Tiffany v. Costco
971 F.3d 74
2d Cir.2020Background
- Tiffany & Co. owns registered trademarks for the name TIFFANY and has long marketed a six‑prong engagement‑ring design known in the trade as the “Tiffany” setting.
- Costco sold unbranded diamond engagement rings (made for Costco by R.B. Diamond) and used uniform point‑of‑sale signs that sometimes read “Tiffany,” “Tiffany setting,” or “Tiffany style” to identify that pronged‑setting type.
- Tiffany sued Costco under the Lanham Act and New York law after investigators found rings labeled “Tiffany” in Costco cases; the district court granted Tiffany summary judgment on infringement and counterfeiting, found willfulness, and after trial awarded trebled profits, prejudgment interest, and punitive damages (~$21M total).
- Costco argued on appeal that “Tiffany” is also a widely used descriptive term for a particular ring setting and asserted a Lanham Act fair‑use defense; it contested actual confusion, bad faith, and consumer sophistication findings.
- The Second Circuit vacated the district court’s grant of summary judgment, holding that disputed material facts exist on likelihood of confusion and on Costco’s fair‑use (including good faith and descriptive use) defenses, and remanded for trial; counterfeiting could not be resolved as a matter of law on this record.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Likelihood of consumer confusion under Polaroid | Tiffany: identical use of its mark on Costco signs produced likely confusion as matter of law | Costco: context, price, packaging, and longstanding descriptive use of “Tiffany” create triable issues about confusion | Reversed summary judgment: triable issues exist; case remanded for trial |
| Fair‑use defense (§1115(b)(4)) — used "as a mark", descriptively, in good faith | Tiffany: Costco used identical mark as source identifier, so fair use fails | Costco: used “Tiffany” descriptively for a setting, not as a mark, and acted in good faith | Reversed summary judgment on fair use; Costco may present defense at trial |
| Counterfeiting (whether identical use is per se counterfeit) | Tiffany: identical use + intent to confuse makes use counterfeit as matter of law | Costco: identical term can be used descriptively; if not used as a mark it cannot be a "spurious" counterfeit | Vacated; counterfeiting cannot be resolved as matter of law here and depends on factual issues (including fair use) |
| Punitive damages under New York law | Tiffany: court below awarded punitive damages | Costco: challenges liability and entitlement | Not reached on appeal because liability vacated; remanded for trial |
Key Cases Cited
- Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492 (2d Cir. 1961) (sets out the multi‑factor likelihood‑of‑confusion test)
- KP Permanent Make‑Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111 (U.S. 2004) (fair use may prevail even if some confusion exists)
- JA Apparel Corp. v. Abboud, 568 F.3d 390 (2d Cir. 2009) (elements of descriptive fair‑use defense explained)
- Star Indus., Inc. v. Bacardi & Co. Ltd., 412 F.3d 373 (2d Cir. 2005) (likelihood‑of‑confusion standard and purchaser care considerations)
- Car‑Freshner Corp. v. S.C. Johnson & Son, Inc., 70 F.3d 267 (2d Cir. 1995) (descriptive use and non‑trademark use of features)
- Nora Beverages, Inc. v. Perrier Grp. of Am., Inc., 269 F.3d 114 (2d Cir. 2001) (distinguishes intent to copy product features from intent to deceive as to source)
- Patsy’s Brand, Inc. v. I.O.B. Realty, Inc., 317 F.3d 209 (2d Cir. 2003) (summary judgment limits in trademark cases)