A rose by any other name would smell as sweet, unless it’s from Tiffany’s: An Analysis of Tiffany & Co. v. Costco Wholesale Corp.
Picture this scenario: a young woman has been doing research on engagement rings so that she can tell her boyfriend what kind of ring she’d like. She decides that she absolutely wants a “Tiffany setting” for her ring because she thinks that shape is the prettiest, and tells her boyfriend to get her a ring with a “Tiffany setting.”
Her boyfriend has been searching for the perfect engagement ring to propose to his girlfriend. He goes to several stores and compares many rings, but the high prices have kept him from making a final decision. One day, as he is walking through his local Costco, he decides to stop by the jewelry counter and see what Costco has to offer. To his surprise, he finds a beautiful ring for a great price. The ring’s description says: “605880—PLATINUM TIFFANY VS2.1 1.00 CT ROUND BRILLIANT SOLITAIRE RING—6399.99.” He buys the ring on the spot.
Did the boyfriend think he was just buying a ring with a “Tiffany setting” or did he think he was buying a ring from Tiffany’s? Did the girlfriend mean that she wanted a ring from Tiffany’s when she asked for a “Tiffany setting?” When you think of this term, do you think of the brand Tiffany’s? Costco tried to argue that the term does not evoke the brand when Tiffany’s sued Costco for infringing on the Tiffany’s trademark. The Southern District of New York, however, decided that putting the word Tiffany in the description of a ring for sale with a “Tiffany setting” ring was infringement of Tiffany’s trademark and that the term “Tiffany setting” is not generic.
The conclusion was based on the success of Tiffany’s Latham Act infringement claim, which required that “Tiffany must demonstrate both: (1) that it holds a mark that is entitled to protection; and (2) that Costco’s use of that mark is likely to cause consumer confusion.” For the first prong, “it is uncontested that Tiffany owns ‘97 separate trademarks’ relating to the Tiffany company name,” some of which are listed on Tiffany’s website.
The second prong, however, is where things get more complicated. The District Court applied the Polaroid factors to determine if consumers were likely to be confused:
These factors include: the strength of the Plaintiff’s mark; the degree of similarity between the Plaintiff’s and Defendant’s marks; the proximity of the products or services in the marketplace; evidence of actual confusion; the Defendant’s good faith in adopting its own mark; the quality of the defendant’s product; and the sophistication of the relevant population of consumers.
Regarding each factor, the court found that:
1) Tiffany’s mark is strong, as backed up by expert testimony and case law;
2) “Tiffany has provided proof of its ownership of the “Tiffany” word mark (see id., Exs. 4-6), which is identical to the word as Costco has utilized it in display case signs” regarding similarity;
3) the products are in competition with each other and therefore proximate;
4) surveys created by Tiffany’s expert showed evidence of actual confusion to the customers;
5) Costco did not act in good faith as evidenced by emails that “indicate(s) that Costco intended to deceive consumers with regard to the source of its jewelry;”
6) “Tiffany’s reputation could be compromised by Costco’s sale of inferior rings under the Tiffany mark;” and
7) The survey conducted by Tiffany’s expert showed that the relevant population of consumers “were in fact confused by Costco’s signage.”
The court also addresses and dismisses Costco’s genericism counterclaim that the word “Tiffany” is a descriptor and is generic. The court says that “to be deemed generic, the principal significance of the word must be its indication of the nature or class of an article, rather than an indication of its origin,” and accepts Tiffany’s evidence from an expert’s survey that concluded that “the term Tiffany is understood and used by the relevant consuming public not as a descriptive or generic term, but as a brand or source identifier.”
From a common sense perspective, the court’s conclusions make sense. Thinking back to our scenario at the beginning, it would be likely that the couple would think that the ring purchased was a Tiffany brand ring, since the display said Tiffany and was similar to how other brand name products are sold at Costco. (“Here, Tiffany has proffered photographs of displays from Costco tending to demonstrate that the word“Tiffany” was displayed on signs next to rings in a manner similar to the way that Costco would display the manufacturer or source of other types of goods, i.e., a Sony television or a Nikon camera.”) However, a couple of factors on Costco’s part made the case an easy win for Tiffany’s which makes me wonder how the case would have turned out had these specific facts not occurred.
It is important to note that the court also found Costco liable for counterfeiting under the Lanham Act. A lot of the evidence for this claim was also used to back up the lack of “good faith” prong from the Polaroid factors for consumer confusion which was shown in the form of emails and photographs “which tend to demonstrate Costco’s efforts to copy Tiffany designs.” But putting counterfeiting and bad faith aside, the case mostly turned on the inability of Costco to show evidence to counter Tiffany’s evidence. For several of the Polaroid factors where Tiffany’s uses expert surveys and testimony to show evidence, the court finds that Costco’s experts just criticize Tiffany’s evidence but do “not provide any evidence that contravenes” Tiffany’s evidence. Therefore, the court rules for Tiffany’s on all of the factors and the genericism claim.
The unanswered question in the case is, what if Costco had provided this evidence (putting aside the counterfeiting and bad faith factors)? Regarding the genericism claim, the court points out that Costco could have done more:
Costco offers no legal authority for the proposition that “Tiffany” can exist in these dual capacities — both a registered mark and a generic word. The Second Circuit has recognized a “dual usage” doctrine in trademark law, wherein a mark may begin as a proprietary word and gradually become generic as to some segments of the public. See, e.g., Harley Davidson, Inc. v. Grottanelli, 164 F.3d 806, 812 (2d Cir. 1999). However, Costco does not address this line of authority, nor does it make any relevant underlying factual demonstration, and the Court declines to explore this argument sua sponte.
Since Costco did not address this issue, and did not provide evidence to show whether the “primary significance of the Tiffany mark to the relevant public is as a generic descriptor or a brand identifier”, it lost the case. Because it was a summary judgement case, it all turned on whether there were material issues of fact.
My issue with this case, although I agree with the outcome because of the lack of “good faith” factor and the counterfeiting, is the disconnect between the law and the ordinary usage of terms in the English language. Costco provides expert testimony saying that the word Tiffany is commonly used as a descriptor: “In the declaration of Donald A. Palmieri proffered by Costco, Palmieri states that “Tiffany is the only single word in the English language that uniquely and unambiguously denotes the general configuration of the [particular] pronged setting of…diamond ring at issue.” The Lanham Act states, “A registered mark shall not be deemed to be the generic name of goods or services solely because such mark is also used as a name of or to identify a unique product or service.” In my mind, that means that when I ask someone for a Kleenex, and I mean a tissue and not that particular brand, I will be fine with whatever brand I get. Yet Kleenex is still not generic. The difference between “Kleenex” and a “Tiffany setting” is that if you would like to not use the word “Kleenex” to ask for a tissue, the you can ask for a “tissue.” However, if the young woman from our scenario is asking for a “Tiffany setting” ring because she likes that setting but does not want it to be from Tiffany’s, she has no other word to describe it. It seems to me that if there are no other words to describe this setting, and had Costco shown more evidence that people commonly use it, then there would be a material issue of fact and the case could have turned out differently.
Laura Arango is a J.D. candidate, 2018, at NYU School of Law.
