Costco Wholesale Corp. willfully infringed
Tiffany & Co's trademarks by selling counterfeit diamond engagement rings
bearing the luxury retailer's name and must face a jury trial to assess
damages, a US judge ruled on Tuesday.
US District Judge Laura Taylor Swain in
Manhattan rejected claims by Costco that Tiffany's trademarks were invalid
because they sought to prevent others from using the word "Tiffany"
as a generic description of a type of ring setting.
Instead, Swain said evidence established that
Costco, the largest US warehouse club chain, had infringed Tiffany's trademarks
by selling engagement rings and confused consumers by using the word Tiffany in
display-case signs.
"Despite Costco's arguments to the
contrary, the court finds that, based on the record evidence, no rational
finder of fact could conclude that Costco acted in good faith in adopting the
Tiffany mark," Swain wrote.
Under the ruling, Tiffany may now take Costco
before a jury to seek damages, including a recovery of Costco's profits from
the sale of the diamond rings and punitive damages.
Swain set a hearing for October 30 and directed Tiffany and Costco to
"make good faith efforts to settle the outstanding issues."
In a statement, Tiffany general counsel Leigh
Harlan welcomed the ruling, saying it "further validates the strength and
value of the Tiffany mark and reinforces our continuing efforts to protect the
brand."
Representatives for Costco did not respond to
requests for comment.
Tiffany filed the lawsuit on Valentine's Day in
February 2013, saying it believed hundreds, if not thousands, of Costco members
bought engagement rings they wrongly believed were authentic Tiffany products.
Tiffany said that in 2012, a person shopping at
a Costco in Huntington Beach, California, complained to Tiffany that she was
disappointed to see Costco offering for sale what were promoted on in-store
signs as Tiffany diamond engagement rings.
Tiffany said a subsequent investigation revealed
rings in a display case at the Huntington Beach Costco labeled with the word
"Tiffany" and that a sales representative there referred to them as
such.
Prior to the lawsuit, Tiffany contacted Costco
and secured a commitment that it would remove references to Tiffany from its
display case signs, according to Tuesday's ruling.
Costco also previously sent a letter to
customers who bought the rings offering a full refund if they were unsatisfied,
the ruling said.
The case is Tiffany & Company and Tiffany
(NJ) LLC v. Costco Wholesale Corp, U.S. District Court, Southern District of
New York, 13-1041.
(Reporting by Nate Raymond in New York; Editing
by Phil Berlowitz)
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