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RAPAPORT... U.S. District Judge Laura Taylor Swain ruled this past week that Costco Wholesale Corporation may proceed with its defense argument and discovery process related to proving that the ''Tiffany setting'' is a generic term. Tiffany & Co. sued Costco in February 2013, claiming that the wholesale club infringed upon its world-famous trademarked ''Tiffany setting,'' diluted the jeweler's brand, counterfeited jewelry and practiced unfair advertising schemes in selling diamond rings. Defendant Coscto, which also acts as a counterclaim-plaintiff, asserted that Tiffany & Co.'s federal trademark registrations were invalid in that they purported to exclude others from using the word ''Tiffany'' to describe a ring or setting, which in fact was simply a generic trade reference in jewelry. Tiffany & Co. requested that Costco's first line of defense be dismissed, arguing that a certain type of ring setting, in this case the ''Tiffany setting'' was not generic due to its federal trademark registrations. The court recognized that Tiffany & Co. holds 97 separate trademarks related to the “Tiffany” company name, which include “decorative art objects made in whole or in part of precious or semiprecious metals – namely, figurines, boxes, bowls, trays, and flowers, jewelry, semi-precious stones, and natural and cultured pearls;” and the stylized mark “Tiffany,” which covers “jewelry for personal wear, not including watches, precious stones and flat and hollow ware made of or plated with precious metal.'' Tiffany & Co. further asserts that it calls one style of engagement ring, a solitaire diamond set with six prongs, a “Tiffany® Setting” ring. Costco denied several of Tiffany & Co.'s allegations concerning ownership of registered trademarks, arguing that the word “Tiffany” has become generic in the context of a certain style of pronged ring setting. Costco was selling two styles of engagement rings at its Huntington Beach, California store with point of sale signs reading, “639911 – Platinum Tiffany 0.70CT, VS2, 1 Round Diamond Ring – $3,199.99 ” and “605880 – Platinum Tiffany VS2.1 1.00CT Round Brilliant Diamond Solitaire Ring – $6,399.99.” The court recognized that neither ring was manufactured by Tiffany & Co. and that Costco did not describe the ring as including a “setting comprising multiple slender prongs extending upward from a base to hold a single gemstone,” which Tiffany & Co. trademark protects. Costco acknowledged that it “has not always verbally called out the type of setting that a displayed diamond ring has” and recognized two screen shots of Costco jewelry advertisements that included ring descriptions incorporating the phrase “tiffany setting,” referring to it as something of a dictionary definition. Furthermore, Costco alleged that Tiffany & Co. “does not ‘own’ any trademark rights to exclude Costco from using the word Tiffany to indicate that a ring has [that type of setting].” Therefore, Costco sought to have the judge decree that Tiffany & Co.'s registrations were invalid insofar as they purported to evidence claims of right to exclude the use of the word Tiffany; define ''Tiffany'' as a generic term for the general type or style of pronged settings included in the counterclaim and agree that the club's prior use of ''Tiffany'' did not infringe upon or invade the plaintiff's legal rights. According to Costco, Tiffany & Co. currently misuses the “® symbol” in advertising the phrase, “Tiffany® Setting,” and Tiffany “appears to have recently initiated this practice in an apparent attempt to try and infuse the generic term with spurious.'' The judge wrote that a summary judgment is appropriate when the petitioner “shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law” and mere conclusory allegations or denials cannot serve as material fact where none would otherwise exist. Citing previous case law on trademarks, the judge wrote that while it is presumed that the U.S. Patent & Trademark Office acceptance of a trademark is valid and thus confers a procedural advantage in an infringement action, the opposing party must overcome the presumption that the purchasing public perceives the mark to be inherently distinctive. However, the statute does not mean that the certificate of registration is itself evidence of how the public actually views the mark, according to the judge's summary. ''Once a plaintiff shows that a trademark has a valid registration, the burden of production therefore shifts to defendant to proffer evidence that the mark is not valid, i.e., that it is generic...” Even a statutorily incontestable mark can be rendered invalid and canceled if it has come to be the generic name for the goods or services, or a portion thereof, for which it is registered, which is primarily what Costco's lawyers argued. Tiffany & Co., of course, maintained that “Tiffany®” has not become generic, to which the judge replied, “Generic marks are those consisting of words identifying the relevant category of goods or services. They are not at all distinctive and thus are not protectable under any circumstances. To be deemed generic, the principal significance of the word must be its indication of the nature or class of an article, rather than an indication of its origin.” The judge added that any question of whether a trademark is, or has become, generic is generally one of fact, in as much as evidence would include dictionary definitions, the generic use of the term by competitors and other persons in the trade, the plaintiff’s own generic use, and generic use in the media and through consumer surveys. And in this case, lawyers for Costco offered dictionary definitions, a report by a lexicographer and evidence of the generic use of the ''Tiffany setting'' by jewelry manufacturers and others, all of which taken together, were sufficient to frame a factual dispute regarding whether the terms “Tiffany” and/or “Tiffany Setting” have a primarily generic meaning in the minds of members of the general public in the context of ring settings. Going forward, Tiffany & Co. and Costco were instructed to contact the magistrate's office for settlement purposes and to update the discovery schedule, if necessary. The final pretrial conference is scheduled for June 27, 2014.
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