The company raised its full-year sales guidance while noting it has not yet assessed the potential impact of the latest tariff news.
Analysis: Why Tiffany Won $15M from Costco
Attorneys Emily Miao and Daniel Organ dissect the jury’s verdict in Tiffany’s trademark lawsuit against wholesale club Costco.

In a highly publicized decision last year1, federal Judge Laura Taylor Swain of the Southern District of New York ruled in favor of the luxury retailer Tiffany & Co. (“Tiffany”), deciding that Costco Wholesale Corp. (“Costco”), the largest U.S. warehouse club chain, willfully infringed Tiffany’s trademark.
According to the court, Costco sold counterfeit diamond engagement rings bearing the Tiffany name and confused relevant consumers by using the word “Tiffany” in display case signage. Judge Swain’s initial ruling against Costco allowed Tiffany to take Costco before a jury to seek damages, including profits from Costco’s sale of diamond rings, statutory damages, and punitive damages.
After several delays, the jury met in September for “Phase I” of the trial to decide (1) the amount of Costco’s profits and statutory damages under the Federal Lanham Act, and (2) whether Tiffany was entitled to punitive damages under New York General Business Law §349 and New York Common Law. “Phase II” was triggered when the jury found Costco liable for punitive damages. In their Phase I verdict, the Jury determined that Costco profited by $3.7 million from the infringing sales, and added an additional $1.8 million to fully compensate Tiffany, bringing the total award for profits to $5.5 million.2 The jury also awarded $2 million for statutory damages.3 The jury further held that Tiffany was entitled to punitive damages, and in the Phase II verdict awarded Tiffany another $8.25 million.4
Analysis of Costco’s Profits
Tiffany sought an accounting of profits based on the sale of both “non-subject goods” (e.g., Costco memberships and goods other than diamond rings) and “subject goods” (e.g., diamond rings). Under Second Circuit law, in calculating “defendant’s profits,” a court should base its analysis on “infringing sales,” or sales that can be tied to the Lanham Act violation alleged.5 The court held that Tiffany presented no evidence tying the “non-subject goods” to Costco’s alleged infringement, and therefore removed the “non-subject goods” from the analysis. Regarding the “subject goods,” however, the court held that Costco did not act in good faith and therefore Tiffany was allowed to seek an accounting for profits from their sale.6 The court’s decision allowed the jury to decide, in the damages phase of the trial, how much Tiffany was entitled to for damages from Costco’s unlawful use of Tiffany’s mark.
During the damages trial, Tiffany argued that it was entitled to millions in damages from
Analysis of Statutory Damages
In addition to awarding Tiffany Costco’s profits, the jury awarded Tiffany $2 million in statutory damages. The Federal Lanham Act states that when a counterfeit mark is used, up to $2 million may be awarded for a willful violation.8 In Judge Swain’s initial ruling, the court held that, as a matter of law, Costco used a counterfeit mark and that Tiffany satisfied the willfulness requirement.9 Then, to decide the exact amount of damages, the jury was instructed to consider factors such as Costco’s profits, Tiffany’s lost revenue, and the value of the mark.10 As a result, the jury determined that the maximum $2 million in statutory damages was justified.
Analysis of Punitive Damage
Tiffany sought punitive damages under both federal and state law. Under federal law, the court held that the Lanham Act prevents the collection of punitive damages.11 Under state law, however, the court noted that New York General Business Law §349 and New York Common Law allow punitive damages, albeit with an exceptionally high bar.12 Under these laws, “punitive damages are available where a defendant’s conduct has constituted gross, wanton or willful fraud or other morally culpable conduct to an extreme degree.”13 The court listed evidence in Tiffany’s favor, including emails from Costco jewelry buyers asking vendors to copy Tiffany designs and testimony that Costco employees were aware of customer confusion but did nothing to remedy it.14
The jury ultimately agreed with Tiffany and in “Phase II” of the damages trial awarded Tiffany $8.25 million.
Conclusion
After the initial ruling, Judge Swain directed Tiffany and Costco to attempt to settle the outstanding issues. But since no settlement occurred, the damages phase proceeded and the jury handed Tiffany a sweeping victory, awarding nearly $16 million in damages.
Tiffany has been involved for many years in lawsuits regarding its intellectual property. A recent PACER search (PACER is a service for publically accessing court records electronically) returned 28 lawsuits since 1991 involving Tiffany copyrights, patents and trademarks. While the award of nearly $16 million against Costco is one of Tiffany’s largest, Tiffany previously won a default judgment of $26.5 million against numerous defendants for infringing on Tiffany trademarks and using infringing domain names.
Costco is also no stranger to lawsuits regarding intellectual property issues, both as a plaintiff and (more often) as a defendant. A recent PACER search returned 190 lawsuits over intellectual property issues since 1991, comprising 47 trademark suits of which Costco was a defendant in 36; 119 patent suits of which Costco was a defendant in 102; and 24 copyright suits of which Costco was a defendant in 22.
Tiffany has a history of policing its trademarks,15 in particular regarding goods such as its jewelry16, blue gift boxes, cufflinks, and money clips17. But Tiffany has not policed its marks with respect to engagement rings--until now. The facts here were straight forward and favorable to Tiffany, so it is unsurprising that Tiffany won. Had Tiffany lost, there would have been inherent confusion around the use of the “TIFFANY” mark as applied to diamond rings and ring settings. Such a result would have been contrary to one of the purposes of trademark protection, which is to avoid consumer confusion.18
With the conclusion of the damages trial, and assuming Judge Swain accepts the jury’s findings, Costco will likely file an appeal against Judge Swain’s ruling and the damages award. Stay tuned for further developments.
©2016 McDonnell Boehnen Hulbert & Berghoff LLP. The information contained in this article reflects the understanding and opinions of the authors and is provided for informational purposes only. It is not intended to and does not represent legal advice. No attorney-client relationship is created by providing this information to you. The information in this article is not a substitute for obtaining legal advice from an attorney licensed in your particular state.
1 Tiffany and Co. v. Costco Wholesale Corp., 127 F. Supp. 3d 241 (S.D.N.Y. Sept. 8, 2015).
2 Jury Verdict Form at 1, Tiffany and Co. v. Costco Wholesale Corp., No. 13CV1041 (S.D.N.Y. Sept. 30, 2016), ECF No. 353.
3 Id. at 2.
4 Jury Verdict Form at 1, Tiffany and Co. v. Costco Wholesale Corp., No. 13CV1041 (S.D.N.Y. Oct. 5, 2016), ECF No. 357.
5 Tiffany and Co. v. Costco Wholesale Corp., 127 F. Supp. 3d at 259 (referencing Am. Honda Motor Co. v. Two Wheel Corp., 918 F.2d 1060, 1063-64 (2d Cir. 1990)).
6 Id. at *261.
7 Tiffany's Damages Case A Publicity Stunt, Costco Tells Jury, Law360 (Sept. 28, 2016), http://www.law360.com/articles/845762/tiffany-s-damages-case-a-publicity-stunt-costco-tells-jury.
8 15 U.S.C.S. § 1117(c)(2).
9 Tiffany and Co. v. Costco Wholesale Corp., 127 F. Supp. 3d at 255.
10 Jury Instructions at 23-24, Tiffany and Co. v. Costco Wholesale Corp., No. 13CV1041 (S.D.N.Y. Sept. 30, 2016), ECF No. 345.
11 Tiffany and Co. v. Costco Wholesale Corp., 127 F. Supp. 3d at 261.
12 Id.
13 Id., (citing Altadis U.S.A., Inc. v. Monte Cristi de Tabacos, c.x.a., No. 96CV4209-BSJ, 2001 U.S. Dist. LEXIS 6892 (S.D.N.Y. May 17, 2001)).
14 Id. at 262.
15 For example, in 2006, Tiffany had an employee dedicate to monitoring listings on the eBay website for counterfeits and report any violations to eBay on a daily basis. See Tiffany (NJ) Inc. v. eBay, Inc., 576 F. Supp. 2d 463, 484 (S.D.N.Y. 2008) aff'd in part, rev'd in part sub nom. Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93 (2d Cir. 2010) (holding that eBay did not infringe Tiffany’s marks). See also Complaint at ¶ 17 (describing other brand protection strategies).
16 See Tiffany (NJ) Inc. v. Luban, 282 F. Supp. 2d 123, 124 (S.D.N.Y. 2003) (finding the operator of a website that sold counterfeit Tiffany jewelry liable for willful infringement).
17 See Tiffany (NJ), LLC v. 925LY.Com, 2:11-CV-00590-LDG, 2011 WL 2118634 (D. Nev. May 25, 2011) (issuing a preliminary injunction in favor of Tiffany).
18 See Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 774 (1992).
The Latest

