Costco neko wo kamu

BrozikIf Tiffany was miffed at Costco before, it’s positively infuriated now.

You will recall that on February 14 the high-end jeweler Tiffany & Co. sued the decidedly-not-high-end warehouse club Costco, alleging that the latter was describing certain diamond rings as “Tiffany” rings in at least one of its locations, thus infringing upon the trademark rights of the former. For a refresher, see here.

What struck this writer as interesting about the otherwise not especially remarkable matter is the barely-concealed disdain for the defendant and its merchandise-for-the masses business model permeating the federal court complaint of the elite plaintiffs. Tiffany made an effort at civility in its initial filing… but now the kid gloves are off. Costco has asserted a counterclaim—and that counterclaim has already gotten Tiffany’s goat.

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The gist of Costco’s counterclaim is that notwithstanding the registrations held by Tiffany & Co. for various trademarks that include the name Tiffany for use with regard to jewelry products, the term “Tiffany” is generic for a type (or set of types; it’s not quite clear)  of diamond ring setting, such that anyone must be permitted to use the term (inasmuch as anyone may sell a diamond ring with that certain kind of setting). Costco’s Answer and Counterclaim reads, in pertinent, unrepentant part:

Costco asks the court to order that the Plaintiffs [Tiffany and Company and Tiffany (NJ) LLC] be prohibited and enjoined from ever again asserting false claims of right to exclude use of Tiffany as a generic term for a style or type of ring setting. *** Costco seeks a judgment declaring invalid, and ordering modified or partially cancelled, 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 using 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….

There’s a Japanese proverb—kyuuso neko o kamu: A cornered rat will bite the cat. Tiffany put Costco in the corner, and now Costco is attempting to bite off part of Tiffany’s trademark portfolio. Tiffany might come to find that it would have been better off letting sleeping dogs… er, you know what? Enough with the animal metaphors. Tiffany could regret suing Costco, if Costco’s possibly-desperate defense holds water.

Tiffany replied a couple of days ago, March 14, to Costco’s answer and counterclaim, filed on March 8th. Tiffany asserts in its answer to Costco’s counterclaim that Costco’s signage did not indicate that the offending rings sold in Costco warehouses (not manufactured by Tiffany) had “Tiffany settings” but rather appeared to describe each ring as a “TIFFANY… DIAMOND RING.” A good point—but now there are two issues. Whether Costco can defend those actions about which Tiffany complained in the first place is separate from whether “Tiffany” has indeed become a generic term to describe a certain type of setting.

On that issue, Tiffany points out that Costco’s “ad-hoc sampling of unreliable sources (including a book called Wedding Planning for Dummies), does not even show consistency [in defining a ‘Tiffany setting’] from source-to-source.” Another good point—but not necessarily a failure that will defeat the claim of genericness of the term. According to Tiffany, the “Tiffany® Setting” describes “a round brilliant diamond solitaire in a six-prong setting… designed by Charles Lewis Tiffany over a century ago. It lifts the stone up into the light where its precise faceting can release its superior brilliance, dispersion and scintillation. The Tiffany[sic] Setting has been copied but never equaled.”

A Tiffany Setting is only one that is manufactured and certified by Tiffany as being in accordance with Tiffany’s strict standards and specifications. It is available from only one place—Tiffany. Anything else is a fake.

(You know, like a Thermos® is made only by Thermos GmbH, and a Zipper® is a product of only the B.F. Goodrich Company.)

It does seem obvious that Costco’s strategy is something of a defensive audible. (What? No sports analogies, either? That was a swing and a miss?) At any rate, it’s unlikely that anyone at Costco HQ thought that the rings for sale in the warehouses could be legitimately described as “Tiffany” rings because “Tiffany” is—and should be judicially recognized as—a generic term for a solitaire elevated by some even number prongs. Indeed, according to Tiffany’s reply, “Prior to filing the Counterclaim, [Costco]’s CEO sent an email to all Costco employees in response to the Complaint… in which he admitted that, ‘In retrospect, it would have been better had we not used that description the way we did.’”

But now, in light of the counterclaim, Tiffany itself might be thinking that, in retrospect, it would have been better not to have forced Costco into the warehouse corner.

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One Response to “Costco neko wo kamu”

  1. Reid Morris
    March 16, 2013 at 8:59 am #

    As a former jewelry designer, now IP lawyer, the Tiffany-style setting issue immediately came to mind when I read your initial write-up. It’s definitely a common industry term for a style. The same goes for a Tiffany-style 3-prong stud earring mounting, but it’s use may not be as widespread as the ring mounting.

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