Notable Case: Tiffany and Co v. Costco Wholesale Corp

Notable Case: Tiffany and Co v. Costco Wholesale Corp

Tiffany and Co is an internationally known luxury goods manufacturer.  Tiffany produces a number of different jewelry items, like necklaces, bracelets and rings. Tiffany became famous for a specific style of mounting a diamond in an engagement ring.  Costco Wholesale Corp is warehouse club retailer.  Costco charges a small fee to members for the opportunity to purchase items at the store.  Costco is best known for negotiating great prices on products from well known brands as well as Costco’s own value priced brands.  The catch is that great prices on well known brands only last as long as the stock on the shelf.

In 2012 Costco sold diamond rings in their stores with the description “Platinum Tiffany”.  Tiffany learned of Costco making these sales and contacted Costco.  Tiffany demanded that Costco stop selling the rings.  Tiffany then filed a lawsuit against Costco in February 2013 asserting claims under both the Lanham Act and New York state law for trademark infringement, dilution, counterfeiting, unfair competition, injury to business reputation, false and deceptive business practices and false advertising.   Costco counterclaimed asking the court to declare Tiffany’s trademarks generic and to dismiss Tiffany’s claims against Costco.

The key question in this case what whether Tiffany registered trademark was infringed when Costco used the phrase “Platinum Tiffany” to describe the rings sold at Costco stores.  Tiffany claimed that its registered trademark on the word Tiffany was infringed because consumers were confused by the description “Platinum Tiffany”.  Costco claimed that Tiffany is the style of diamond ring, a Tiffany setting is a specific method to hold a diamond on a ring, the term Tiffany setting is used by many manufacturers other than Tiffany and that the term Tiffany is generic when it comes to diamond rings.

The Honorable Laura Taylor Swain of the Southern District of New York was the judge assigned to this case.  Judge Swains issued a lengthy opinion in September 2017 which granted summary judgement in favor of Tiffany and Co.  Granting summary judgement means that there were no issues of fact in dispute and as a matter of law Tiffany should win the lawsuit.  Reading the judge’s opinion it appears that Tiffany employed testimony from many different experts on the jewelry market and economics.  Costco failed to offer experts of its own to provide evidence.

In order to succeed on its infringement claim under the Lanham Act, Tiffany had to demonstrate both: (1) that it holds a mark that is entitled to protection; and (2) that Costco’s use of that mark is likely to cause consumer confusion.  The court found that Tiffany had a valid trademark on the word Tiffany because the trademark was registered with the United States Patent and Trademark Office.  The court went through each of the factors of the Polaroid test to determine whether Costco’s use of Tiffany’s trademark resulted in consumer confusion.

The factors of the Polaroid test are:

  1. Strength of the “Tiffany” Mark – Tiffany offered prior court cases which it had won, along with reports from independent market analysts which stated that Tiffany is one of the most well recognized trademarks in the luxury goods market.  Costco’s expert witnesses even agreed that Tiffany is a strong trademark. The court found in favor of Tiffany.
  2. Similarity of the Marks – Tiffany offered photographs of Costco’s jewelry display cases with signs that read “Platinum Tiffany”, Costco offered no responsive legal argument.
  3. Proximity of the Products – Tiffany has provided several emails and photographs demonstrating Costco’s efforts to copy Tiffany designs, as well as side-by-side images of Tiffany and Costco rings which highlight the similarity of the products. Costco offered no substantive facts to show how the products were not proximate of each other.
  4. Actual Confusion – Tiffany submitted several statements from consumers stating they were confused about who made the Costco rings.
  5. Good Faith – Tiffany submitted several pieces of evidence that demonstrated Costco’s bad faith and intent to deceive the relevant purchasing public.
  6. Quality of the Defendant’s Product – Tiffany submitted evidence of its high quality standards, and that Costco had no such quality standards in place.
  7. Sophistication of the Relevant Population of Consumers – Tiffany submitted a survey of more than 900 adults performed by an expert, which demonstrated how sophisticated the average diamond engagement ring buyer is.  Costco submitted no competing evidence.

It is not surprising that the court sided with Tiffany in this case.  The evidence submitted to the court was overwhelmingly in favor of Tiffany and no contradictory evidence was submitted to support Costco.

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