In 2013 U.S. District Judge Swain, when ruling on Tiffany’s Motion for Summary Judgment, held: “The question of whether a mark is, or has become, generic is generally one of fact,” citing Bristol-Myers Squibb Co. v. McNeil-P.P.C. Inc., 973 F.2d 1033, 1039 (2d Cir. 1992) Tiffany & Co. v. Costco Wholesale Corp., Civil Action No. 1:13-cv-01041. Moreover, she set forth the always entertaining list of marks that have become generic:

“Notable examples [of trademarks that have been genericized] include ‘aspirin’ for 8 acetyl salicylic acid, ‘cellophane’ for transparent cellulose sheets and films, ‘escalator’ for a moving stairway, [and] ‘Murphy Bed’ for a bed that folds into a closet . . . .” Horizon Mills Corp., 161 F. Supp. at 214 (collecting cases). In King-Seeley Thermos Co. v. Aladdin Industries, Inc., the Second Circuit found that the terms “thermos bottle” and “vacuum bottle” had become virtually synonymous and, that because “Thermos” had been genericized, King-Seeley Thermos Company had lost its trademark protection against certain uses of the term. King-Seeley Thermos Co. v. Aladdin Industries, Inc., 321 F.2d 577, 580-81 (2d Cir. 1963) (“[s]ince in this case, the primary significance to the public of the word ‘thermos’ is its indication of the nature and class of an article rather than as an indication of its source, whatever duality of meaning of word still holds for a minority of the public is of little consequence except as a consideration in the framing of a decree”). Similarly, in Pilates Inc. v. Current Concepts, Inc., 120 F. Supp. 2d 286, 306 (S.D.N.Y. 2000), the court held that despite the plaintiff’s “efforts to police its marks and promote the Pilates method,” the mark had become generic, at least as it related to service and equipment marks, and thus, the trademark holder could not foreclose others from using the term “Pilates” to describe their services.

Unknown at the time, this case was going to become a “poster child” for perhaps being careful about what you wish for, as sometimes Judges “buy into” more outlandish arguments and requests for relief. On September 8, 2015, she not only decided the “fact question” herself (judges typically determine issues of law, while the juries determine issues of fact) and ruled the TIFFANY mark not generic (in fact barely dealing with the topic in her opinion and never again mentioning the previously relied on Bristol-Myers Squibb Co. v. McNeil-P.P.C. Inc. decision)(although contradictorily suggesting in her choice of words quoted below that TIFFANY is generic for a cut of diamond), she found as a matter of law that Costco was a Counterfeiter and potentially subject to punitive damages – WOW!!!! and for my trademark colleagues “we better rethink some of the advice we’ve been doling out.”

The Opinion is so startling that it speaks for itself.

Counterfeiting

The Court finds that, as a matter of law, Tiffany has established trademark counterfeiting on the part of Costco. The Court has already concluded that Tiffany has established actual confusion and that Coscto has utilized a word mark identical to the one that Tiffany has registered. Furthermore, the Court has found that Costco was not acting in good faith when it adopted the Tiffany mark, which in turn establishes Costco’s intent to confuse customers as to the source of its rings. Thus, Costco’s use of the Tiffany mark may be considered “spurious” as a matter of law. The fact that the rings were stamped with generic marks is not dispositive of this issue. (emphasis added) There is no statutory requirement that the counterfeit mark be placed on the product itself. See 15 U.S.C. § 1127; see also Shell Co., Ltd. v. Los Frailes Service Station, Inc., 596 F. Supp. 2d 193 (D.P.R. 2008) (finding defendant liable for counterfeiting by sale of gasoline that was sold alongside signs advertising Shell brand gasoline).

Costco has offered no evidence that the stamping of these rings with generic marks has done anything to alleviate confusion; rather, at least six customers who purchased these “generically” stamped rings were confused as to their source. (emphasis added) Thus, Mr. Palmieri’s “stamping” argument is unavailing. The evidence proffered by Tiffany thus shows conclusively that Costco used “in commerce [an identical] counterfeit of a registered mark in connection with the sale, offering for sale or advertising” of its rings and that such use was “spurious” and “likely to cause confusion, or to cause mistake, or to deceive.” Costco has failed to raise any issues of material fact with respect to these conclusions. The Court therefore grants Tiffany’s motion for summary judgment insofar as it seeks a finding of liability with respect to Costco’s trademark counterfeiting.

Punitive Damages

New York state law sets an exceptionally high bar for awarding punitive damages, permitting them only when “the defendant’s wrongdoing is not simply intentional but evince[s] a high degree of moral turpitude and demonstrate[s] such wanton dishonesty as to imply a criminal indifference to civil obligations.” Ross v. Louise Wise Servs. Inc., 868 N.E.2d 189, 196 (2007) (internal quotation marks and citation omitted). Accordingly, courts in this jurisdiction have recognized that “[u]nder New York unfair competition law, punitive damages are available where a defendant’s conduct has constituted gross, wanton or willful fraud or other morally culpable conduct to an extreme degree.” Altadis U.S.A., Inc. v. Monte Cristi de Tabacos, c.x.a., No. 96CV4209-BSJ, 2001 U.S. Dist. LEXIS 6892 (S.D.N.Y. May 17, 2001).The Court finds that Tiffany has proffered evidence upon which the finder of fact could conclude that Costco’s behavior has satisfied the “gross, wanton or willful” standard. This includes the emails sent from Costco jewelry buyers asking vendors to copy Tiffany designs, as well as testimony indicating that Costco employees were aware of customer confusion but did nothing to remedy it. . . .In light of this, the Court denies Costco’s motion insofar as it seeks dismissal of Tiffany’s punitive damages claim with respect to any alleged state law violations.

This decision is interesting and remarkable for so many different reasons. First, it involves our favorite “big box” store and brings into question whether Costco is in fact the benign entity it has portrayed itself as. Second, reading the decision, it is startling how dramatically Judge Swain’s approach changed from her 2013 Opinion. Third, it is remarkable how oddly the central “genericness” issue is dealt with; how a mark can seemingly be generic at least in some categories, yet at the same time “counterfeited” and used in “gross, wanton or willful fraud” – that really requires a look at the actual underlying evidence to understand. Fourth, I’ve always believed, and continue to believe, that you are free to “fairly” copy any competitor’s product providing patent, copyright and/or trademark rights aren’t infringed. See as part of Tiffany’s hypocrisy parade: http://www.sublackwell.co.uk/2010/12/21/after-writing-a-letter-of-appeal-to-the-visual-merchandiser-at-tiffany-and-co-i-have-since-been-requested-to-remove-their-images-from-my-blog/ Fifth, counterfeiting is a “high bar” standard – to find it as a matter of law, under these facts, remarkable. Sixth, and as stated, “gross, wanton or willful fraud or other morally culpable conduct to an extreme degree” is a “high bar” standard – to find it as a matter of law under these facts, remarkable. Can you say “appeal?” Finally, TIFFANY may be the best example of a trademark that dances dangerously close to the “genericness” cliff without going completely over – put another way, Tiffany the best trademark “policer” that I’m aware of. Interestingly, because certain claims remain subject to trial, Costco will have this hanging over its head unless it can persuade the Second Circuit to take these findings up on appeal in the interim, or likely be forced to settle in the meantime. Let’s keep an eye on this one. [contact-form][contact-field label=’Name’ type=’name’ required=’1’/][contact-field label=’Email’ type=’email’ required=’1’/][contact-field label=’Phone’ type=’text’/][contact-field label=’Website’ type=’url’/][contact-field label=’Comment’ type=’textarea’ required=’1’/][/contact-form]