RAPAPORT… A US court overturned a $21 million judgment previously awarded to Tiffany & Co. in its ongoing case against Costco Wholesale Corporation over use of the jeweler’s name to describe generic engagement rings.
A lower-court judge erred in finding Costco liable for using the name “Tiffany” on its displays, a federal appeals court ruled Monday in a 3-0 decision. The court believed “reasonable” customers would realize Costco was describing the rings’ settings and was not selling them as Tiffany engagement rings. The court also felt the issue of liability should have been decided by a jury rather than a district judge.
The court agreed with Costco’s argument that “‘Tiffany’ is not only a brand name, but also a widely recognized descriptive term for a particular style of pronged ring setting,” the filing noted. It also concurred Costco was entitled to use the name “in good faith only to describe the style of its rings.”
Tiffany first filed suit against Costco in February 2013, citing trademark infringement and counterfeiting, with the $21 million judgment handed down in 2015. During that period, approximately 3,349 customers bought Tiffany-set rings from Costco, according to the filing.
“We are disappointed in the court’s ruling, which finds that a jury, rather than the judge, should have decided the question of liability in the first trial,” Leigh Harlan, Tiffany’s senior vice president, secretary and general counsel, said Monday. ”We continue to believe that the district court was correct in its findings, and that the jury’s finding on damages, which resulted in a $21 million award for Tiffany & Co., is a clear indicator of the strength of the Tiffany brand, and of the jury’s outrage over Costco’s actions.”
Tiffany intends to take the case back to court in the hope of overturning the newest ruling, it noted.
“We have no qualms about trying this case again, and remain confident that a jury will find counterfeiting and infringement upon retrial, just as the district court originally ruled,” Harlan added.
Image: Tiffany’s flagship store in New York. (Tiffany & Co.)
Appeals Court Backs Costco in $21M Tiffany Case
The Bottom Line
- The appeals court ruled unanimously that Costco's use of 'Tiffany' described the ring setting style and did not mislead reasonable customers into believing the rings were Tiffany products.
- The court determined that liability should be decided by a jury, not a district judge, and acknowledged 'Tiffany' as both a brand name and a descriptive term for a pronged ring setting.
- Tiffany plans to retry the case, maintaining confidence that a jury will again find infringement and counterfeiting, despite the appeals court ruling.
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