On Tuesday, September 8, 2015, Judge Laura Taylor Swain of the Southern District of New York granted summary judgment in favor of Tiffany, ruling that Costco was “willfully infringing Tiffany trademarks.” Costco had been selling rings bearing the label “Tiffany” under the mistaken belief that “Tiffany” was a generic diamond setting, and not a brand – and it argued the same in Tiffany & Company and Tiffany (NJ) LLC v. Costco Wholesale Corp, (U.S. Dist. Ct., SDNY). Judge Swain, however, did not find Costco’s argument persuasive.
Tiffany filed for the lawsuit on February 14, 2013 after discovering that numerous consumers purchased Costco’s rings under the false impression that they were purchasing a product from Tiffany & Company. A customer had alerted Tiffany that rings were being sold in a Huntington Beach, California, Costco location next to signs that read “63991 Platinum Tiffany .70 VS2 1 Round Diamond Ring- 3199.99” and “605880 Platinum Tiffany VS2.1 1.0 Round Brilliant Solitaire Ring-6399.99.”
Costco argued that these signs were meant to indicate a general style of a ring setting, purportedly commonly understood to the public as a “Tiffany” setting. According to Costco “Tiffany is a generic term for ring settings comprised of multiple slender prongs extending upward from a base to hold a single gemstone.” Costco claimed that the generic use of the term therefore invalidates the Tiffany trademark. In her ruling, Judge Swain relied upon Tiffany’s registrations at the United States Patent and Trademark Office (USPTO) and examined the elements that constitute the “genericization” and partial “genericization” of a trademark.
Judge Swain found that Tiffany had a valid USPTO registration for the term “Tiffany.” Tiffany apparently holds over 97 registered and valid trademarks. The trademarks relevant to this case specifically were No. 133, 063 for the word mark “Tiffany,” and No. 1, 228, 409 for a stylized mark for “decorative art objects” and “jewelry for personal wear”.
The so-called generic style of ring that Costco referred to was found individually registered with the USPTO, as was the wordmark “Tiffany®Setting,”
The mere fact that these registrations existed and were current granted Tiffany a presumption of validity. The court cited American Ort, Inc. v. Israel, No. 07 Civ. 2332(KMK), 2007 WL 2049733, at *4 (S.D.N.Y. July, 17, 2007), holding that, “[t]he fact that the USPTO accepted a mark for registration creates a presumption that the mark is valid.” Due to this presumption, the burden shifted to Costco to prove otherwise. A difficult presumption to overcome given that “after a mark has been continuously used for five years the mark becomes incontestable and in such cases registration ‘shall be conclusive evidence of the registrant’s exclusive right to use the registered trademark in commerce’.” Lemme v. Nat'l Broad, Co., Inc., 472 F.Supp.2d 433, 443 (E.D.N.Y.2007).
Costco argued that Tiffany was misusing the “® symbol” in an attempt to “infuse the generic term with spurious trademark significance.” The court, however, found that the term was not generic. “When considering whether a mark is generic, the key determination to be made is the primary significance of the registered mark to the relevant public.” Feathercombs Inc. v. Solo Prods. Corp., 306 F.2d 251, 256 (2d Cir.1962). Consumer surveys showed that Tiffany is a widely recognized term associated with jewelry and diamonds. In some circumstances, however, famous marks may still become generic and lose protection. This may arise when a mark becomes generic pre or post registration. The Court found that the Tiffany mark did not fall into either of the two categories.
The Court further noted that common use of a trademark name alone does not render it generic. For instance, marks such as Coca-Cola® and Polaroid® are popular coined terms in the colloquial English language that refer to the specific products associated with them and therefore are not mere generic terms. Kraft Foods Holdings, Inc. v. Helm, 205 F.Supp.2d 942, 946-47 (N.D.Ill.2002). The court therefore found that Tiffany is not a generic term nor had the term become generic through broad use.
Costco also argued that its use of the term “Tiffany” constituted “fair use.” However, one key element of a “fair use” defense is that it must be used in “good faith.” The court held that Costco’s actions did not constitute a good faith use of the mark in that it intentionally led to consumer confusion - as evidenced by consumer testimony demonstrating a mistaken belief that the Costco rings were made by Tiffany & Company.
Tiffany’s motion for summary judgment was granted in its entirety; Costco’s counterclaims were dismissed in their entirety. Damages are still to be decided by jury.