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Costco Attempts to Defend Sale of Counterfeit TIFFANY Diamonds


Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
Zies, Widerman & Malek
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Posted: April 1, 2013 @ 9:30 am
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On February 15, 2013, Tiffany and Company filed a lawsuit against Costco Wholesale Corporation in the U.S. District Court for the Southern District of New York, alleging that Costco was engaging in the sale of counterfeit TIFFANY diamond engagement rings.  The complaint filed by Tiffany alleges counterfeiting, trademark infringement, dilution, unfair competition, injury to business reputation, false and deceptive business practices and false advertising. Tiffany’s is seeking a permanent injunction, damages, treble damages and punitive damages for the alleged infringement and other alleged unlawful acts, but if you read the complaint carefully it seems pretty clear that what they really want is to make a public example out of Costco. They want everyone to know that they are watching and when they find infringers they will act swiftly. Thus, Tiffany has asked for an apology and they want the world to know that they never have and never will sell their rings to discounters or wholesalers. For more information see Tiffany Sues Costco Over Counterfeit Diamond Rings.

This should have been an open and shut case. But then Costco decided to aggressively defend what seems indefensible.

Costco is basing its defense on the belief that the “[t]he word Tiffany is a generic term for ring settings comprising multiple slender prongs extending upward from a base to hold a single gemstone.” See opening paragraph of the Costco Answer and Counterclaim. In support of this position Costco submitted dictionary definitions, pages from Wedding Planning for Dummies discussing rings, online articles (such as from About.com), online sales pages (such as from Amazon.com) and other materials.

To the uninitiated this line of defense may seem peculiar at first, and then upon learning a bit about the law behind the defense it might seem as if Costco has the upper hand. Let’s dig a little deeper here to see what is going on and then I’ll offer my assessment of what is likely to happen.

First, let’s begin with what we learned from Tiffany & Co. when we contacted them for further comment after Costco filed its Answer. Linda Buckley, who is Vice President of Worldwide Public Relations at Tiffany & Co., told us that their trademark has been registered for over 175 years and they look forward to proving Costco’s infringement in court. She explained:

Costco’s answer seeks to muddy the waters, but one thing remains clear. The TIFFANY mark is a federally registered incontestable trademark, has been continuously used for over 175 years and enjoys worldwide fame and recognition as designating superior goods from Tiffany & Co, and particularly Tiffany & Co. diamond engagement jewelry.  When Costco used that trademark to refer to goods that had nothing whatsoever to do with Tiffany & Co., they infringed Tiffany’s trademark, while damaging both their own customers and the Tiffany brand. Costco’s counter-claim is an unfounded and weak attempt to defend its willful and infringing use of the TIFFANY trademark. We look forward to proving this in the upcoming court case.

Obviously, Tiffany is going to fight. They have to fight hard. Their entire business is build upon luxury quality and it would be devastating if anyone could claim they are selling TIFFANY diamond rings. Tiffany will not roll over, and they will fight as hard as they have to in order to win. Eventually, I think they will indeed win.

Second, what is this business about the TIFFANY mark being incontestable? How can an incontestable trademark be challenged? Incontestable legally does not mean what the word suggests.

An “incontestable” trademark registration is conclusive evidence of the validity of the registered mark, of the registration of the mark, of the owner’s ownership of the mark and of the owner’s exclusive right to use the mark with the associated goods or services. In order for a trademark to achieve incontestable status a filing must be made between the 5th and 6th year after the trademark has been registered.

Achieving incontestable status does not mean that the trademark cannot be challenged. It means that the grounds for challenging a trademark are significantly reduced. A registered trademark can still be challenged even if it is incontestable if the trademark has become a generic name for the goods or services, the trademark is functional, the trademark has been abandoned, or the registration of the trademark was obtained fraudulently. See 15 U.S.C. 1064. There seems to be absolutely no legitimate way to say that the trademark has become functional, it clearly has not been abandoned, and it would be virtually impossible to even begin to demonstrate that it was obtained fraudulently. Thus, in order to defend this counterfeiting case the only option Costco has is to allege that the TIFFANY trademark is generic. It is akin to a “Hail Mary pass” with no time remaining on the clock.

But is the TIFFANY trademark generic? A casual review of the Costco filing could make you think that the TIFFANY trademark has become synonymous with a certain type of diamond ring, which would mean that it has lost its ability to operate as a source identifier. But a closer look at the allegations, at least in my opinion, shows that Costco is attempting to conflate the issue.

