Costco Owes $19M for Knockoff Tiffany Rings

MANHATTAN (CN) — Finding that Costco’s so-called Tiffany engagement rings infringe the trademark rights of a high-end jeweler by the same name, a federal judge ordered the warehouse club Monday to fork over $19 million.

Tying a bow around the case Monday after four years of litigation and a weeks-long trial in New York, U.S. District Judge Laura Taylor Swain endorsed the jury’s $8.25 million punitive-damages judgment and found that Tiffany’s deserves three times the $3.7 million profits that Costco by infringing Tiffany’s trademark.

“Costco has not established that any ‘extenuating circumstances’ warrant denial of a treble award,” she wrote. “Costco is a large corporation with billions of dollars in annual sales and profits.”

With 729 warehouses sprawled across 11 countries, the Issaquah, Washington-based Costco reported $118.7 billion in revenue last year.

“Its arguments draw on good faith and genericism positions that were clearly rejected by the jury, which found Costco liable for substantial punitive damages, and are also rejected by this court based on its own evaluation of the evidence,” the 17-page ruling states.

Costco has not returned a request for comment, but Tiffany’s attorney Brett Katz applauded the ruling as a happy ending to a protracted legal rumble.

“This has been a long, hard-fought battle to vindicate Tiffany’s rights,” Katz said in a statement. “We are very happy the court agreed with the jury. Judge Swain’s decision sends a powerful message to Costco and others that the Tiffany trademark is not something to be trifled with.”

Swain offered up a hypothetical rare case where treble damages would be inapt: “such as in the case of ‘an unsophisticated individual, operating on a small scale, for whom the imposition of treble damages would mean that he or she would be unable to support his or her family.’”

Though the word Tiffany also has cache as industry jargon — a “Tiffany setting” refers to a type of multipronged solitaire ring — the storied jewelry store achieved iconic status after the Truman Capote novella “Breakfast at Tiffany’s” became an Audrey Hepburn blockbuster.

Costco claimed that its branding had only industry jargon in mind, but Swain found this argument inapplicable to the Tiffany rings that Costco sold without the “settings” language.

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