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Judge Tells Costco to Pay Tiffany $19M
Aug 20, 2017 7:37 AM
By Rapaport News
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RAPAPORT... Costco Wholesale Corporation must pay Tiffany & Co. at
least $19.35 million in damages after selling counterfeit diamond rings bearing
the iconic jeweler’s name, a US federal judge ordered last week.
US District Judge Laura Taylor Swain told Costco to hand
over $11.1 million plus interest — covering three times Tiffany’s lost profit
from the trademark infringement — in addition to the $8.25 million in punitive
damages that a jury awarded last October.
The latest decision follows a ruling in September 2015 in which the court found
in Tiffany’s favor in the long-running case centering on Costco’s use of the
term “Tiffany” when labeling engagement rings in its stores. Back then, the
court ruled that Costco was liable for infringement and counterfeiting of
Tiffany’s trademark for signage that used the word “Tiffany” without any other
word, such as “setting,” “set” or “style,” to make it clear that Tiffany did not
manufacture the product.
In its August 14 ruling, the court rejected Costco’s claims
that clerical workers had only copied language from jewelry suppliers’ invoices
stating “Tiffany” as a shorthand for the Tiffany setting — a method of placing
a diamond in a ring. Evidence from the trial showed that Costco had made
frequent reference to Tiffany as a benchmark for style and quality, and placed
rings labeled with the standalone word “Tiffany” next to branded luxury
watches, Swain said.
Meanwhile, the fact that a name other than Tiffany’s
appeared on the actual ring did not excuse Costco from allegations of
intentional deception, she said.
“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,” Swain said. “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.”
Costco also gave “valuations” for some of these rings that
were identical to prices that Tiffany & Co. had actually charged for
similar rings — a fact that supported the court’s conclusion, the judge added.
Swain’s decision validates the strength of Tiffany’s trademark
and the value of the Fifth Avenue-based retailer’s brand, Leigh Harlan,
Tiffany’s senior vice president and general counsel, said in a statement to Rapaport News
Thursday. The ruling also sends a “clear and powerful message” to Costco and
others who infringe the Tiffany mark, the lawyer added.
“We brought this case because we felt a responsibility to
protect the value of our customers’ purchases and to ensure that Costco’s
customers were not misled about their purchases,” Harlan said. “It is
critically important that the Tiffany name not be used to sell any engagement
ring that is not our own.”
Costco intends to appeal and claimed the ruling was a
“product of multiple errors in pretrial, trial, and post-trial rulings.”
In a statement last week following the judge’s decision,
Costco contended that the rings themselves did not display a Tiffany & Co. engraving or
any other marking with the famous jeweler’s name, but rather were stamped with
the name of the company that manufactured them. It had sold them in plain beige
and brown wooden boxes, in contrast to Tiffany’s iconic blue boxes or bags,
Costco explained.
Fewer than 10 customers out of 2,500 on its purchaser list
said they had misunderstood Costco’s signage, it added.
“This was not a case about counterfeiting in the common
understanding of that word,” the company insisted. “Costco was not selling
imitation Tiffany & Co. rings.”
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Tags:
Costco, diamonds, Jewelry, legal, Rapaport News, retail, Tiffany & CO.
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