Costco must pay the storied jewelry company Tiffany & Co. more than $19 million for selling about 2,500 diamond rings falsely identified on store signs as “Tiffany” rings, a federal judge ruled Monday.
Costco’s management “displayed at best a cavalier attitude toward Costco’s use of the Tiffany name in conjunction with ring sales and marketing,” U.S. District Judge of the Southern District of New York Laura Taylor Swain wrote in her opinion.
Her decision followed a 2015 jury verdict, which found that Costco had received a profit of $3.7 million from falsely using the Tiffany brand, rejecting Costco’s argument that the word “Tiffany,” with reference to a ring’s setting, had become a generic term, like Popsicle or dumpster.
Swain ruled Costco should pay Tiffany $11.1 million plus interest, which is three times Tiffany’s lost profit from Costco’s actions plus $8.25 million in punitive damages.
Finally, Costco is barred from using the stand-alone word “Tiffany” to describe any products that aren’t connected to the famous jewelry brand.
Tiffany said in a statement to CNN the ruling “validates the strength of the Tiffany trademark and the value of our brand, and most importantly, sends a clear and powerful message to Costco and others who infringe the Tiffany mark.”
“We brought this case because we felt a responsibility to protect the value of our customers’ purchases,” the company added. “It is critically important that the Tiffany name not be used to sell any engagement ring that is not our own.”
Following the ruling, Costco said it would appeal, calling the decision the “product of multiple errors” on the part of the judge.
“This was not a case about counterfeiting in the common understanding of that word — Costco was not selling imitation Tiffany & Co rings,” Costco said. The diamond rings “in question were not stamped or otherwise marked with the Tiffany & Co. name (but rather were stamped with the name of the company that manufactured them); they were accompanied by appraisal documents that did not mention Tiffany & Co., and with sales receipts that did not say Tiffany or Tiffany & Co. Notably,” Costco added, “Tiffany & Co. did not claim in the lawsuit that it lost a single sale to Costco as a result of any sign. From a purchaser list of approximately 2,500, Tiffany identified fewer than 10 who said they had misunderstood Costco’s signage.”