Costco Ordered To Pay $19.4 Mln For Selling Fake Tiffany Rings

(RTTNews) - Membership warehouse operator Costco must pay $19.35 million for selling "Tiffany" engagement rings that weren't made by jewelry company Tiffany & Co., according to a federal judge ruling. In a response statement, Costco said it intends to appeal the ruling.

U.S. District Judge Laura Taylor Swain ruled on Monday that Costco should pay $11.1 million, which is three times Tiffany's lost profit from Costco's actions, plus interest. This is in addition to $8.25 million in punitive damages.

Swain wrote in her opinion that Costco's management "displayed at best a cavalier attitude toward Costco's use of the Tiffany name in conjunction with ring sales and marketing."

It was in 2013 that Tiffany sued Costco for allegedly infringing its trademark by selling "Tiffany" engagement rings. Costco was accused of selling about 2,500 diamond rings falsely identified on store signs as "Tiffany" rings.

In a statement, Tiffany said the decision validates the strength of the Tiffany trademark and the value of its brand, and most importantly, sends a clear and powerful message to Costco and others who infringe the Tiffany mark.

Swain's decision followed a 2015 jury verdict, which found that Costco had received a profit of $3.7 million from falsely using the Tiffany brand. The court rejected Costco's argument that the word "Tiffany," with reference to a ring's setting, had become a generic term, like Popsicle or dumpster.

Costco is also barred from using the stand-alone word "Tiffany" to describe any products that aren't connected to the jewelry brand.

In its response, Costco said, "This was not a case about counterfeiting in the common understanding of that word -- Costco was not selling imitation Tiffany & Co. rings." The company said the ruling is a product of multiple errors in pretrial, trial, and post-trial rulings.

Costco said, "The rings in question were not stamped or otherwise marked with the Tiffany & Co. name (but rather were stamped with the name of the company that manufactured them)..... they were accompanied by appraisal documents that did not mention Tiffany & Co., and with sales receipts that did not say Tiffany or Tiffany & Co."

Costco added, "Tiffany & Co. did not claim in the lawsuit that it lost a single sale to Costco as a result of any sign. From a purchaser list of approximately 2,500, Tiffany identified fewer than 10 who said they had misunderstood Costco's signage."