US Court of Appeal Overturns Tiffany & Co's $21M Judgment Against Costco Wholesale in Trademark Action

On August 17, 2020, the US Court of Appeals for the Second Circuit (the Court) released its decision in Tiffany and Co et al v Costco Wholesale Corp, No. 17-2798, overturning the district court’s judgement for Tiffany & Co. (Tiffany).

The district court found that Costco was liable to Tiffany for trademark infringement, counterfeiting, and unfair competition and awarded Tiffany over 21 million USD in damages.

The Court found that the district court erred in finding Costco Wholesale Corp. (Costco) liable for selling engagement rings bearing the “Tiffany” name. Tiffany had claimed that Costco’s use of a term identical to Tiffany’s trademark in connection with the sale of engagement rings violated the Lanham Act. In response, Costco claimed that “Tiffany” is a widely recognized term used to describe a particular style of pronged ring setting. The Court agreed with Costco that a reasonable jury could conclude that Costco’s use of the word “Tiffany” was not likely to confuse its customers. Furthermore, even in the event that some confusion was likely, Costco was entitled to use the term “in good faith only to describe” the style of its rings.

The Court ultimately held that Costco raised a “question of material fact as to its liability for trademark infringement and counterfeiting and, relatedly, its entitlement to present its fair use defense to a jury”. The Court therefore vacated the judgment of the district court and remanded the case for trial.

Summary By: Steffi Tran