National Jeweler Network

Market Developments

Tiffany slaps Costco with trademark lawsuit

2013-02-15

New York--Tiffany & Co. claims in a new lawsuit that Costco Wholesale Corp. has been selling diamond engagement rings falsely identified as “Tiffany” for years, and now the New York-based jeweler wants pay back.

According to a trademark infringement lawsuit filed last Thursday in U.S. District Court for the Southern District of New York, Tiffany first became aware of the warehouse retailer’s alleged infringement in November 2012. A customer shopping at the Costco in Huntington Beach, Calif. complained to Tiffany after seeing diamond engagement rings advertised as “Tiffany” on signs in the store.

After receiving the complaint, Tiffany launched an investigation and discovered that two engagement rings inside the jewelry display case at the California Costco store had signs referencing them as “Tiffany.” One sign, for example, read: “639911 – Platinum Tiffany .70 VS2, 1 Round Diamond Ring – 3199.99,” according to court papers.

The Costco salesperson also referred to each of the rings as a ‘Tiffany ring,” even though Tiffany has never sold its jewelry through Costco.

According to the lawsuit, after making this discovery, Tiffany confronted Costco, and the Issaquah, Wash.-based retailer said it removed all Tiffany references from product signage.

Further investigation by Tiffany, however, revealed that Costco allegedly had been selling different styles of rings for years falsely identified on in-store signs as “Tiffany” but did not use the Tiffany trademarks for the same products at the same time online, “thereby avoiding detection of its unlawful activities by Tiffany’s normal trademark policing procedures,” court papers state.

Costco did not immediately respond to request for comment on the suit.

Now, Tiffany wants a cut of the money it says Costco made trading off the Tiffany & Co. name.

The company is asking for monetary damages equal, but not limited to, all profits of Costco “by which it was unjustly enriched by its counterfeiting of Tiffany’s valuable trademarks,” plus punitive damages costs and attorneys’ fees, court documents show.

“What’s different here from many other cases of counterfeiting is that here customers might be more easily taken in, since Costco members expect authentic brand-name merchandise at discount prices at Costco,” said Jeffrey Mitchell of Dickstein Shapiro, Tiffany’s counsel in the case. “Everyone knows that buying something on a street corner or over the Internet from an unknown source is risky. Until now, no one would have thought it could be risky to buy brand-name merchandise from Costco as well.”

Tiffany also wants Costco to be permanently banned from using the Tiffany trademark and notify affected customers that they don’t have a Tiffany engagement ring.

Tiffany & Co. and Costco are two of the largest sellers of fine jewelry in the United States. Tiffany ranks No. 3 on National Jeweler’s 2012 list of $100 Million Supersellers while Costco is No. 9.

In April 2012, the warehouse retailer told CNBC that its sales of engagement rings and wedding bands have been on the rise for the past two years, with couples drawn to Costco because of the store’s “high-quality yet discounted” diamonds.