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Costco's $19M Lesson: Only Tiffany & Co. Sells 'Tiffany' Rings

By George Khoury, Esq. on August 15, 2017 5:04 PM

Everyone's favorite big box warehouse retailer, Costco, is learning a very expensive lesson in the jewelry business: There's big difference between a "Tiffany" ring, and a ring with a "Tiffany setting." The difference is so great, Costco's going to have pay Tiffany & Co. nearly $20 million.

World famous jeweler, Tiffany & Co., won their infringement case against the retailer on summary judgment by convincingly proving this point. While jewelers across the world use, and advertise certain rings as having, a "Tiffany setting," Costco advertised their rings with the world famous setting as "Tiffany" rings, rather than rings with a "Tiffany setting." When Tiffany & Co. discovered this after Valentine's Day 2013, the case against Costco was filed.

What's a "Tiffany Setting"?

Generally, when a diamond, or other stone, is "set" into a ring, jewelers will use one of two primary methods to affix the stone. One involves created a beveled edge that holds the stone in place, while the other involves a set of prongs that come up and secure the stone in place. The use of prongs to secure the stone is now known as the "Tiffany setting."

In 1886, the founder of Tiffany & Co. actually purchased the patent to the setting, which was original known as "Improvement in Diamond Setting."

One Missing Word Matters

Jewelers across the globe use the Tiffany & Co. style setting without running into problems or getting sued for trademark or patent infringement. This is due to the fact that its patent is no longer in force. Also, the phrase "Tiffany setting" is a common, descriptive phrase used across the industry, to describe the setting of a ring, rather than the manufacturer.

However, Costco claimed that the dropping of the word "setting" after the word "Tiffany" was a clerical error, and not done intentionally to mislead, or boost sales. Unfortunately, despite how believable it is that the second word was dropped accidentally, the court was not convinced that Costco was without blame. Additionally, it is rather simple to foresee consumers being confused and misled due to the dropped word.

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