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Costco owes Tiffany $19 million for selling counterfeit engagement rings

Costco owes Tiffany $19 million for selling counterfeit engagement rings
[Photo: Flickr user Cheryl]

Costco recently started trying to cash in on the wedding industrial complex by launching a wedding registry service, helping members plan their special days, and selling engagement rings. It’s that last one that has gotten them in some 14k trouble. The big box retailer had been selling Tiffany-style engagement rings at some of their stores—but some of their signs simply said “Tiffany engagement rings”—which apparently led some customers to believe they were getting actual Tiffany rings at big-box bargain prices. Tiffany sued Costco for trademark infringement and counterfeiting—and a U.S. District Court just agreed. The court ruled on Monday that Tiffany is entitled to more than $19.3 million from Costco for trademark infringement, trademark counterfeiting, and punitive damages, per CNN. The decision followed a 2015 jury verdict, which found that Costco had received a profit of $3.7 million from falsely using the Tiffany brand.

Costco argued that it was using “Tiffany” as a generic term to describe a ring’s setting, but not using Tiffany’s trademark blue box or the Tiffany name on their rings. It’s not a great defense, though, because there’s no way that Tiffany the company is going to let “Tiffany” become a generic description for an engagement ring setting without a fight. If they did, their trademark would become useless, like how Popsicle, Dumpster, and Xerox occasionally remind consumers that they are real products not catch-all terms. According to a statement from Costco, Tiffany was only able to find “fewer than 10” customers who thought they were getting real Tiffany rings (and perhaps re-creating the proposal scene from Sweet Home Alabama in the middle of Costco). Still, it was enough for the court to slap the store with a massive fine.

Now, Costco can never again use the word “Tiffany,” to sell products as a standalone, but the court said they can use the word if it’s followed by “setting,” “set,” or “style”—because despite the company’s efforts, a multi-prong setting for a diamond ring is slowly becoming generically known as a “Tiffany-style” setting. It’s hard to imagine that Costco will risk it, though, with a $19 million payout looming over them. Costco says they are planning to appeal the ruling.ML