Costco wins $21m ‘Tiffany’ trademark reprieve

A US federal appeals court has cancelled a $21 million trademark win for Tiffany over Costco, and sent the case back for trial.

In its decision, issued yesterday, August 17, the US Court of Appeals for the Second Circuit ruled that a New York district court was wrong to grant summary judgment in favour of Tiffany against the retailer.

Costco appealed after the US District Court for the Southern District of New York found it to have infringed the jewellery brand’s trademarks with diamond engagement rings advertised using the word ‘Tiffany’.

Costco argued that this was descriptive fair use, and that it was using the term to refer to a style, rather than the Tiffany brand itself.

On appeal, the Second Circuit found that the district court was too hasty in dismissing Costco’s arguments, and that the case should go to trial.

The district court had awarded TIffany $21m in punitive damages for the alleged infringement.

Writing on behalf of a unanimous Second Circuit panel, Circuit Judge Debra Ann Livingston said that Costco had “genuine question as to the likelihood of customer confusion”.

Costco maintains that its signs referred to the “Tiffany setting” or “prong setting” method used in diamond rings.

This involves using metal prongs to secure a gemstone to the ring. Tiffany argued it was “absurd” that the term could be seen as descriptive.

But the Second Circuit said that was a matter for a jury, rather than summary judgment by the district court.

“Here, a jury could reasonably find that Costco used the term ‘Tiffany’ descriptively, based on Costco’s evidence that (1) ‘Tiffany’ has a descriptive meaning independent of Tiffany’s brand and (2) Costco intended to and did invoke that meaning when it created its point-of-sale signs,” Livingston wrote.

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