The jury in Tiffany & Co. and Costco Wholesale Corp.’s mass versus class trademark lawsuit decided that mass is going to have to pay up.
This story first appeared in the October 3, 2016 issue of WWD. Subscribe Today.
A Tiffany spokesman confirmed that the jury “awarded Tiffany $5.5 million in actual profits” in the case. Punitive damages are still to be determined and would be added to that, possibly on Wednesday. Then, in several weeks, Manhattan Federal Judge Debra Freeman is expected to issue her final judgment.
After the jury’s initial verdict, handed down Thursday, Costco said, “Proceedings will immediately follow concerning the jury’s determination that Tiffany & Co. is entitled to an award of punitive damages. Because the jury’s deliberations are continuing, further comment is not appropriate at this time.”
Although a large award in a hard-fought legal case, the sum is something of a rounding error in the grand scheme of things at the two multi-billion dollar companies.
Shares of Tiffany gained 1.8 percent Friday to $72.63, while Costco’s stock rose 3.4 percent to $152.51.
The case dates back to February 2013, when Tiffany sued Costco, accusing the warehouse club of selling engagement rings that it passed off as Tiffany-branded rings in signs at its Huntington Beach, Calif., store.
The luxe jeweler became aware of the offending signs a few months earlier and sent a cease-and-desist letter, and pursued the case even though the signage was removed, arguing that the brand’s “name and goodwill” were tarnished.
Costco argued that the word “Tiffany” could be considered a generic term for a pronged, solitaire-style ring. But Tiffany prevailed in the case a year ago, with a judge ordering that Costco stop using the Tiffany name and logo in its marketing and merchandising of jewelry.
This is relatively familiar legal territory for Costco, which has gained share in part by offering deep discounts on well-known brands.
Another case that landed in the Supreme Court had Omega SA challenging Costco’s right to sell “authentic” Omega watches it obtained on the gray market. Omega won that case in a narrow 2010 ruling.
Attorney Douglas Hand of Hand Baldachin & Amburgey described the award as “significant,” noting the jury gave Tiffany $1.8 million beyond the $3.7 million Costco was deemed to have gained from selling the rings.
“The lesson here is a pretty simple one,” Hand said. “Don’t appropriate another brand’s trademark. It’s a fairly blatant case of trademark appropriation.”