trademark damages

3 Takeaways from the Tiffany Verdict Against Costco for Misuse of Marks

A court decision in a trademark case awarded substantial damages in favor of luxury jeweler Tiffany against discount wholesale warehouse marketer Costco for misuse of the TIFFANY mark on jewelry. The decision teaches several valuable lessons in trademark enforcement:

  • Generic Meaning Is Not A Free Pass To Infringement

Although it was conceded that “Tiffany Setting” is a generic term in the jewelry industry, Costco was still found to be an infringer for confusing use of the TIFFANY mark.

  • Courts Will Look At The Entire Story To Assess Bad Faith

In trademark cases, bad faith can be a major factor both in finding infringement and obtaining enhanced damages. In the Tiffany case, Tiffany used both undercover investigation and discovery to build a compelling case of bad faith – by examining the total circumstances of Costco’s marketing strategy for jewelry.

  • Look To The Full Value Of Infringements In Assessing Profits

Trademark owners generally seek the defendant’s profits as damages. Profits may include not only the immediate profits on infringing goods, but the secondary profits gained by using infringing luxury goods to draw customers into the store. In Costco’s case, the court found that the jewelry items were used as a draw to gain members, and a portion of Costco’s membership fees were also awarded as part of the damages – increasing the award by close to four times.

Fastener Case Presents Supreme Court with Opportunity to Resolve Long-Standing Trademark Remedies Issue

Obtaining full relief against infringers is an important part of any trademark enforcement effort.  In trademark cases, trademark owners generally seek the defendant’s profits from infringement.  But while it is clear that the Trademark Act provides such a remedy, courts are split about what standards to apply.  A recent Connecticut case, Romag Fasteners Inc. v. Fossil, Inc., presents the Supreme Court with an opportunity to clarify when and under what circumstances profits may be awarded.

Awarding Profits in Trademark Infringement Cases Made Easier by District Court Ruling

Recent case law has made monetary remedies easier to achieve in trademark cases – even absent a finding of willful infringement.  The recent Southern District of New York decision in Nike, Inc. v. Top Brand Co. Ltd., 2005 WL 1654859 (S.D.N.Y. 2005)  has held that the prior Second Circuit rule in trademark cases requiring a showing of willful infringement for an award of an infringer’s profit is no longer good law and has in effect been overturned by Congress. 

According to District Judge Kimba Wood’s decision, the 1999 amendments to the Lanham Act mean that willfulness is no longer a prerequisite to an award of profits.  However, willfulness remains an important equitable factor to be considered.  Procedurally, it remains unclear whether a trademark plaintiff can recover such an award on summary judgment, or whether the issue of willfulness will always necessitate a trial.