Breakfast, lunch and dinner at Tiffany’s — on Costco

I wrote last fall that it didn’t look like it could get much worse for Costco in its awful litigation against Tiffany, which followed its awful business decision to use the word “Tiffany” to sell diamond rings that were not Tiffany diamond rings at all and to essentially run with it even when it knew, according to testimony in the case, that customers were confused.  Not much worse, I said, except for the damages part.

So now it’s the damages part:

U.S. District Judge Laura Taylor Swain ruled on Monday that Tiffany is entitled to $11.1 million in trebled profits — triple the loss it incurred from Costco’s actions — plus interest, in addition to $8.25 million in punitive damages. Overall, Costco owes the luxury jewelry retailer more than $19.3 million.

Look, if defendants use other lawyers in these cases, I wash my hands of it.  I kid, of course.  These are some stinky, stinky facts, as you can see in my original post, and Matthew David Brozik’s predecessor post as well.  And facts is pretty much what wins it, Jack.

All the same, here’s a defense-side point that corresponds to my own initial reaction — it’s about the “counterfeiting” issue:

In a statement, Costco said it intends to appeal the ruling. “This was not a case about counterfeiting in the common understanding of that word — Costco was not selling imitation Tiffany & Co. rings,” it said.

Yes, kind of a hard question.  This is not the traditional knockoff situation meant to be targeted by the enhanced damages provisions for trademark counterfeiting, is it?  Or is it?

Is this or is this not “selling imitation Tiffany & Co. rings”?
I don’t know. It doesn’t quite look like counterfeiting. If this is counterfeiting, how would the facts of this case have to look different to just get a judgment of plain-old “passing off” trademark infringement?

On the other hand, Costco — don’t think we don’t know what you did there:   the issue isn’t whether or not you were selling “imitation Tiffany & Co. rings.”  It’s whether you were selling imitation “Tiffany rings.”  The trademark is TIFFANY.  Who makes, sponsors, authorizes or endorses rings bearing that trademark is not the point — as long as it’s not YOU.

The “counterfeiting” appeal, which would presumably go to the trebling of damages, nonetheless seems like a good investment, given the risk-reward ratio here. Not as good an investment as they say a diamond is, but so far that line hasn’t worked out too well for Costco.

Ron Coleman

2 Replies to “Breakfast, lunch and dinner at Tiffany’s — on Costco

  1. I think Costco has a point. It seems to me they weren’t passing this jewelry off as Tiffany product; rather they made the mistake of using the term Tiffany as if it were the generic term for a specific type of ring setting. That’s ill-advised, and they should have done more homework before they did it, or maybe said something like “Tiffany-style setting” or “compare with Tiffany”. But it’s not the kind of mistake that should deserve counterfeiting damages.

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