The complaint explains in summary fashion the investigation that ensued after Tiffany learned of what Costco was doing. The complaint reads in relevant part:

Subsequent investigation showed that in the jewelry display case at the Huntington Beach Costco location was an engagement ring alongside a point of sale (“POS”) sign marked “639911 – PLATINUM TIFFANY .70 VS2, 1 ROUND DIAMOND RING – 3199.99,” and another ring alongside a different POS sign marked “605880 – PLATINUM TIFFANY VS2.1 1.00 CT ROUND BRILLIANT SOLITAIRE RING – 6399.99.” (emphasis added)  The Costco salesperson also referred to each of the rings as a “Tiffany ring,” and said the store generally carries one of each item.

Thus, Costco was selling TIFFANY diamond rings when they were not from Tiffany & Co.

In the Costco Answer and Counterclaim, Costco defends and comes out swinging saying:

Costco not only denies having infringed or invaded any legal rights of these Plaintiffs, but Costco asks the Court to order that the Plaintiffs be prohibited and enjoined from ever again asserting false claims of the right to exclude use of Tiffany as a generic term for a style or type of ring setting. By its counterclaim herein, Costco seeks a judgment declaring invalid, and ordering modified or partially canceled, federal trademark registrations which the Plaintiffs have put forward as purportedly evidencing or supporting false claims of right to prevent Costco and other retailers from suing the word Tiffany to indicate that a ring has a Tiffany setting, i.e., a setting comprising multiple slender prongs extending upward from a base to hold a single gemstone…

Thus, Costco says they believe they have a right to sell rings that present in a Tiffany setting.

Clearly, at least in my opinion, Costco is overstating their case and affirmatively twisting and misrepresenting what Tiffany has charged them with. This type litigation strategy is unfortunately commonplace. Twist and obfuscate the facts in order to confuse.

Tiffany is not complaining about Costco selling rings in a Tiffany setting, they are complaining about Costco selling TIFFANY diamond rings when in fact they are not TIFFANY diamond rings. So don’t be confused by the artful dodge of Costco. The Costco Answer does nothing to substantively address the charges brought by Tiffany & Co. Even if the district court believes everything asserted in the Costco Answer and Counterclaim they are still liable for trademark infringement because they sold counterfeit TIFFANY diamond rings.

If you doubt the analysis ask yourself this: If Costco believes they did nothing wrong then why were they only selling these diamond rings as “TIFFANY diamond rings” in real world, brick and mortar stores? It is curious that they were not selling these rings they claim to have every right to sell on their online store. That will be quite hard to explain, and if I were the Judge I would need an extremely convincing answer to that question otherwise I would almost certainly view that as conscious knowledge by someone that they knew what they were doing was wrong. Perhaps it can be explained, but I am hard pressed to think of any rationale explanation that would seem convincing.

Finally, from a strategic standpoint I think what Costco is doing here is a mistake. Any reasonably objective observer has to know that Tiffany can’t afford to lose this case and will put whatever they must behind winning. Rather than apologize, explain it was an unfortunate rouge act that can happen in any company as large as Costco, they are doubling down. This doesn’t strike me as thoughtful risk management strategy. Perhaps they are just trying to raise the stakes for a better settlement or to save face, but coming out swinging like this will likely only force Tiffany to take a harder line and make an even bigger example out of Costco.

Stay tuned! This battle will likely get a lot more interesting.

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Posted in: Gene Quinn, IP News, IPWatchdog.com Articles, Trademark

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

 


25 comments
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  1. Gene-

    The lack of online sales is very interesting, and perhaps seems to suggest that they knew that what they were actually doing by calling them Tiffany rings was infringing the copyright.

    If they sensed some heat over their practice, the rings could just disappear from their brick and mortar stores, with no hard evidence of what they were doing, just witnesses that it had happened. If they had advertised on line, there would probably be hard evidence of what they were doing, even if they took the advertising down, since thousands of independent computers would most likely have copies of their adverts saved on their hard drives.

    As you know I am not an attorney, and this is all just conjecture on my part, but it might explain their rationale that you were wondering about. I believe it is very sad that Costco would intentionally make things difficult and expensive for Tiffany to defend their copyright and good name with their Answer and Counterclaim that seems a lot like blustering to me. I can’t help but wonder who actually produced the rings, and what the actual quality of the products happen to be.

