Last week, a federal jury found in favor of the high-end jewelry brand Tiffany, concluding that Costco’s 2012 collection of “Tiffany” engagement rings was a trademark infringement, and wasn’t just the name of a popular diamond setting. The jury awarded $5.5 million in actual damages to Tiffany for the infringing ring sales, and has now awarded Costco $8.25 million in punitive damages for infringing on the brand’s copyright.
The case has been litigated for this long because it’s really over an important question in the jewelry industry: is “Tiffany” a respected brand, and what do consumers think when they see a ring next to a sign that says “Tiffany” at Costco? What if it’s in a light blue box?
It was a concerned customer who alerted Tiffany to the items at Costco, noting that the salesperson called them “Tiffany” rings as well. Other shoppers may not have questioned it, either assuming that the rings were a Tiffany-type setting or that yet another luxury brand was selling cheap at Costco or had licensed its brand.
Costco later offered refunds to any customers who thought they had been misled.
The jurors concluded that Costco did mean for customers to believe that the rings were from Tiffany, and awarded damages accordingly.
“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,” the company’s general counsel told Fortune. “It is critically important that the Tiffany name not be used to sell any engagement ring that is not its own.”
Costco will most likely appeal the decision.
by Laura Northrup via Consumerist