If you were shopping at Costco for a diamond ring a couple of years ago and believed you were buying a Tiffany diamond, you may have been confused, and a U.S. federal judge agrees. The judge granted victory to Tiffany & Co. over Costco in a trademark infringement suit after Costco used jewelry displays promoting “Tiffany diamonds”. The case will now head to a jury to decide how much Costco owes Tiffany in damages and lost profits for infringing on its trademark.
This situation arose in 2012 when a customer in a Southern California Costco noticed a display advertising “Tiffany Round Diamond Rings”. The customer believed that the diamonds were Tiffany brand diamond rings, but what Costco was actually offering was a “tiffany” ring setting. The customer’s mistake is somewhat understandable as Costco routinely sells other expensive brands throughout its stores, including high-end jewelry brands.
The customer complained to Tiffany that she was disappointed to see the luxury brand offered at a discount at Costco, which could potentially remove some of the prestige of owning a Tiffany brand diamond. Tiffany had no knowledge of its rings being sold at Costco so it investigated and discovered that the diamond rings Costco was selling were in fact not Tiffany & Co. diamond rings. Tiffany found other instances of Costco selling “Tiffany diamonds” in other locations.
After this discovery, Tiffany filed a trademark infringement lawsuit against Costco. Tiffany claimed that Costco’s use of the term Tiffany in association with offering diamonds for sale confused customers into believing they were buying genuine Tiffany diamonds. Further bolstering its claim, Tiffany’s holds nearly 100 trademark registrations on the term Tiffany in various categories including jewelry.
In response, Costco stated that the term “tiffany” had become generic to indicate a particular ring setting and that Tiffany does not have exclusive rights over the term in that context. While Costco put forth some evidence of this, including dictionary references indicating that a tiffany setting refers to a particular type of ring, the judge found that Costco acted in bad faith in advertising its rings as Tiffany diamond rings. In addition to a finding of bad faith actions, the judge found the strength of Tiffany’s trademarks to be quite strong, further supporting Tiffany’s trademark infringement claims. It is now up to a jury to determine the amount of damages that Costco must pay to Tiffany for using its trademark in a misleading way.
As this situation illustrates, trademark issues can come up in all sorts of ways. If you have questions about the trademark process, please contact the trademark attorneys at Trademark Access. Let our experience protect your valuable brand.
Article written by DA Johnson. Connect with DA on Google+