Costco owes Tiffany $13.75M for Trademark Infringement


Tiffany & Co. was awarded a total of $13.75M by a New York Jury on October 5, 2016. This total award corresponds to 73% more than the actual profits Costco generated from the sale of rings deceptively similar to Tiffany rings.

Tiffany sued Costco three and a half years ago, in February 2013 after discovering that Costco was selling engagement ring displayed next to signs reading “Platinum Tiffany.”  These rings were not manufactured or licensed by Tiffany.

Tiffany contacted Costco and secured a commitment that Costco would remove references to Tiffany from its display case signs. Costco also sent a letter to all customers who had purchased rings from stores where display cases included references to Tiffany, inviting them to return their rings for full refunds if they were unsatisfied.

Last year, a New York court found that Costco had counterfeited and knowingly infringed the Tiffany trademark. The court found that “no rational finder of fact could conclude that Costco acted in good faith in adopting the Tiffany mark.”

There was compelling evidence that Costco was requesting its vendors to copy Tiffany products, that Costco employees were aware of the vendors’ efforts to do so, and that Costco employees took no action to put a stop to this. A series of emails and photographs demonstrated Costco’s efforts to copy Tiffany’s designs by making references to Tiffany designs and sharing links to Tiffany’s website. Accordingly, the court held that Costco had infringed Tiffany’s trademark in bad faith.

Costco’s argument that Tiffany’s trademark had become generic was rejected by the court which noted the inconsistency of the argument.

“In essence, Costco urges the Court to find that Costco jewelry buyers used the word “Tiffany” in a generic sense when communicating with vendors, while at the same time asking those vendors to copy Tiffany & Co. designs, and that signage incorporating the word “Tiffany” on the resulting merchandise was nothing more than clerical duplication of a generic reference from an invoice. Such a conclusion is untenable in light of the evidentiary record” reasoned the New York Court for the Southern District.

The jury decided that the actual profit of $3.7M derived by Costco from the sale of the rings was inadequate. Instead the jury found that $5.5M would be just under the circumstances. The jury also found that additional punitive damages of $8.25M would be appropriate, bringing the total award to $13.75M.

“The award validates the strength of the Tiffany trademark, the value of our brand, and most importantly, sends a clear and powerful message to Costco and others who infringe the Tiffany mark,” said Leigh Harlan, Tiffany’s general counsel.

The case is not quite over yet. Costo has the opportunity to appeal the verdict and a Judge could modify it.