Tiffany Diamonds vs Costco: Tiffany SPANKS Costco in Landmark Lawsuit for trademark infringement & more

Tiffany & Co., presented COSTCO with a very special Valentines Day gift in 2013, they filed a lawsuit against them for trademark infringement and selling what Tiffany claimed to be counterfeit Tiffany diamond engagement rings. “Happy Valentines Day” sealed with a kiss and all of that! Long story short, the U.S. District Court for the Southern District of New York granted Tiffany & Co.’s motion for summary judgement in its entirety against Costco Wholesale Corporation on September 08, 2015. Costco has been found guilty of Trademark Infringement and Selling Counterfeit Tiffany rings! $$$ OUCH $$$ Something tells me that the CEO of Costco is feeling Comfortably Numb*

“Relax, I’ll need some information first. Just the basic facts”

Tiffany and Co., sues Costco on Valentines Day 2013 for trademark infringement and selling counterfeit Tiffany ringsApparently Costco had been selling diamond engagement rings that bore the mark of “Tiffany” and which were labeled and marketed as Tiffany diamond engagement rings, instead of the more generic reference to a “Tiffany style engagement ring” which is generally understood throughout the industry to refer to any four or six prong solitaire style engagement ring.

The Court denied Costco’s claim that “Tiffany” is a generic term for a pronged ring and found that Costco was liable for trademark infringement and trademark counterfeiting in its use of “Tiffany” on jewelry cases signage at Costco to describe jewelry that were not actually Tiffany & Co., brand merchandise.

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“We are gratified that the Court found that Costco’s use of the TIFFANY trademark infringed on our rights” said Leigh Harlan, Tiffany & Co. Senior Vice President, Secretary and General Counsel. In rendering its decision, the Court concluded that “Tiffany had proffered uncontroverted evidence demonstrating the strength of its mark.” Ms. Harlan added, “We believe this decision further validates the strength and value of the Tiffany mark and reinforces our continuing efforts to protect the brand.” [Source: Tiffany Press]

“Can you show me where it hurts?”

Tiffany Co., solitaire style engagement ring. Tiffany triumphs in lawsuit against Costco for trademark infringementAll right. So am I to understand that thousands of people purchased “Tiffany diamond engagement rings” from Costco, actually thinking that they were buying a Tiffany & Co., diamond engagement ring at a wholesale discount? Seriously?!?! I’m just curious, but were those rings accompanied by the infamous Tiffany & Co., baby blue box? Stamped on the inside of the ring shank with the Tiffany & Co., trademark? This part of the complaint is unclear to me, but perhaps you purchased what you believed to be a genuine Tiffany & Co., diamond engagement ring from Costco and can tell me whether the inside of the ring shank bears the Tiffany & Co., trademark or whether it says something else. The complaint initially filed by Tiffany & Co., complaint that the engagement rings being sold in Costco’s stores were labeled as Tiffany when the rings are not actually Tiffany rings. One of the key mistakes that Costco seems to have made is that they labeled the item as a “Tiffany” ring on the sales receipts issued to customers. Doh!

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But perhaps this is what happens when a company like Costco Wholesale enters the jewelry market, possibly lacking the wherewithal to understand the subtle intricacies of the industry jargon used by the diamond trade.

Tiffany style settings from Stuller, screenshot September 10, 2015I personally agree with Costco’s argument that the word “Tiffany” has become is used colloquially throughout the industry to refer to a standard four or six prong solitaire style setting, these are the search results from Stuller which is one of the largest suppliers of jewelry findings to the trade. While the original style of the Tiffany knife edge style solitaire engagement ring might have been introduced by Charles Lewis Tiffany in the late 1890’s the fact of the matter is that according to Costco’s legal defense, Tiffany & Co., did not file a claim to the use of “Tiffany setting” as a trademark until April of 2013.

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The original Tiffany knife edge solitaire engagement ring designed by Charles Lewis TiffanyPictured to the left is a sketch provided by Tiffany & Co., of the Tiffany knife edge solitaire diamond engagement ring that was designed by Charles Lewis Tiffany.

Arguably the terms “Tiffany setting” and “Tiffany style setting” have been used throughout the jewelry industry to refer to numerous variations of solitaire style engagement rings that feature a thin ring shank and a four or six prong head configuration.

And it seems that even Tiffany & Co., recognizes and accepts the industry’s wide spread use of the term “Tiffany” to refer to a specific style of setting since Tiffany stated that it was not complaining about the phrase “Tiffany Setting” in the complaint, but rather the fact that Costco was selling rings that were labeled as Tiffany when the rings were not actually Tiffany rings.

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The Tarnished Reputation of Tiffany & Co:

At the end of the day, I personally do not feel that this was a simple matter of Costco selling rings that were labeled as Tiffany rings, but rather the potential for the reputation of a high end retailer like Tiffany & Company to be tarnished by the very idea that Tiffany merchandise is being sold at a discount in a wholesale warehouse setting, where household products like toilet paper and toothpaste are sold in bulk. Somehow I don’t picture Tiffany & Co., naming their next collection “Warehouse Chic” but stranger things have happened [tongue in cheek].

Under the ruling handed down by U.S. District Judge Laura Taylor Swain in Manhattan, Costco infringed upon Tiffany’s trademarks by selling diamond engagement rings in a manner which confused consumers due to the use of the word Tiffany in signs exhibited in the display cases.

Apparently Costco sent letters out to customers who had purchased Tiffany engagement rings from Costco, offering accept the rings for return in exchange for a refund. One has to wonder whether customers of Costco who mistakenly purchased what they deemed to be an authentic Tiffany & Co., diamond engagement ring might be liable for the difference between the price that they paid for the ring at Costco and the price that a ring of the same carat weight, color, and clarity would actually sell for in a Tiffany & Co., jewelry store.

