LIKELIHOOD OF CONFUSION®

Originally posted 2013-03-15 09:57:30. Republished by Blog Post Promoter

If 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.

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. Read More…

[Editor’s note:  When this was first posted, I — not Matthew, I, Ron Coleman — failed to utilize the drop-down box and make sure that MDB showed as the author of this piece, probably thinking that the picture at left would do the trick.  Based on some blog posts, um, it didn’t.  Sorry to all concerned!]

On Valentine’s Day, appropriately enough perhaps, Tiffany (the jeweler, not the singer) filed a complaint against Costco in the United States District Court for the Southern District of New York, asserting a variety of trademark-related causes of action. The lawsuit is not extraordinary by any means. The alleged facts, summarized below, are not scandalous, even if they describe an underhanded practice:

A woman complained to Tiffany & Co. about something she had seen at a Costco warehouse in Huntington Beach, California—to wit: diamond rings for sale, described in signage at the display case as “Tiffany” rings. (The woman was reportedly “disappointed” by her “observ[ation].”)  Costco investigated and confirmed what the woman had described: Costco was selling jewelry (mis)labeled as Tiffany items. (A saleswoman referred to the rings as “Tiffany” rings, and said that the store generally carries only one of each at a time.)

But Tiffany has never permitted its merchandise to be sold by Costco; apparently, something was amiss. The items sold by Costco were not in fact Tiffany items—not even in the way that other higher-end watches, for instance, sold by Costco are the real things (even if not every higher-end watchmaker is happy about it; see Omega S.A. v. Costco Wholesale Corp., the Ninth Circuit matter addressing whether the first-sale doctrine is a defense against claims of infringing distribution and importation for unauthorized sale of authentic items incorporating designs protected by copyright.) Tiffany found that Costco was selling the items in question online as well, but not labeled “Tiffany” there.

Tiffany confronted Costco with its discovery, and Costco immediately removed all misleading signage. The damage had been done, however. The complaint alleges (or at least suggests) that the offending practice was not limited to the Huntington Beach warehouse, but rather was widespread throughout Costco’s locations nationwide, for many years. “There are now,” according to the complaint, “hundreds if not thousands of people who mistakenly believe they purchased and own a Tiffany engagement ring from Costco.”

So what makes this case interesting? A few minor things, to my mind, and one more significant. Read More…