    Stan~.

  2. Stan-

    I’m surprised by the Costco response here. If they want to sell diamond rings in a Tiffany setting that is another matter entirely. But I don’t see any justification for selling TIFFANY DIAMOND RINGS.

    It may also be a fluke, or unrelated way that Costco labels products, but convention is to capitalize a word mark when not using the familiar R in a circle. So the Capitalization of “tiffany” and the fact that the label boils down to TIFFANY diamond rings is hard for me to escape. The fact it was not online also seems icing on the cake.

    -Gene

  3. I don’t know that you can read anything into the capitalization. Lot’s of people capitalize “Tiffany style” and “Tiffany Style” and lots don’t

    I think there is no question but that “Tiffany style” is descriptive/generic. So the real question in this case, after all the bluster, is whether the words on these printed signs in a local store is sufficient to create confusion where “Tiffany” is used as a “shorthand” for “Tiffany style.”

    I don’t know the answer to that, but I suspect that part of the reason Costco is striking back is that it doesn’t want train all its local managers to figure out the difference (and wants to use that difficulty as evidence that the shorthand is generic), nor does it know which used the sign and which didn’t. The reason why this didn’t happen online is that you have central quality control, I suspect.

  4. Michael-

    If the signs said “TIFFANY Diamond Rings”, wouldn’t that imply that they are using the shorthand version of Tiffany’s trademark? If so, it seems to me as if all of the allegations being made by Tiffany and Co. in the first paragraph of this article would seem to be true. If the signs said “Tiffany Diamong Rings”, it seems like the only allegations that Might not apply are trademark infringement and/or dilution of the trademark. I guess the reason I am so concerned is that Tiffany and Co. have produced so many very real works of art of very high quality for over a hundred years. It seems to hint that this is not the only instance in Costco’s product line where issues like this might appertain.

    Stan~

  5. Stan -

    The entire sign appears to have been capitalized PLATINUM, TIFFANY, ROUND, DIAMOND, and RING. It may be that all of their signs are capitalized. I was just there last week, but I can’t remember what the signs looked like. If, as you posit, TIFFANY was capitalized but nothing else was, that would definitely be bad news for Costco. I don’t think you can read much into everything being capitalized, though.

    If you have knowledge of some other trademark infringement by Costco, that would be interesting. While they go out of their way to push the limits (for example, by buying foreign works and importing them, which is completely legal post Kirtsaeng), I’ve never seen or heard any evidence that implies a pattern of palming off except this one case.

  6. Fair enough Michael-

    I was just conjecturing about their possible motives for pushing back so adamantly against Tiffany in this case, with seemingly very little by way of a valid premise. If they can win this case, it gives them all sorts of latitude, and possibly prevents them from having to deal with perhaps several other entities in a similar manner.

    Costco is a huge corporation, with deep pockets, which is probably not true of Tiffany and Company. I tend to object when large corporations attempt to steam-roller over smaller entities just because they think they Might be able to get away with it when nobody happens to be paying attention.

    They got “Patent revision” passed, and now they seem to be going after Trademarks as well. Color me paranoid if you like, but I happen to think it is a very valid concern. By the way, Chief Judge Michel coined the term *patent revision*, because he said that *patent reform* implied some sort of improvement, which he didn’t believe was true of the AIA.
    http://www.youtube.com/watch?v=J96KjAbEwQo

    Stan~

  7. I hear you on these points. I even blogged about the phenomenon for the SHIELD Act. I just don’t know how far it applies in this case, where Tiffany Style is undeniably generic. I don’t know that there are a variety of other borderline generic marks that Costco is using – I didn’t see any “Kleenex” signs for the Kirkland facial tissues, for example.

    I suspect the pushback is that they are irritated that their local store screwed up, but don’t want to have to get sued for 100% of their ring profits in every single store (which is what Tiffany is asking for) every time “tiffany style” gets confused with “tiffany” on a sign, when there is probably little is any actual confusion at the point of sale. Thus, as the speculation above went, this is increasing the stakes for Tiffany to settle.

  8. I would be curious to see how the markers for the non-tiffany rings are written. The signs would seem to be formulaic – ’639911 – PLATINUM TIFFANY .70 VS2, 1 ROUND DIAMOND RING – 3199.99′ – I am guessing that the first part is a part number, the second is obviously the material, and then there is tiffany. If non-tiffany rings display some other style idenifier in this slot Costco has a solid case. If non-tiffany rings leave this slot empty, or worse (for Costco), place a brand name there then Costco is infringing.

