Tiffany vs Costco is a case that ended quietly but left behind significant questions about trademark law and brand protection. Spanning eight years, the dispute concluded with a confidential settlement and a dismissal with prejudice, preventing Tiffany from bringing similar claims against Costco in the future. Although the terms remain undisclosed, the case draws attention to the challenges of trademark enforcement, particularly where brand names overlap with descriptive language, and the broader limits of exclusive rights.
How the Tiffany vs Costco Dispute Began
On Valentine’s Day 2013, Tiffany & Co. filed a lawsuit against Costco in a New York federal court, alleging trademark infringement, counterfeiting, and deceptive business practices. Tiffany claimed that Costco had misled customers by labelling diamond engagement rings as “Tiffany” rings, creating the impression that the jewellery was authentic Tiffany merchandise.
Costco defended itself by arguing that the term “Tiffany setting” had become generic within the jewellery industry. According to Costco, the term described a style of pronged diamond ring setting, rather than serving as a direct reference to Tiffany & Co. Specifically, Costco contended that “Tiffany setting” referred to a widely recognised type of ring setting that was used across the market, independent of the Tiffany brand. Meanwhile, court documents showed that thousands of customers had purchased these rings, demonstrating the widespread use of the term.
Tiffany’s Early Win
In 2015, a federal judge granted summary judgment in favour of Tiffany, ruling that Costco had infringed Tiffany’s trademark. The court ordered Costco to pay $5.5 million in unlawful profits, $8.25 million in punitive damages, and an additional $3.7 million in trebled damages under the Lanham Act, bringing the total award to $21 million.
At that time, this ruling appeared to be a decisive victory for Tiffany and a major setback for Costco. The judgment upheld Tiffany’s trademark rights and clearly signalled the consequences of unauthorised use of the brand name.
A Turnaround on Appeal
However, the case took a significant turn in 2020 when the Second Circuit Court of Appeals overturned the summary judgment. The appellate court ruled that the dispute was not suitable for summary judgment and required a jury trial to resolve factual questions.
The court explained that the term “Tiffany” could be interpreted in two ways, as a protected trademark or as a descriptive term referring to a particular ring style. This dual interpretation introduced uncertainty around whether Costco’s use of the term was infringing or merely descriptive.
Additionally, the court emphasised that whether Costco customers were genuinely misled depended on the context in which the term was used and the sophistication of the buyers. This focus on consumer perception added complexity to the dispute and highlighted the fine line between trademark protection and fair use in descriptive terms.
Settlement Replaces the Trial
As the trial date approached in July 2023, the parties agreed to settle the matter out of court. The terms of the settlement have not been disclosed, but Costco described the resolution as amicable, while Tiffany declined to comment. Although the agreement brought the dispute to a close, the underlying legal questions remain unresolved, keeping Tiffany vs Costco relevant to ongoing discussions around trademark enforcement and the descriptive use of brand names.
The dismissal with prejudice formally ends the litigation, drawing a line under a dispute that tested the boundaries of trademark protection and the limits of descriptive use.
Conclusion
The Tiffany vs Costco dispute illustrates that trademark rights are not absolute. A brand name can also serve as a descriptive term, complicating efforts to enforce exclusive rights. Although the settlement leaves these legal questions unresolved, the case remains relevant for understanding how courts may approach marks with dual meanings and the challenges that arise when brand names become part of everyday language.
For Tiffany and Costco, the settlement brings finality to a costly dispute. For others, it highlights the ongoing balance between protecting brand identity and permitting legitimate descriptive or generic use in business.
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