The Tiffany v. Costco Battle Wages On

New York—The battle wages on between Tiffany and Costco in what is a formative case for the jewelry industry regarding the use of the term “Tiffany setting.”

Tiffany & Co. first took Costco Wholesale Corp. to court in 2013, suing the big-box retailer in New York federal court for trademark infringement, counterfeiting and unfair business practices for selling rings in its stores labeled as “Tiffany” that were not made by Tiffany.

Costco filed a countersuit, claiming the term “Tiffany setting” had become genericized and could be used by any company to describe a ring with multiple, slender prongs holding a single stone. It asked the court to invalidate any federal trademark registrations that would prevent other retailers from using the term “Tiffany setting.”

A federal judge ruled in Tiffany’s favor in 2015, granting the jeweler’s motion for summary judgment (a judgment entered by the court without a full trial) in the case.

A jury decided on damages, ordering Costco to pay Tiffany $5.5 million for unlawful profits ($3.7 million in direct profits and $1.8 million for additional benefits derived from the ring sales) and $8.25 million in punitive damages.

The judge trebled the $3.7 million to $11 million, bringing the total amount Costco was to pay Tiffany to $21 million. 

Last August, however, the Second Circuit Court of Appeals vacated the summary judgment on appeal from Costco. 

The judges ruled unanimously that if a jury had heard the case, “reasonable” jurors could find Costco’s use of the word “Tiffany” wasn’t likely to confuse customers or make them think Tiffany had produced or endorsed the rings.

The appeals court sent the case back to the district court, where Tiffany and Costco are now at odds over punitive damages and the issue of a jury. 

On Feb. 12, Costco filed a motion in limine seeking to prevent a jury trial in the case and blocking Tiffany from seeking punitive damages on grounds the jeweler needs to prove lost profits (which it is not seeking in the case) before it can ask for punitive damages. 

Tiffany fired back earlier this month, arguing the district court has ruled multiple times—a total of six before this, in fact—that punitive damages are available to it under New York law and that “nothing material” has changed about the case since those prior rulings. 

The court also previously determined that Tiffany is entitled to a jury and, the jeweler argued in its March 12 memo opposing the motion, one is needed to determine damages in the case.  

The now LVMH-owned jeweler also pointed out Costco itself asked for the case to be presented to a jury when it filed its appeal.

When, or if, another trial might take place remains unclear. 

According to a joint status report filed March 12, Tiffany will not consent to a virtual trial, but said it could be ready for an in-person trial by July, if one can be held safely by then.

Court papers also indicate a settlement is not out of the question.

The two parties had a settlement discussion prior to the case going to trial in 2016 and have had additional discussions since the ruling on the appeal. Those discussions are continuing. 

Tiffany v. Costco is filed in U.S. District Court for the Southern District of New York.