A federal appeals court on Monday overturned a $21 million judgment awarded to Tiffany & Co against Costco Wholesale for violating the Lanham Act.
The original trademark infringement suit alleged that Costco infringed on the Tiffany name by selling diamond engagement rings branded as “Tiffany.” Costco argued that it was using the word “Tiffany” to refer to a particular style of diamond rings. Thus, Costco concluded that the use of the “Tiffany” name would not confuse consumers and was not infringing upon the Tiffany trademark. However, the district court did not agree and granted Tiffany summary judgment, stating that “Costco had failed to raise a genuine issue of material fact as to nay of the factor relevant to the infringement analysis, that Costco’s far use defense failed as a matter of law, and that Costco’s infringement constituted counterfeiting as a matter of law.”
In the appeal, Costco argued that the district court’s summary judgment determination was inappropriate. The appeals court agreed and vacated the judgment. The court found that the survey evidence Tiffany provided to show customer confusion was not truly representative of the relevant purchasing public. Thus, the study was fatally flawed and “sufficient to raise a question as to whether potential buyers of Costco’s diamond engagement rings were actually confused by the appearance of the word ‘Tiffany’ on Costco’s signs.” As a result, Tiffany did not provide sufficient evidence to satisfy its burden of proof. In addition, the court concluded that Costco did not act in bad faith by using the “Tiffany” name on its signs. More specifically, “Costco’s admitted intent to sell jewelry that looks like Tiffany’s—as opposed to an intent to have its jewelry pass as Tiffany’s—cannot be enough to justify a finding that Costco acted in bad faith in connection with Tiffany’s trademark infringement claim.”
This case has been remanded and will go back to the district court for another trial.