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9 September 2015Trademarks

Tiffany succeeds in Costco lawsuit and bats away generic claim

Luxury brand Tiffany has persuaded a US court that retailer Costco infringed its trademark and that the name of its company is not a generic term for jewellery.

Yesterday, September 8, the US District Court for the District of New York granted Tiffany’s motion for summary judgment finding Costco liable for counterfeiting and unfair competition.

Tiffany sued the retailer in February 2013 after it received information from consumers that Costco was selling a range of rings under the name Tiffany.

A month later, Costco filed a counterclaim and said that the term had become generic.

Tiffany submitted evidence from six Costco customers who were “confused by Costco’s signage” and believed that they were purchasing a genuine Tiffany product.

In addition, Tiffany submitted survey evidence from academic Jacob Jacoby, professor of marketing at Leonard N. Stern School of Business at New York University, which showed “more than two out of five prospective purchasers of diamond rings at Costco were likely confused into believing that Tiffany was the source of the rings”.

Costco disputed Tiffany’s evidence, but Judge Laura Swain was persuaded that the rings caused confusion.

“Costco’s proffer is insufficient to raise an issue of material fact with respect to the actual confusion factor, and Tiffany’s evidence of consumer confusion stands unrebutted,” she wrote in yesterday’s judgment.

On Costco’s claim that the term ‘Tiffany’ had become generic, Costco provided a declaration from Donald Palmieri, president of the Gem Certification and Assurance Lab, which certifies diamond grades, that 'Tiffany' is the only word that “unambiguously denotes” the setting of a diamond ring.

Furthermore, Charles Levine, a senior consultant to Dictionary.com, said that the terms ‘Tiffany’ and ‘Tiffany setting’ have a “common descriptive meaning”.

But Swain was not convinced.

She wrote: “Costco has proffered no affirmative evidence that raises a material issue of fact with respect to the issue of whether the primary significance of the ‘Tiffany’ mark to the relevant public is as a generic descriptor or a brand identifier.”

Leigh Harlan, vice president and general counsel at Tiffany, welcomed the news.

She said: “We are gratified that the court found that Costco’s use of the ‘Tiffany’ trademark infringed our rights.

“We believe that this decision further validates the strength and value of the ‘Tiffany’ mark and reinforces our continuing efforts to protect the brand,” she added.

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