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The case between Costco and Tiffany began in 2013 with the jewellery brand filing a case against the warehouse club chain for counterfeiting its rings. Costco responded by removing the signage with the Tiffany mark while still maintaining its claim that it had used a generic term described to refer to a particular set of diamonds.
After a sale of three thousand tiffany-set diamond sets, Tiffany appealed seeking damages. In 2015, this plea was granted by a district court in the form of summary judgment wherein trials are evicted. Costco could not counterclaim the accusation of trademark infringement. Tiffany was thereby promised a whooping sum of $13.8 million, later raised to $21 million to make up for the jewellery brand’s lost profit.
Deeming the ruling unfavorable, Costco appealed again since it lost an opportunity to present its case in front of a jury. In its defense, the wholesale giant insisted on the use of tiffany style of rings rather than the intention of passing it off as an imitation. It also added that the consumers could understand that the product was not associated with Tiffany in any way, being sold in Costco. Not to forget the apparent difference in the type of packaging and price between the brands.
Costco’s justification stems from the style of the ‘six-prong diamond-set engagement ring’ developed by Charles Lewis Tiffany in the late nineteenth century. This style was later popularized as ‘Tiffany-setting’ by advertisements, documents, etc. According to the second circuit, the previous judgment was flawed since it based factual judgments on summary judgment leading only to a single conclusion.
In addition to that, the court thought Costco’s rebuttal was wrongly denied since out of the 3300 purchases only 6 were believed to be made under some confusion between the brands. And lastly, Tiffany’s survey’s authenticity was also brought into question.
The case will continue to twist and turn with time. However, the unique aspect brought by the judges is the way a trademark can be just a term used in the same industry as the trademark and not be treated in bad faith. The case is now in the Federal Court to ascertain the kind of use the term ‘Tiffany’ on Costco’s product indicated.