Costco Tiffany trade mark infringement

Further details have emerged this week regarding the multi-million pound lawsuit between US wholesaler Costco and luxury jewellery retailer Tiffany & Co. (Tiffany).

Tiffany sued Costco in 2013 for trade mark infringement. Costco had been selling solitaire style diamond rings displayed with reference 'Tiffany' labelling. Tiffany argued that the labelling was misleading to customers while Costco argued that it was not and in any event 'Tiffany' had become a generic term for rings. According to the Washington Post, Costco sold approximately 2,500 'Tiffany' rings . Following the ruling of a U.S District Judge earlier this week, Costco is facing a damages pay-out of over $19 million! That figure comprises $11 million in compensatory damages and $8.25 million in punitive damages.

An interesting aspect of the case is the award of punitive damages, a way of punishing a Defendant for their behaviour and deterring other from doing the same, which is separate from and additional to compensatory damages.

Typically in intellectual property claims, certainly in the UK, damages are calculated to put the claimant in the position they would have been in but for the infringement. In the UK, there is usually a split trial; the first part will be to establish liability, then what is effectively a second trial will proceed to establish the level of damages flowing from that liability (if the parties cannot agree a figure). The damages will either be calculated to equate to an account of the profits an infringer has made through infringing activities or, if it can be shown that a claimant would have made sales but for a defendant's infringement, damages to the level of those sales. Either way, the damages are in effect compensatory; they compensate the claimant for the impact of the defendant's infringement.

If you have any questions on the above, please do not hesitate to contact the team at McDaniel & co. on 0191 281 4000 or legal@mcdanielslaw.com.