Earlier this week, Costco was ordered to pay Tiffany over $19.3 million after being found guilty of infringing on the iconic jeweler’s trademark.
This legal battle began on Valentine’s Day 2013, when Tiffany gifted Costco with a little blue box filled with a shiny new lawsuit. Tiffany alleged that Costco was selling different styles of rings as “Tiffany” rings for years.
Tiffany has always policed and enforced its trademark quite well, so how did they miss Costco’s use? Well, Costco did not advertise their rings as “Tiffany” style online at all, but only in-store. Tiffany only found out about Costco’s actions after a customer told Tiffany about it. The customer was disappointed to see the infamous jeweler selling its rings at Costco, and so was Tiffany (to say the least).
Costco argues that it will be appealing this decision because it did not advertise its rings as actual Tiffany rings, but only described the ring setting as “Tiffany”. The wholesaler even went as far as to call Tiffany a generic term. Before you go burn your Costco card for such blasphemy, remember they are using generic in the legal sense.
When a trademark is generic it means that the name has become so popular that it has become synonymous with the general class of product. For example, escalator was once a specific brand name, and not the only word used to describe the moving staircases. Although it may seem great to have your brand name genericized, it is basically a death sentence to your trademark rights. Once consumers morph your name with the only name for the product you lose your ability to enforce your trademark, and everyone and anyone can use it.
Naturally, the federal judge agreed that Tiffany is not a generic trademark and hit Costco with a permanent injunction.
While we await Costco’s appeal, we can continue loving having Breakfast at Tiffany’s rather than in Costco’s food court.