By Brecken Branstrator
A trademark case involving Costco’s use of the word “Tiffany” to describe unbranded diamond rings has been sent back to a lower court for reconsideration by a jury. Pictured here is a diamond engagement ring featuring the jeweler’s famed six-prong setting.

New York—A federal appeals court has overturned the $21 million judgment levied against Costco Wholesale Corp. for its use of the name “Tiffany” for unbranded goods.

Tiffany & Co. sued Costco in early 2013 for selling rings in its stores with signs that read “Tiffany” that were not made by Tiffany & Co.

Costco argued in a countersuit that “Tiffany” had become a generic term that could be used by any company to describe a particular style of ring setting (multiple slender prongs holding a single stone).

In 2015, the U.S. District Court for the Southern District of New York granted Tiffany’s motion of summary judgment of liability, and in 2017, a civil jury awarded the jeweler damages totaling about $21 million.

Costco appealed the judgment and won, with the Second Circuit Court of Appeals reversing the decision.

In a filing Monday, the appeals court the said question of liability for infringement and counterfeiting should have been presented to a jury during the first trial, rather than be decided by the district court judge.

In a 3-0 decision, the appeals court judges said “reasonable” jurors could find Costco’s use of the word “Tiffany” wasn’t likely to confuse customers or make them think the latter had produced or endorsed the rings.

They could understand “Tiffany” wasn’t only a brand name but also “a widely recognized descriptive term for a particular style of pronged ring setting.”

The case has been remanded to U.S. District Judge Laura Taylor Swain in Manhattan for a jury trial.

“We are disappointed in the court’s ruling … 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,” said Leigh Harlan, Tiffany senior vice president, secretary and general counsel.

“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.”

The attorneys at Debevoise & Plimpton LLP, which represented Costco in the appeal, declined to comment on the ruling.

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