Costco Owes Tiffany $19.4 Million for Selling Knock-Off Engagement Rings
Tiffany & Co. is the victor in a long-running fight with Costco Corp. over knock-off engagement rings to the tune of $19.4 million.
A New York federal judge ordered the bulk retailer to pay $11.1 million of the profits selling what it labeled as “Tiffany” engagement rings along with $8.25 million in punitive damages.
Tiffany sued Costco in early 2013, claiming its trademarked name was being improperly used on signage that misled shoppers.
“Costco’s proffered explanations for the Standalone usage — that clerical workers merely copied language from jewelry suppliers’ invoices as shorthand for Tiffany settings and that Costco therefore was not engaging in intentional infringement or counterfeiting — were not credible in light of trial evidence that showed that displays of fine jewelry are an integral part of Costco’s marketing strategy, Costco made frequent internal and external references to Tiffany as a quality and style benchmark, and Costco displayed of rings with ‘Tiffany’ stand-alone signage in proximity to displays of name-brand luxury watches,” the judge said.
With Monday’s ruling, Costco is permanently barred from using the word “Tiffany” alone or in reference to ring or setting styles.
The case went to trial in fall of 2016, and a unanimous jury found that while Costsco’s profits from “Tiffany” labeled rings totaled $3.7 million, that amount was “inadequate to compensate Tiffany” and suggested that $5 million plus $8.25 million in statutory damages be awarded.
Instead, the judge decided to triple Costco’s actual profits and order the $8.25 million in statutory damages, finding that there was no “credible evidence as to Costco’s reason for using ‘Tiffany’ without a following modifier.”
The judge also noted that “Costco’s salespeople described such rings as ‘Tiffany’ rings in response to customer inquiries, and were not perturbed when customers who then realized that the rings were not actually manufactured by Tiffany expressed anger or upset. Costco’s upper management, in their testimony at trial and in their actions in the years prior to the trial, displayed at best a cavalier attitude toward Costco’s use of the Tiffany name in conjunction with ring sales and marketing.”
Representatives of Costco and Tiffany could not be reached for comment.
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