  9. Eliza-

    I disagree with your assessment; it appears that you are saying that if Costco was merely using “TIFFANY” as an identifier in its normal course of business it has a “solid case” (I assume you mean defense), whereas if it appears that Costco was using “TIFFANY” in an attempt to identify the goods as something they are not, it “is infringing.”

    Speaking strictly to the trademark infringement claims, a party’s intent is only one factor that would be considered and, if this case were to go to trial, it would be unlikely that Costco’s intent would make much of a difference here.

    If Costco won its argument that “Tiffany” is a generic term with no secondary meaning (unlikely, in my opinion), then it would make absolutely no difference how Costco was using that term, because it would not be protectable under trademark in the first place.

    If Costco were to lose this argument it wouldn’t matter if it was using “TIFFANY” in the generic sense if other factors such as the overlapping market, the likelihood of consumer confusion and the strength of the Tiffany brand were strongly in favor of Tiffany (very likely.)

  10. Justin – I think Eliza was making the likelihood of confusion argument. As I read the comment, if you had a bunch of signs next to each other:

    Platinum Tiffany Round
    Gold Emerald Square
    Platinum Offset Heart

    etc., then to the consumer, Tiffany would be like any of the other styles, and not a brand use. The consumer would not be confused because tiffany would be understood to mean tiffany style.

    BUT if it said
    Platinum Tiffany Round
    Gold Cartier Square

    Then confusion would be much more likely. I think this is a decent defense argument – and quite frankly – Costco’s better argument if the facts turn out to land that way.

  11. Well I was thinking about both points actually, the likelihood of confusion and the intent, which would be important in parsing the deceptive business practices charges and the like. I think it is the confusion point that is most relevant though. And yes, I meant a good defense for the infringement. I don’t know enough about the language of jewerly to say if Tiffany setting is indeed a generic term to the point of invalidating the trademark.

  12. My insurance rider for my wife’s engagement ring describes it as a “tiffany setting.” 30 years ago, my mother described her engagement ring as a “tiffany setting.” It seems that Tiffany is not disputing this. So Costco and my mother and my insurance company should all be free from suit for use of the term “tiffany setting.”
    Tiffany has a tough problem on their hands, with a clearly generic term so closely related to their brand. It is going to be very interesting if both sides dig in and litigate to a conclusion. But I suspect they will settle.

    According to the complaint, a customer (who may well also have been an employee or investigator of Tiffany) saw sign, and some unnamed person heard a costco salesman. The sign, in my view, used both the term platinum and the term tiffany to refer to the setting, and the term .70 VS2 ROUND to refer to the diamond. But it could be interpreted the other way, with TIFFANY .70 VS2 ROUND referring to the diamond. A comma between the TIFFANY and .70 would have made it a bit clearer, or a little less muddy, that TIFFANY referred to the setting.

    It seems that the whole dispute revolves around a sign printed by some ESL minimum wage worker with insufficient insight into commas and the subtleties of trademark law. The whole dispute could be settled by fixing the sign. I suspect that is how the case will settle.

    The Costco salesman quoted in the complaint (¶5), fifty-fifty, may have been an immigrant for whom English is a second language who has no idea that Tiffany might be a brand. (Like some other old and venerable brands, they are much more widely known on the East coast.) Costco might be very brand-aware, but I would excuse them for missing the need to train all their employees to correctly refer to these split generic/branded terms properly when investigators for brand-owners show up to get quotes. And we don’t really know what he said. By referring to the rings as Tiffany rings, he may have just affirmatively responded to the investigator’s exclamation like “Wow, is that a tiffany ring for only 80 thousand dollars?” The salesman might have thought the investigator was referring to the setting, and just grunted “uhha’ as he way dealing with multiple customers at the same time. It wasn’t a deposition.

    And these diamond rings sell for 10 to 80K at Costco. Who, with all that cash in their pockets, and the cultural awareness to recognize and seek out the TIFFANY brand, is going to Costco to buy a Tiffany ring by mistake?
    According to ¶38 of the complaint, Costco did a few thing that militate against confusion. You couldn’t see the sign until you got into a limited-access store, which means you already know you are in Costco. The Tiffany term is buried deep in the description, not prominently displayed (per Tiffany’s description).
    Seems like there are some Dupont/Sleekcraft factors that favor each party here. The case seems defensible to me.

