Costco’s Final Toll to Tiffany: $19.35 Million

A New York federal judge is ordering Costco Wholesale to pay Tiffany & Co. $19.35 million, after the discount chain sold engagement rings falsely labeled Tiffany.

In 2015, Judge Laura Taylor Swain ruled on summary judgment that Tiffany had proven its claims that Costco had infringed on its trademark by using the word Tiffany as a standalone term, without the accompanying set or setting.

Last October, a jury determined that Costco should be liable for $13.5 million in damages. Swain lowered that to $11.1 million but then added over four years of interest.

In her Aug. 14 order, Swain said that Costco’s management “displayed at best a cavalier attitude” toward the Tiffany trademark.

She also found that Costco’s explanation for the language—that clerical workers inadvertently used the Tiffany name unalloyed as a shorthand—was not credible.

In her order, Swain permanently enjoined Costco from using the term Tiffany as a stand-alone term.

Tiffany spokesman Nathan Strauss said in a statement the verdict “sends a clear and powerful message.

“We brought this case…to ensure that Costco‘s customers were not misled about their purchases,” he said. “It is critically important that the Tiffany name not be used to sell any engagement ring that is not our own.”

Not that the legal drama—which dates back to February 2013—is over. Costco has already appealed the judge’s ruling.

The warehouse chain justified its actions in a statement.

“Signs that said Tiffany setting or Tiffany set or Tiffany were in use at Costco for many years,” it said. “Tiffany first complained to Costco about them in late 2012. Costco promptly changed its signs to omit all references to Tiffany (even the phrases Tiffany set and Tiffany setting, as to which Tiffany later conceded Costco has no liability).”

It further argued that “this was not a case about counterfeiting in the common understanding of that word,” as Costco was not selling imitation Tiffany rings. It noted that the rings were not stamped with the Tiffany name, were sold in plain wooden boxes, and the accompanying appraisal and sales receipts never mentioned the retailer.

“Tiffany & Co. did not claim in the lawsuit that it lost a single sale to Costco as a result of any sign,” it added. “From a purchaser list of approximately 2,500, Tiffany identified fewer than 10 who said they had misunderstood Costco’s signage.”

(Image courtesy of Tiffany & Co.)

JCK News Director