Tiffany initially sued Costco in 2013 for trademark infringement. Costco got in trouble for selling rings described as “Tiffany” rings. Costco argued that using a common name such as “Tiffany” did not constitute trademark infringement as it just described a type of ring setting. The Court did not agree, granting damages in the amount of $5.5 million to Tiffany & Co.
As Tiffany is aware, policing your trademark is quite important. Simply allowing others to use your make may result in dilution, and ultimately, your mark may become generic. Names such as “dry Ice,” “laundromat,” and “thermos” were previously federally trademarked but have all become generic, mainly due to the public’s use of such terms and the inability of the owners of the respective marks to properly enforce their rights.
A lot of the policing trademarks can be accomplished by simply educating the public. Xerox is a good example of a company that is trying its hardest to ensure that its mark does not become generic. They have put out ads that say, “If you use “Xerox” that way you use “zipper,” our trademark could be left wide open.” Xerox understood the value of a federally registered trademark and they recognized the danger of losing the mark resulting from the public’s use of the word “xerox.”
A federal judge ruled in Tiffany’s favor in 2015 by granting a motion for summary judgment filed by Tiffany, and Costco was ordered to pay $21 million in damages. Costco appealed the ruling last year, and the appellate court overturned the lower court’s ruling regarding the summary judgment. The case was sent back to the district court, where Tiffany and Costco continued fighting.
However, at long last, the parties have settled the matter and agreed to dismiss the case, with the terms of the settlement being confidential. It was an interesting case that would have provided some case law that could be beneficial to trademark attorneys and companies when using names for advertising such as this. It would have been especially interesting to see how much weight the court would give to a customer’s belief of the origin of the goods, meaning how impactful is it that an average Costco customer would not reasonably believe this was a Tiffany ring, although “Tiffany setting” was used in the advertising. We will not get that answer in this case.
When you find someone else using your mark, the first step is typically to send a demand letter explaining the infringement. Hopefully, they will cooperate and stop using the mark. Unfortunately, that is typically not the case. Should they continue using the mark, then you must decide how to proceed. Will not filing a lawsuit be deemed you not enforcing your legal rights? Could this result in loss of trademark rights in the future? And as always for any lawsuit, a cost-benefit analysis needs to be performed. All of these items must be analyzed when someone is infringing your mark before determining how to proceed.
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