have adjudication that something is a generic term, because that opens it up to being used and abused.”
Colman even thinks that Tiffany may have bitten off more than it can chew by going after Costco, an aggressive litigator that took its fight with Omega all the way to the Supreme Court.
“[This] can only leave Tiffany exactly where it started, if things go well, and much worse off, if things go poorly,” he says. “This case might have repercussions that the jewelry company should have anticipated—but apparently did not. When cases are brought for reasons having far more to do with business than law, they have a way of backfiring.”