Court Says Costco Must Pay $19.4 Million Over Fake Tiffany Engagement Rings

On Monday, a federal judge ordered that Costco Wholesale Corp must pay more than $19 million in damages to Tiffany & Co. This is the result of accusations from the luxury jewelry that the wholesale chain store was selling rings falsely identified as being of the “Tiffany” brand.

The accusation actually goes back as far as Valentine’s Day of 2013, when the company filed a complaint after learning, from a customer, that Costco was offering engagement rings under a sign reading “Tiffany”. As you may have discerned, these rings were not, in fact, made by Tiffany & Co; the jeweler argued, then, that Costco mislead customers who purchased the rings under the guise that they were, in fact, Tiffany & Co products.

Costco had been selling the rings long before 2007; the jeweler filed the lawsuit agaisnt the wholesaler, fittingly, on February 14, 2013.

According to the complaint, Costco made roughly $3.7 million in profit selling these fake Tiffany engagement rings. Costco, of course, argued that it was widely understood the use of “Tiffany” was as a generic reference to the setting of the ring and not to the brand itself. Still, the court determined, in 2015, that this was, in fact, an infringement on trademark.

In addition to this ruling, US District Judge Laura Taylor Swain barred Costco from marketing or labeling the rings—or any other item—as “Tiffany” unless they also have a distinct modifier, which could include terms like “set,” “setting,” and “style.” As you might expect, Costco plans to appeal the decision, arguing that this decision was simply the result of “multiple errors in pretrial, trial, and post-trial rulings.”

In its statement regarding the claims, the company said, “Tiffany & Co. did not claim in the lawsuit that it lost a single sale to Costco as a result of any sign. From a purchaser list of approximately 2,500, Tiffany identified fewer than 10 who said that they had misunderstood Costco’s signage. This was not a case about counterfeiting in the common understanding of that word — Costco was not selling imitation Tiffany & Co. rings.”

In the judgment, Swain said that Tiffany should be awarded $11.1 million in the suit. Keep in mind this is three times the $3.7 million in profit that Costco made from selling these items. Also, the jury ruled, in October, that Costco must also pay $82.5 million in punitive damages.

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