Costco Thinks "Tiffany" Is A Style, Not A Brand — Courts Disagree

For years, Costco has been winning over the hearts of frugal lovebirds by selling "Tiffany engagement rings." There was just one problem: The jewelry wasn't coming from the famous luxury retailer.

Now, the popular wholesaler has to pay.

A federal judge ruled that Costco Wholesale Corp owes Tiffany & Co $19.4 million in damages over selling diamond engagement rings under the Tiffany name, Reuters reports.

Though only 2,500 rings were sold — a number that wouldn't garner $19.4 million in sales, even at Tiffany's prices — the jeweler was awarded $8.25 million in punitive damages last October, and U.S. District Judge Laura Taylor Swain ruled Monday that Tiffany & Co also deserved $11.1 million plus interest to cover lost business — triple the lost profit.

According to Reuters, Costco defended its use of the term "Tiffany" to sell its own jewelry by arguing that "Tiffany" had developed as a standalone term with connotations beyond Tiffany & Co. That's a pretty bold argument, considering Tiffany & Co's cultural icon status has been cemented through millions of blue boxes and Audrey Hepburn's on-screen window gazing in Breakfast at Tiffany's.

U.S. District Judge Laura Taylor Swain agreed, taking particular issue with Costco's flagrant use of the term "Tiffany" in marketing. Costco employees "described such rings as 'Tiffany' rings in response to customer inquiries, and were not perturbed when customers who then realized that the rings were not actually manufactured by Tiffany expressed anger or upset," Swain wrote.

Besides owing Tiffany & Co a significant amount of money, Costco Wholesale Corp. is also forbidden from marking any jewelry not made by Tiffany & Co as "Tiffany" products. However, Costco is allowed to describe its own jewelry as "Tiffany style" or as having a "Tiffany setting."

According to MarketWatch, Costco plans to appeal the ruling on the grounds that it "is a product of multiple errors in pretrial, trial, and post-trial rulings." However, we have a feeling that Tiffany & Co. is committed to winning this fight. In a fitting move for a company famous for selling engagement rings, the label filed its suit against Costco on Valentine's Day. Now that's what we call a power move.