At the close of each year, IPWatchdog engages a panel of industry experts to identify the biggest moments in intellectual property, along with topics to watch over the next twelve months. This year, Dyan Finguerra-DuCharme, a partner in Pryor Cashman's Intellectual Property Group and a recognized authority on trademark law, was asked to opine on the most significant IP cases to be decided in 2018.
Tiffany & Co. v. Costco Wholesale Corp.
"In September 2017, following a jury trial on damages, U.S. District Judge Laura Taylor Swain of the Southern District of New York ruled that Tiffany and Company is entitled to $11.1 million in trebled profits, plus interest, in addition to $8.25 million in punitive damages," Finguerra-DuCharme told IPW. "Overall, Costco owes the luxury jewelry retailer more than $19.3 million for its use of the TIFFANY mark in connection with the sale and promotion of generic diamond engagement rings."
"At trial," she explained, "Costco argued that the three-pronged setting used in the rings is commonly known as the 'Tiffany setting,' and that it used the verbiage in a generic manner and was not holding the rings out as authentic TIFFANY items." She added, "Costco further argued that the rings were not stamped or marked with the TIFFANY mark, nor sold in the distinctive blue box or bag. The judge rejected these arguments and determined that the wholesale giant was willfully selling 'counterfeit' rings, subjecting it to enhanced liability."
Finguerra-DuCharme predicted that "Costco's appeal to the Second Circuit will be closely watched by trademark practitioners for several reasons. First, the ruling is important for the case law on genericness, a legal principle that has been the death knell of trademarks like kerosene, linoleum and yo-yo and is an ongoing battle for brands like Kleenex, Band-Aid and Xerox. Having the Second Circuit set forth the level of proof required for genericness, and whether a famous mark can become generic for just one aspect of its goods, will be instructive."
"Second," she opined, "the case sets parameters for what constitutes a counterfeit product. Do the goods have to be an exact replica, including all markings, or is it sufficient for the mark to be used in connection with products that contain the dominant feature of the senior user's goods (here, the three-pronged setting)?"
Finguerra-DuCharme emphasized that, "with such weighty questions at stake, it is difficult to predict whether the Second Circuit will uphold the lower court's finding that the goods are counterfeit."
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