Publish date:

Court Tosses Tiffany & Co. Judgment Against Costco

An appeals court overturns a lower court ruling that found Costco liable for selling rings bearing the 'Tiffany' name.

A federal appeals court on Monday threw out Tiffany's  (TIF) - Get Tiffany & Co. Report $21 million judgment against Costco Wholesale (COST) - Get Costco Wholesale Corporation Report over the warehouse club company's sale of generic diamond engagement rings bearing the "Tiffany" name. 

The Second U.S. Circuit Court of Appeals in Manhattan overturned a ruling by a lower court judge who found Costco liable for selling the rings.

Costco said the rings had a pronged setting known as a "Tiffany" and the company argued that it used the word "Tiffany" as a description of a widely recognized solitaire cut ring.

Circuit Judge Debra Ann Livingston said in the 3-0 decision that reasonable jurors could find that Costco's use of "Tiffany" was unlikely to confuse customers or make them think Tiffany endorsed the rings.

Leigh Harlan, Tiffany  senior vice president, secretary and general counsel, said in a statement that the company was "disappointed in the court’s ruling, which finds that a jury, rather than the judge, should have decided the question of liability in the first trial."

TheStreet Recommends

"We continue to believe that the District Court was correct in its findings, and that the jury’s finding on damages, which resulted in a $21 million award for Tiffany & Co., is a clear indicator of the strength of the Tiffany brand, and of the jury’s outrage over Costco’s actions,” Harlan said. "“We have no qualms about trying this case again, and remain confident that a jury will find counterfeiting and infringement upon retrial, just as the District Court judge originally ruled.”

Costco, which did not immediately respond to a request for comment, said it removed "Tiffany" from store signs within one week after the jewelry company  complained.

An estimated 3,349 customers bought Tiffany-set rings at Costco during the relevant period, according to court records.

Tiffany first filed the suit against Costco in February 2013 for trademark infringement and counterfeiting to prevent Costco's use of "Tiffany" on signs in jewelry cases at Costco to describe engagement rings that were not made by Tiffany. 

In 2017, U.S. Judge Laura Taylor Swain barred Costco from selling anything marked as a "Tiffany" product without using an identifier such as "style," "setting," or "set." Costco didn't use those modifying nouns in displays for the diamond rings in question.

Tiffany shares were up slightly to $125.18, while Costco shares were up 1.25% to $340.17.