    Also, don’t you think it is odd that Tiffany averred infringement only in Huntington Beach, but sued in New York? Costco, though members-only, is pretty wide open. I bet Jeffrey Mitchell could have walked into a New York Costco and found the same sign, if it were in widespread use. Makes me suspect they might be arguing over a single sign. Not all complaints are the gospel truth.

  13. After reading Costco’s answer, I think Tiffany would have been better served by buying new signs for Costco. I settled a case that way years ago, and the plaintiff only feared going to trial to get the same result (the very recognizable brand was susceptible to attack, but the confusion case was weak, and the defendant did not mind nice new building signs on all his outlets.) If Costco succeeds in their counterclaim, that Tiffany is generic for a ring setting (as opposed to “Tiffany setting” being generic for a ring setting), then every jewelry store in the country will be using the term more loosely. There is an inherent confusion between Tiffany as a brand for diamond rings and Tiffany as generic term for settings, that they will just have to live with, if Costco succeeds.
    Is there a backstory that explain the overly aggressive actions, like a relationship gone bad?

  14. The business about CostCo not offering the rings on their website is much ado about nothing. It seems that the activity was at one store. I’ve never seen anything marked “Tiffany” at any other CostCo ( not that I’ve been seeking it out). The sign may have been made at the store under instructions of a single manager, who may not have even known that Tiffany is a brand.

    The fact that CostCo doubled down on this is, of course, all about the money. It would seem (to me, at least) to be just posturing for a better settlement. In other words, “we’re not afraid of multi-million dollar litigation.” Tiffany has a lot more to lose in the case, but it’s still not as crippling as Gene makes it out to be. Tiffany takes action against wilfully infringing counterfeiters regularly. A lot of jewelry sellers try to sell knockoffs, even sometimes with real gemstones and real platinum.

    Now if CostCo had sold the rings in little blue bags, they’d be dead in the water. The only thing that makes this case interesting is CostCo’s allegations that anyone can call a Tiffany setting a”TIFFANY ring.” I doubt this sees a trial.

  15. Chris-

    Much ado about nothing? Seriously? Why? If you want to make an erroneous claim like that the least you can do is provide analysis explaining yourself.

    The fact that Costco did not sell the rings online will be used as evidence of malfeasance and intent to hide. If they were free and clear like they claim to be then they could have sold online. They didn’t for a reason.

    As for your characterization of me overblowing what is at stake for Tiffany Co., again you are wrong. If Costco can market “Tiffany rings” without the rings actually being sourced by Tiffany it will be because Tiffany loses the trademark as being generic. Then everyone will be able to sell Tiffany rings whether they are sourced from Tiffany Co. or not. There can be really no debate over the reality that this would have an enormous negative impact on the company.

    -Gene

  16. There are a multitude of reasons for not selling online, and I am aware of several companies that vary offerings by channel (with absolutely no indictment for hiding anything) – for exmple, many computer vendors, large cahins like Wal-Mart, and insurance carriers of all types segment by channel. In fact, the USPTO segments by channel – offering full copies of complete file wrappers iin person, but limiting file wrappers on line (in view of some of the copyright controlled material). A fact, by the way, that I find very interesting in the copyright debates.

    Are you impugning that the USPTO itself must be hiding something? That this selective non-offering online is evidence of malfeasance?

    Sure, the intimation could be made that such was meant to hide – but I would not advise that tactic as it can easily backfire and make you look petty and like you are crying ‘wolf.” It’s value as evidence is doubtful – especially in the Costco case. I have not yet made up my mind on the USPTO involvement in the copyright case.

  17. I still don’t understand why anyone should be able to sell either “TIFFANY rings” or “Tiffany rings” and argue that they aren’t infringing a federally registered trademark, or engaging in false advertising, if not outright fraud. Nearly anyone who thought about it for more than a few minutes would probably conclude that they should be calling them “Tiffany style” or “Tiffany type” rings, or the Trademark holder would probably take great exception to the deceptive use of their company name, and riding on the coat tails of their hard won stellar reputation, in this case especially.

    Isn’t that exactly what trademarks are supposed to prevent? if I were Costco, I would be apologizing for the foolish behavior of one of their store managers, instead of trying to break Tiffany’s Trademark in net effect by trying aver that the word Tiffany has magically somehow become a generic term? To me IP in general is meant to help smaller entities protect their interests from larger entities that might otherwise just steamroller them flat just because they think they might be able to get away with it.