The organization has raised more than $1.3 million for charity since its inception.

The brand’s latest iteration of a bezel-set diamond bangle features clean lines and a timeless design for a new modern silhouette.

As a leading global jewelry supplier, Rio Grande is rapidly expanding and developing new solutions to meet the needs of jewelers worldwide.

The first watch in the series commemorates his participation in the Civil Rights movement, marching from Selma to Montgomery in 1965.


The catalog contains a complete listing of all the loose gemstones in stock, as well as information about the properties of each stone.

The company added a retailer dashboard to its site and three new birds to its charm collection, the cardinal, blue jay, and hummingbird.

The Seymour & Evelyn Holtzman Bench Scholarship from Jewelers of America returns for a second year.

An additional 25 percent tariff has been added to the previously announced 25 percent.

Its Springfield, Massachusetts, store is set to close as owner Andrew Smith heads into retirement.

Designer Hiba Husayni looked to the whale’s melon shaped-head, blowhole, and fluke for her new chunky gold offerings.

She will present the 23rd edition of the trend forecasting book at Vicenzaoro on Sept. 7.

Omar Roy, 72, was arrested in connection with the murder of jeweler Dionisio Carlos Valladares.

The New Orleans-based brand’s “Beyond Katrina” jewels honor the communities affected by the storm.

Lilian Raji explains why joining an affiliate network is essential for brands seeking placements in U.S. consumer publications.

The organization has awarded a total of $42,000 through its scholarship programs this year.

The winner of the inaugural David Yurman Gem Awards Grant will be announced live at the 2026 Gem Awards gala.

As summer winds down, celebrate the sunny disposition of the month’s birthstones: peridot and spinel.

Moshe Haimoff, a social media personality and 47th Street retailer, was robbed of $559,000 worth of jewelry by men in construction outfits.

The addition of Yoakum, who will lead Kay and Peoples, was one of three executive appointments Signet announced Thursday.

The insurance company’s previous president and CEO, Scott Murphy, has split his role and will continue as CEO.

The nearly six-month pause of operations at its Kagem emerald mine earlier this year impacted the miner’s first-half results.

The necklace uses spinel drops to immortalize the moment Aphrodite’s tears mixed with her lover Adonis’ blood after he was fatally wounded.

The diamond miner and marketer warned last week that it expected to be in the red after significantly cutting prices in Q2.

Jewelers of America’s 35th annual design contest recognized creativity, artistry, style, and excellence.

Tratner succeeds Andie Weinman, who will begin stepping back from the buying group’s day-to-day operations.

The president made the announcement via Truth Social Wednesday, adding that India also will face a penalty for its dealings with Russia.