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The 2nd US Circuit Court of Appeals in Manhattan overturned a $21 million judgment in favor of Tiffany & Co's against Costco Wholesale Corp over the latter's sale of diamond engagement rings bearing the "Tiffany" name.
In a 3-0 decision, the court agreed with Costco's argument that its use of the name "Tiffany" was unlikely to confuse customers. It also ruled that Costco may describe the style of its engagement rings even if confusion were likely.
Tiffany had sued Costco for trademark infringement in 2013 after an estimated 3,349 customers bought Tiffany-set rings at Costco during Valentine's Day season that year.
Costco countered that "Tiffany" had become a generic term, and claimed it had removed the "Tiffany" signage within a week after being contacted by that company.
The $21 million awarded to Tiffany, one of the world's most famous luxury retailers, included $11.1 million for lost profit due to the alleged infringement, $8.25 million in punitive damages, and interest.
