Benjamin Appelbaum, Attorney at Law

Costco ordered to pay $19 million for trademark infringement

New Jersey residents will likely associate light blue jewelry boxes with Tiffany & Co. It can take decades to nurture and develop this kind of consumer awareness, and major companies generally act quickly when their intellectual property is used without their permission. Tiffany sued the Costco Wholesale Corporation in 2013 after learning that engagement rings made by other jewelry makers were being marketed as Tiffany rings. Costco attorneys denied any wrongdoing, but their arguments failed to impress the judge hearing the case.

Costco attorneys claimed that "Tiffany" was used to describe a type of diamond setting and not to mislead customers into thinking that the pieces in question had been made by Tiffany & Co., and they pointed out that no Tiffany & Co. branding was used in Costco stores and the rings were not packed in light blue boxes. However, a federal district court judge ordered the retailer to pay Tiffany $11.1 million to compensate it for lost profits and $8.25 million in punitive damages. The compensatory damages amount represents triple the loss suffered by Tiffany due to Costco's intellectual property infringement.

A Costco representative said that the rings were not counterfeit items in the conventional sense and announced that the retailer was planning to launch an appeal. However, in 2015, the federal court granted Tiffany summary judgment after finding the retailer liable for trademark counterfeiting and trademark infringement.

This case shows how protracted and complex intellectual property litigation can be even when the facts seem straightforward. Attorneys with experience in this area may urge their clients to address these matters promptly so that prolonged legal disputes can be avoided.

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Benjamin Appelbaum, Attorney at Law - Intellectual Property

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