Costco has to pay Tiffany & Co. the storied jewelry maker over $19 million for selling close to 2,500 rings that were falsely identified on signs in the store as being Tiffany rings, said a federal judge on Monday.
Management at Costco displayed a cavalier attitude at best toward the use by the company of the name Tiffany in conjunction with ring marketing and sales, wrote the U.S. District Court Judge hearing the case.
The judge’s decision following a 2015 jury verdict, which found Costco received a $3.7 million profit from using the brand Tiffany falsely, rejected the argument by Costco that Tiffany alone with reference to the setting of a ring, was generic like dumpster or Popsicle.
The judge ruled that Costco must pay $11.1 million to Tiffany plus interest, which is three times the lost profit of Tiffany’s from the actions of Costco, plus punitive damages of $8.25 million.
In addition, Costco has been barred from using the word Tiffany alone to describe any of its products that are not connected to the world famous jewelry brand.
Tiffany announced in a statement that the ruling validated the strength of the trademark “Tiffany,” and its value as a brand, but more importantly, it sent a powerful and clear message to Costco as well as others who infringe on the brand.
After the ruling was handed down, Costco announced that it would be appealing, calling the court’s decision a product of multiple errors on the Judge’s part.
Costco said the case was not one about counterfeiting in the common definition of the word, as Costco was not selling imitation rings of Tiffany & Co.
The rings that were in question were not marked or stamped with the name Tiffany & Co., said Costco, but with the name of the company which manufactured them.
In addition, said Costco, they came with appraisal documents that made no mention of Tiffany & Co. accompanied with sales receipts that did not mentioned Tiffany & Co.
Costco added that Tiffany & Co. did not claim through its lawsuit that it had lost any sales to Costco due to any sign.
From a list of purchasers that number roughly 2,500, Tiffany was able to identify less than 10 who said they misunderstood the signage made by Costco.
Costco argued instead that Tiffany is commonly used as a generic term describing a particular ring setting.