Under the ruling, Tiffany may now take Costco before a jury to seek damages, including a recovery of Costco’s profits from the sale of the diamond rings and punitive damages. Judge Swain set a hearing for October 30th of this year, and instructed Costco and Tiffany & Co., to “make good faith efforts to settle the outstanding issues.”

Are Tiffany Diamonds Better than Costco Diamonds?

Naturally this sort of thing might cause people to wonder whether the diamonds offered by Tiffany & Co., are actually any better than the diamonds sold by Costco, and believe it or not this is the type of thing that people ask me all the time… Perhaps now I know the reason why. Ultimately I think that it comes down to the specific characteristics of the diamonds that are being compared, such as the overall cut grade which Tiffany claims is Excellent (they grade their diamonds internally) and the combination of proportions and degree of optical precision.

If you happen to be comparing a genuine Tiffany & Co., diamond with one from Costco that has the same measurements, the same proportions, and those proportions fall within my preferred range of selection criteria, including an overall cut grade of either GIA Excellent or AGS Ideal-0 cut, then arguably it might be difficult to ascertain that the Tiffany diamond is any better than the Costco diamond but there is also something to be said for reputation and the value of a brand. And I must say that I haven’t been impressed by the diamonds I’ve seen at Costco, but this might be because I’ve yet to find one that meets my selection criteria.

However I suppose that even if the diamonds sold by Costco were of comparable quality to a Tiffany diamond, there is the matter of the ring not being presented in the infamous baby blue box… but maybe you can buy a bulk pack of fifty of those in the office supplies aisle at Costco! That’s where I usually buy my packing supplies…

Picturing the CEO of Costco on Judgement Day:

Can you stand up?
I do believe it’s working, good
That’ll keep you going through the show
Come on, it’s time to go.

There is no pain you are receding
A distant ship smoke on the horizon
You are only coming through in waves
Your lips move but I can’t hear what you’re saying
When I was a child
I caught a fleeting glimpse
Out of the corner of my eye
I turned to look but it was gone
I cannot put my finger on it now
The child is grown
The dream is gone
I have become comfortably numb*

Speaking of “Comfortably Numb” how about those prices?

It’s no secret that the last time I secret shopped Tiffany & Co., in Menlo Park, California that things didn’t go so well… I just can’t seem to wrap my brain around the mark-up commanded by their name and reputation. Maybe I’ve just been in the diamond business too long, the mythical illusion that seems to go with most brand name diamonds and jewelry is lost on me. Or perhaps it is because I was raised in Silicon Valley with think tank engineers for a father and step-father, I’m more apt to look at the specifications of a diamond and compare one sparkly commodity to another and decide which one makes the most sense on paper, brand name be damned!

Brian Gavin classic solitaire style engagement ringI’m the kind of guy who is going to be more impressed by the volume of light return and sparkle factor that a diamond exhibits, than the name engraved on the inside of the ring, or which adorns the box, regardless of what color that box happens to be… But that’s just me, this blog reflects my preferences and shopping habits, so don’t get your nose out of joint if you’re a die hard fan of Tiffany & Co., if that’s what you want to spend your money on, knock yourself out, go crazy! I just can’t do it. I can’t do it because when I helped a client recently buy a diamond from Tiffany, we rejected 30 of the options presented before finding one that met my selection criteria for proportions. I can’t do it because all of their diamonds are sold mounted, and they don’t provide the reflector scope images necessary to judge the degree of optical precision that the diamonds are cut to, and the simple reality is that buying a diamond by the numbers is just not good enough for me… but maybe it’s good enough for you.

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It goes without saying that as a professional diamond buyer with 30 years of experience, I approach buying a diamond from a different perspective than the average consumer. I look beyond the basics of diamond grading presented by the 4C’s and take the geometry of the diamond into account, I need to know the proportions of the diamond, I need to be able to judge the three dimensional precision that the facets were polished on to the surface of the diamond, I need the reflector scope images, I want to see how the diamond faces-up when viewed through an ASET Scope, an Ideal Scope, and a Hearts & Arrows scope. The fact of the matter is that I don’t know how to buy a diamond any other way…

If by chance the way that I approach buying a diamond makes sense to you, then I invite you to take advantage of my free Diamond Concierge Service. Birds of a Feather Flock Together as they say… but if you’re more comfortable buying a diamond ring from Tiffany & Co., or even Costco, then feel free to do that. And I’m more than happy to look over whatever technical details you can acquire in hopes of helping you make an informed decision.

* Comfortably Numb, reference to the song by Pink Floyd, with the first two headings being lines from the song…

Images of the Tiffany blue box, Tiffany diamond engagement ring, and sketch of the Tiffany solitaire style engagement ring are courtesy of Tiffany & Co.

Todd Gray
Todd Gray is a professional diamond buyer with 30+ years of trade experience. He loves to teach people how to buy diamonds that exhibit incredible light performance! In addition to writing for Nice Ice, Todd "ghost writes" blogs and educational content for other diamond sites. When Todd isn't chained to a desk, or consulting for the trade, he enjoys Freediving! (that's like scuba diving, but without air tanks)
Todd Gray

@NiceIceDiamonds

Professional diamond buyer with 30+ years trade experience in the niche of super ideal cut diamonds. In my free time, I enjoy freediving & photography.
The incredible #story behind the Sirisha diamond necklace by @BrianGavin 71 #Diamonds cut to order #Amazinghttps://t.co/dHOo1T99xT - 2 years ago

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