Tiffany & Co. vs. Costco: The $21 Million Dispute That Ended Quietly

Tiffany diamond ring tiffany ring in blue box

With packaging and presentation drawing focus in the IP community, the resolved case between Tiffany & Co. and Costco Wholesale Corporation offers notable insights. This eight-year dispute ended with a settlement and dismissal with prejudice, preventing Tiffany from pursuing similar claims against Costco. While the settlement terms remain undisclosed, the case emphasises key aspects of branding and trademark use.

How It Began

On Valentine’s Day 2013, Tiffany sued Costco in a New York federal court, alleging trademark infringement, counterfeiting, and deceptive business practices. The lawsuit claimed Costco misled customers by labelling diamond engagement rings as “Tiffany” rings, creating the impression they were purchasing authentic Tiffany jewellery.

Costco’s defense? It claimed the term “Tiffany setting” was generic and simply described a type of pronged diamond ring setting, not a direct reference to Tiffany & Co. Meanwhile, court documents revealed that thousands of customers had purchased the rings.

Tiffany’s Early Win

In 2015, a federal judge sided with Tiffany, issuing a summary judgment in its favour. Costco was ordered 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. This brought the total to $21 million.

For Tiffany, it seemed like a decisive victory. For Costco, the fight was far from over.

A Turnaround on Appeal

In 2020, the Second Circuit Court of Appeals overturned the earlier judgment, ruling that the case deserved a jury trial. The court noted that “Tiffany” could be interpreted both as a trademark and a descriptive term, depending on its use. The appellate court cast doubt on whether Costco customers would genuinely believe the rings came from Tiffany & Co., emphasising the importance of context and customer sophistication in interpreting the use of the term.

Settlement Replaces the Trial

With the case set for trial in July 2023, the parties opted to settle instead. The terms remain unknown, but Costco described the resolution as amicable. Tiffany declined to comment.

The dismissal with prejudice formally ends the dispute, drawing a line under a case that examined the boundaries of trademark protection and descriptive use.

Conclusion

This dispute offered a lesson: trademarks are not absolute. A brand name can also describe a style or product feature, creating gray areas for enforcement. While the settlement avoids a definitive verdict on the matter, the case remains a reference point for disputes involving dual-use terms and the balance between protecting a brand and allowing descriptive use in commerce.

As for Tiffany and Costco, the settlement closes an expensive chapter in their histories. For everyone else, it leaves room to consider where branding ends and common language begins.


Sources:

https://caselaw.findlaw.com/court/us-2nd-circuit/2081870.html

https://www.reuters.com/legal/transactional/tiffany-costco-end-8-year-lawsuit-over-fake-tiffany-rings

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