Tiffany & Co.: One Ring to Rule Them All…and Forever Bind them in Litigation?
Much to my dismay, this article has nothing to do with elves, goblins, or trolls, but an epic legal battle is looming on the horizon, and it may bring new meaning to the oft repeated phrase, “One ring to rule them all”, made famous by celebrated author of The Lord of the Rings trilogy, J.R.R. Tolkien.
This battle I speak of will pit two corporate behemoths, Costco Wholesale Corp. and Tiffany & Co., against one another over what Tiffany believes is Costco’s attempt to infringe on their nearly 200-year-old trademark by selling counterfeit “Tiffany” engagement rings to its shoppers. According to Tiffany’s attorney, Jeffrey Mitchell, thousands of Costco members may have been duped into buying what they believed were genuine Tiffany rings at a discounted price for many years. While Costco customers probably purchased these rings under the assumption that they were getting another great deal, Tiffany states the rings that Costco has been selling to its customers are not manufactured by, approved by, licensed by, or properly associated with Tiffany & Co. in any way.
Apparently, Tiffany had no idea this was happening until a faithful customer called from a Costco in Huntington Beach, California to ask why the rings were being sold so much cheaper at Costco than in Tiffany stores. Sure enough, Tiffany launched an investigation which culminated in the company filing a lawsuit in February alleging trademark infringement and sale of counterfeit merchandise (along with claims for unfair competition and deceptive business practices). As consumers and distributors in the jewelry industry all know, “Tiffany & Co.” has continued to be a prestigious and high-end name in the business for about 175 years (as Tiffany has been clear to point out on its homepage, ever so wisely I might add). Where counterfeiting has grown into a $600 billion a year industry, according to some sources, it’s easy to understand why a company that relies on its reputation and prestige to sell expensive, high-end jewelry might be concerned with Costco warehouses selling knock-off “Tiffany” products at a substantially lower price nation-wide.
So how does Costco respond? In March, Costco filed its answer to Tiffany’s complaint denying all of the claims against it and responded with a counterclaim of its own against Tiffany, alleging “the word Tiffany is a generic term for ring settings comprising multiple slender prongs extending upward from a base to hold a single gemstone,” Costco said. This age old defense to trademark infringement and counterfeiting essentially argues that the plaintiff’s trademark has suffered “genericide”, or in other words, that in the mind of the greater public, the brand name has become so synonymous with the product itself rather than the source of the product, so that the plaintiff’s trademark is considered dead or constructively abandoned by federal law. Remember Raisin Bran, Cornflakes, or Trampoline and Escalator? You’re probably thinking, “Of course I know what they are!” However, you probably didn’t know that those were all actual trademarks of companies or products made by companies, which have suffered the same fate that Costco now hopes to subject Tiffany & Co. to. Whether Costco will succeed with this argument is a question only time and a lot of litigation dollars will end up answering, unless the parties can settle outside of court.
If you ask me, I don’t think a jury will buy that Tiffany is a generic term for a type of engagement ring because, even if the term has been thrown around among jewelers to describe a certain type of ring, to the broader public, the name “Tiffany” inextricably brings to mind a high-end jewelry brand that generations of customers have purchased from for 175 years –now you see why Tiffany makes sure you know this fun little snippet on their homepage. When going to trial on this issue, it certainly helps when the plaintiff can prove that they have diligently worked to prevent the genericide and infringement of their trademark, and this is something Tiffany has done quite well. In the past, Tiffany & Co. has filed lawsuits against a media company named Tiffany Productions to prevent it from diluting its trademark’s strength in the minds of the public, and against eBay for what Tiffany believed was inadequate policing of users who were selling counterfeit Tiffany rings on the site. Although Tiffany prevailed in the former case, the Court of Appeals for the Second Circuit ruled in favor of eBay in latter case as eBay had apparently done all it could to curtail the illegal conduct of its users.
If anything is clear at this point, both parties are ready to rumble in this battle of giants, and Tiffany & Co. is not ready to hand over its title as Lord of the Rings just yet.
Law Clerk at
JAFARI LAW GROUP®, INC.