Costco Seeks Tiffany & Co. Lawsuit Dismissal

The wholesaler denies it sold Tiffany-branded rings, adding that it never infringed on the jeweler's trademark, as the term "Tiffany Setting" is "generic."

Costco Wholesale Corp. is punching back at Tiffany & Co., after the luxe jeweler sued the warehouse club for selling unauthorized Tiffany-branded engagement rings in its stores.

The big box retailer denied ever selling Tiffany-branded baubles, instead claiming that it only used the words “Tiffany setting” to describe the ring setting.

In counterclaims, which were filed in Manhattan federal court on Friday, Costco said “the word Tiffany is a generic term for ring settings comprising multiple slender prongs extending upward from a base to hold a single gemstone.”

Citing multiple examples of dictionary entries, references and advertising using the word “Tiffany” to denote a type or style of ring setting, Costco said it has “sold unbranded rings having Tiffany settings for many years.”

Last month, in its lawsuit, Tiffany claimed Costco infringed on its trademark when the wholesaler promoted Tiffany rings on signs in its Huntington Beach, Calif. store.

The jeweler became aware of the situation last November, and a month later sent out a cease-and-desist letter. Costco immediately took down the signage, but according to Tiffany intangible damage had been sustained. The New York-based retailer is looking for a permanent injunction and damages, which will be decided by the court.

In its counterclaims, Costco argued that Tiffany “falsely accused” it of using “counterfeit trademarks and selling counterfeit Tiffany rings.” The rings, which were unbranded, included Tiffany settings and were “accurately described as such on in-store signs,” Costco’s lawyers said.

“Diamond rings purchased at Costco come in plain beige outer gift boxes unlike rings sold by Tiffany & Co., which come in blue outer gift boxes bearing the name Tiffany & Co.,” attorneys noted, adding that rings purchased at Costco are unbranded and come with receipts that clearly indicate their origin of purchase — Costco.

In a bold move, Costco not only denied having infringed on Tiffany’s trademarks, but it also asked the court to permanently ban Tiffany from claiming it controls the name of the ring setting, which Costco deems as “generic.” As a result, Costco said it wants court-ordered changes to the federal trademark registration, which Tiffany is putting forward as evidence.

The wholesaler also wants Tiffany to “admit” that its well-publicized lawsuit against Omega SA was “dismissed on grounds of copyright misuse.” In its complaint, Tiffany had cited the lawsuit, implying that the cases had similarities, Costco said.

Finally, Costco is looking for the court to drop Tiffany’s lawsuit and award it any equitable relief it deems proper.