RAPAPORT... Tiffany & Co. sued Costco Wholesale Corporation to prevent further sales of what the luxury retailer concluded where counterfeit diamond engagement rings and for damages associated with prior sales. The lawsuit was file to protect the Tiffany brand, according to a filing in the U.S. District Court for the Southern District of New York. It also alleges trademark infringement, dilution, counterfeiting, unfair competition, injury to business reputation, false and deceptive business practices and false advertising. Tiffany seeks $2 million per infringement.
In November, Tiffany was alerted to the sale of what were promoted on in-store signs as “Tiffany” diamond engagement rings at a Costco store in Huntington Beach, California. Tiffany investigated the claim and learned that for many years, and without Tiffany’s knowledge, Costco had allegedly been selling different styles of rings that it was identifying on in-store signage as “Tiffany,” according to Tiffany.
The rings were not Tiffany rings, however, nor were they manufactured by, licensed by, or otherwise in any way properly associated with the brand. In this way, Costco led its members to believe they were purchasing authentic Tiffany products at significant discounts, when in fact, that was simply not true, according to the filing.
“We now know that there are at least hundreds if not thousands of Costco members who think they bought a Tiffany engagement ring at Costco, which they didn’t. Costco knew what it was doing when it used the Tiffany trademark to sell rings that had nothing to do with Tiffany. This is not the kind of behavior people expect from a company like Costco, and this case will shed a much needed light on this outrageous behavior,” said Jeffrey Mitchell of Dickstein Shapiro, Tiffany’s counsel in the case. “The Tiffany brand has been damaged, Costco members have been damaged, and Costco has profited from the sale of engagement rings by misrepresenting what they were. We will get to the bottom of what Costco was up to and why, and right a terrible wrong,” Mitchell added.
Authentic Tiffany jewelry is manufactured to the company's strict specifications and then subjected to rigorous quality control standards to assure provenance and quality, according to the firm. Tiffany diamond engagement rings are then backed by a lifetime guarantee. Additionally, to protect the brand, Tiffany fine jewelry is sold only in Tiffany retail stores by trained sales professionals and is not distributed or sold at discount through other wholesale or retail establishments. In particular, Tiffany has never sold nor would it ever sell its fine jewelry through an off-price warehouse retailer like Costco, either directly or indirectly, the company stated.
“What’s different here from many other cases of counterfeiting is that here customers might be more easily taken in since Costco members expect authentic brand name merchandise at discount prices at Costco. Everyone knows that buying something on a street corner or over the internet from an unknown source is risky. Until now, no one would have thought it could be risky to buy brand name merchandise from Costco as well,” Mitchell said.