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Costco Ordered to Pay Tiffany & Co. $5.5m in Trade Mark Infringement Case

Written by Fozia Cheychi on 06 October 2016

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Costco has now been ordered to pay Tiffany’s $5.5 million in compensation for selling thousands of diamond rings marketed and sold under Tiffany’s name. The level of damages awarded represents Costco’s actual profits from the sale of approximately 2,500 rings. The damages far surpass the $781,000 that Costco had argued should be the maximum it owes. In addition Tiffany’s could also seek punitive damages.

Tiffany’s initiated legal proceedings against Costco back in February 2013- after obtaining information that Costco was selling a range of diamond rings, marketed under the Tiffany name. It was the use of the name ‘Tiffany’s’ that was at issue. At the time Jefferey Mitchell- Tiffany and Co’s lawyer had told ABC News that the company was originally alerted to the fact that Costco were selling the contentious rings when a Tiffany’s customer filed a complaint after being offended that Tiffany’s would sell their engagement rings at a discount in Costco.

The trial to determine damages began on 20 September 2016- this was one year after Judge Laura Swain granted Tiffany’s motion for summary judgment- which found Costco liable for trade mark infringement and counterfeit.

Costco responded by filing a counterclaim, in which it was alleged that the term ‘Tiffany’ is a generic term for a prolonged, solitaire-style ring setting. Judge Swain rejected this argument and held that Costco had failed to produce any affirmative evidence demonstrating that ‘Tiffany’ when used as a mark is not strong or that any potential generic use of Tiffany had “undermined the strength of the ‘Tiffany’ mark”. She added that “Costco’s proffer is insufficient to raise an issue of material fact with respect to the actual confusion factor, and Tiffany’s evidence of consumer confusion stands rebutted”. Consequently Costco was ordered to cease use of the Tiffany name and logo in its marketing and merchandising of the jewellery.

Within the next few weeks, Manhattan Federal Judge Debra Freeman is expected to issue a final judgment in relation to punitive damages.

Costco has declined to comment on the case due to continuing deliberations by the jury.

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