The world famous jewellery company Tiffany & Co. has received a damages award of $19.4million in a US trade mark battle with Costco Wholesale Corp (Costco) concerning ‘Tiffany’ rings. The battle began when Tiffany sued Costco on Valentine’s Day in 2013.

The case concerned only about 2,500 rings sold by Costco with the name Tiffany but the damages bill represents the court’s ability to grant punitive damages. In this case, the bill far exceeded the lost profits to Tiffany.

Costco unsuccessfully argued that Tiffany has become a generic term for the rings and was simply a reference to the fact that the ring in question had a pronged setting style that is commonly known as a Tiffany setting. Costco said it intended that ‘the word Tiffany in its sign convey only that the rings had this style of setting – not that the rings were Tiffany & Co. brand rings’.

This argument did not wash with the judge who found that Costco’s evidence was insufficient to establish that this was not an intentionally deceptive marketing ploy and the company’s management ‘displayed at best a cavalier attitude toward Costco’s use of the Tiffany name’. It is important to note that Costco used Tiffany as a stand-alone name and did use other wording, such as ‘setting’ or ‘set’ to indicate that this was not trade mark use.

Tiffany has welcomed the decision saying it sends a ‘clear and powerful message’ and no doubt other brand owners will agree. The punitive damages award should deter other would-be infringers and highlight the financial risk they run. Costco has labelled the decision ‘a product of multiple errors’ and has said it intends to appeal.