    Stan~

  18. Anon-

    What the USPTO does online is governed by computer limitations and lack of resources.

    You are entitled to your opinion about the probative value of Costco not selling these particular diamond rings online while they sell other diamonds online. But it seems pretty clear to me that it is as the result of malfeasance. Particularly given that they are so confident that “Tiffany rings” are generic, but not confident enough to sell them online. Very curious indeed.

    -Gene

  19. What the USPTO does online is governed by computer limitations and lack of resources.

    Sorry Gene – not buying it.

    Not at all, sir.

    Were you aware that this is a pure policy decision having nothing whatsoever to do with computer limitations or lack of resources?

    I have no idea where you drummed up such lame excuses, but I know for a fact that neither is true. I am talking about a flick of a switch for NPL in PAIR. The items are there during prosecution in Private PAIR, but when the application becomes a patent and the image file wrapper becomes public, it is ONLY the NPL that is copyright affected that loses access. I think you need to go back to whomever told you otherwise and press a little harder for the truth.

    I hold less strong opinion on the merits of the Costco case, but would deign only to reiterate that such is a common practice – for whatever reasons – across many different types of goods and vendors. What you call curious simply lacks the nefarious aspects (it may still very well be curious).

  20. Anon-

    If you think the USPTO has computer resources that can handle any request all the time and at any volume you are incorrect. I don’t care whether you buy it or not. Truth is a funny thing. It is true even when someone chooses to disbelieve.

    -Gene

  21. Gene,

    Your reply of “that can handle any request all the time and at any volume you are incorrect” is simply off point from what I am telling you.

    I am telling you that PAIR – during prosecution – offers links to NPL that are wiped out once the application goes to public PAIR. That is a truth you cannot avoid, and I will turn your own words back to you: It is true even if you choose to disbelieve.

    If it was a bandwidth issue, I would expect that the wipeouts would be driven by size. The wipeouts are not driven by size. If it were a technology issue, I would expect that the items wiped out would not have been available in the first place. The items wiped out are available in the first place. I need something cogent from you to explain this – not a broad and sweeping excuse untethered to the particulars of exactly what is chosen to be unavailable in one mode of access.

    There is NO basis in the excuses you attempt to give (technological or bandwidth) that explains the selective removal of links to prior art in PAIR.

    NONE.

    As you often request of others: I expect a little intellectual honesty on this particular point. The removal from easy availability of something previously available cannot be for the reasons you are attempting to use.

    Whether or not this is “nefarious,” I will leave to the readers. All I am pointing out to you is that this is a conscience decision, and that this is not based on any affordability or capability rationale (unless you include the fact that exposure to copyright suits falls under some affordability risk factor analysis).

    At the same time, the Office willhandle any request at any time of anyone who comes up to the window and asks for and pays for a complete (including all NPL) paper copy to be made of any publicly available patent or patent application.

    Clearly, this is a disparity based on channel. And this is one not based on the flimsy reasons you are offering. You are correct in one manner – it matters not whether I buy this. It also matters not whether you buy it. The fact remains: the Office itself engages in selective offerings by channel. That is truth.

  22. Gene,

    Your whole premise of not selling one type of ring online as being evidence of malfeasance has no real legs. Perhaps if the inventory of every Costco was the same as the online inventory, there might be some correlation. But I assure you, every big box store (Costco or Walmart, etc) has some products that are not available through their store online. If the sign was the same in all of their stores, again, maybe there would be some evidence that there was intent to infringe, but this is apparently one store only. There could be any number of reasons why the rings were not available online. Maybe it was a new product being tested at that store. Maybe it was an item that the one store ordered, not through the corporate office. Maybe Costco didn’t have enough inventory of that item to support online sales. Maybe the online sales rights belong to another entity exclusively. The idea that not selling online is evidence of malfeasance requires the assumption of an ulterior motive to begin with. It’s not proof of anything.

    As for the stakes of the case, jewellers use the term “Tiffany setting” or “Tiffany mount,” on a daily basis to describe their rings. If all of the thousands of jewelry retailers that do this are allowed to advertise it as what they already call it every day, does this dilute the Tiffany brand? Not even a thousandth as much as the jewelry makers who mark their inferior wares “Tiffany” and sell them in little blue bags without license or approval from Tiffany.

