Diamond engagement rings are known for reducing the bank balances of would-be spouses, but they’re far less costly than the penalty for selling rings under an infringed trademark.
A federal judge in Manhattan ruled that Costco must cough up more than $19 million for selling rings under the luxury jewelry maker Tiffany’s trademark, which is more than $5 million over the jury award—in profits and punitive damages—in the case handed up last year.
U.S. District Judge Laura Taylor Swain of the Southern District of New York said she agreed with the jury’s October 2016 finding that Tiffany is entitled to $8.25 million in punitive damages for Costco’s use of the word “Tiffany” on its in-store advertisements for rings.
The case began in 2012 when a shopper wearing a Tiffany ring noticed advertisements for “Tiffany” rings at a Costco in Huntington Beach, California, being sold for several thousand dollars less than they would by Tiffany.
Costco argues that it was using “Tiffany” as a generic term to describe the setting or style of the rings, but Swain said that no such modifiers were included in Costco’s signage. The practice of using “Tiffany” as a standalone term in store signage had been in place since about 2007.
Swain said that Costco salespeople described rings as “Tiffany” rings and that, prior to trial and during testimony, Costco’s upper management displayed “at best a cavalier attitude” toward the store’s use of the word Tiffany.
The jury found that, for Costco’s use of the word “Tiffany” without modification, Tiffany was entitled to $3.7 million in profits. They added an additional $1.8 million to make it a just award based on the circumstances of the case.
Swain agreed that Costco should pay the $3.7 million, but said the extra $1.8 million was not necessary; noting that Costco made $2.4 billion in profits in 2014, the judge said she found no extenuating circumstances warranting denial of treble damages, or $11.1 million, to Tiffany.
Tiffany was represented by Jeffrey Mitchell, a partner at the Los Angeles-based firm Browne George Ross; Judith Cohen, who is of counsel to the firm; and associate Brett Katz.
“This has been a long, hard-fought battle to vindicate Tiffany’s rights,” Mitchell said in a statement forwarded to the Law Journal. “We are very happy the court agreed with the jury. Judge Swain’s decision sends a powerful message to Costco and others that the Tiffany trademark is not something to be trifled with.”
Hughes Hubbard & Reed partner James Dabney; counsels Richard Koehl and Ross Lipman; and associate Emma Baratta appeared for Costco.
In a press statement, Costco said in a statement that it plans to appeal the decision.