    In case it wasn’t clear, I believe Costco doesn’t have much here. “Tiffany ring” is different from “Tiffany setting.”. I still think they’re just posturing for a better settlement. This has settlement written all over it.

  23. Chris-

    You can believe whatever you want regarding the lack of online sales. I know, as well as anyone who has ever been in a courtroom, that the Judge will find it particularly interesting that Costco, which sells EVERYTHING online was only selling TIFFANY DIAMOND RINGS in a few stores. If they thought they had a right to sell them they would have been selling them online.

    As for your contention that big box stores have items that are not available online… I think if you look it is typically the exact opposite. In most situations items are available online and not available in stores.

    It also seems you are completely missing the entirety of the point. You are saying that jewelers should be able to use “tiffany setting” and “tiffany mount.” Nothing I have said in this or any other article says that jewelers should be prohibited from saying that. You completely confuse the single issue of the case. Can Costco sell a “TIFFANY DIAMOND RING” when the diamond ring is not sourced by Tiffany Co. The answer is absolutely not. If they want to sell Joe’s Diamonds in a tiffany setting that is fine.

    Sure, in the last paragraph you acknowledge the difference between ring and setting, but in the penultimate paragraph of your comment you completely muddle the waters by suggesting that jewelers are diluting the brand. Your analysis is quite confused.

    -Gene

  24. How many of the rings sold under the Costco signage were appraised as genuine Tiffany & Co. rings by any competent appraiser? How many of the rings sold bore the “T&CO” trademark and serial numbers? How many were accompanied by a blue box and Tiffany & Co papers (I mean if you’re intent is to counterfeit, you might as well do it right – and I have seen real counterfeits in my practice) How many receipts were marked Tiffany & Co ring? How many buyers took their “TIFFANY” rings back to T&CO for sizing or repair? How much “damage” was really done to T&CO? I think they should be proud that people like their timeless setting style, which is often copied. I’m a little worried they may start going after the design as well as the term. Watch out jeweler of the world.

    How many clients who purchased rings from Costco REALLY thought they were being sold a Tiffany & Co ring? So was there any real counterfeiting going on as Costco claims?

    A simple cease and desist letter from Tiffany to Costco, or an order to clarify the items they were selling would be a much more rational response. But then, look whats happening to the escalation with North Korea. Humans are interesting. If I were the judge getting this case I’d be concerned this was a waste of time, when mediation or arbitration might do. But there is little publicity in that route, just common sense problem solving.

    Tiffany, Cartier, and anyone worth copying for financial gain will always be subject to counterfeiting. I do not believe this mis-handling of the term “TIFFANY” can rationally be confused with true counterfeiting with an intent to make a consumer believe they were actually buying something produced by Tiffany & Company.

  25. I stopped at a Costco (Maui) last week to peek at the signs in the diamond ring case. The “signs” were scissor-cut from a laser-printed page, each one smaller than an index card, and obviously the “signs” were typed by someone at the store to correspond to each individual ring on sale. They were like bake-sale signs from elementary school. They were inside the case, next to each ring. So, you had to be inside the store, gawking at a ring with a five figure price tag, to see the signs. It would be tough to be confused (unless confusion is measured against the most gullible consumer?). Also, the ad-hoc nature of the “sign” militates against evil intent on the part of Costco, absent more evidence (like it was not ad-hoc, and Costco executives trained employees to use the generic sloppily to create confusion).

    By the way, Tiffany itself, in the caption to the photo that Gene uses above, refers to the setting generically as a “Tiffany Engagement Setting.” The confusion between the generic and the trademark is a self-inflicted wound. Tiffany might have referred to setting as an “engagement setting.” Perhaps, though, they originally promoted the generic use of the Tiffany Setting term to boost awareness of TIFFANY itself. A self-inflicted wound in the long term, but perhaps beneficial in the short term. A good lesson for developing marks: Don’t engage in mixed use, but if you cannot resist the urge, don’t blame the world for engaging in mixed use.

    It occurred to me that Tiffany is depending on competitors to bolster its mark, after it muddied the mark with its own sloppiness. I would propose that, if Tiffany wants Costco to be perfect in its usage, that they should pay the salary of an executive at Costco, and all other attendant costs, so that Costco can continuously train its employees on the floor to avoid using the trademark while properly using the generic. That will never happen, but it would be an equitable remedy.

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