Tiffany & Co. just won a $19.4 million lawsuit against Costco – but the real value is in brand protection
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Tiffany & Co. just won a $19.4 million lawsuit against Costco – but the real value is in brand protection

Tiffany & Co. has been in a legal battle with the world’s second largest retailer, Costco, since Valentine’s Day 2013. The jeweler’s complaint was pretty clear to understand: Costco had labeled diamond rings in its stores “Tiffany” despite there being no connection with the iconic luxury brand.

A jury sided with Tiffany’s in 2015, but Costco continued the naming practice anyway, arguing that the designation referred to “a generic style of ring” rather than the luxury house itself. Last week, a judge ruled against Costco, and ordered it to pay Tiffany’s $19.4 million in compensation. The real value for the jeweler, however, is in the protection of the mystique and exclusivity that the Tiffany & Co. name provides.

Costco is not being entirely dishonest. The Tiffany Setting, which is now widely used beyond the Tiffany brand, is a thing in itself. It was popularised by Charles Lewis Tiffany, founder of the brand that bears his name, when he bought the patent from a New York jeweler for something he called his “improvement in diamond setting”.

The problem with Costco’s use of the term Tiffany is that – despite being perhaps technically correct – it is clearly disingenuous: the company obviously wanted to create an equivocation between its own rings and the much more expensive ones sold by Tiffany & Co. Otherwise, Costco would have called its rings “Tiffany Setting Rings” rather than “Tiffany Rings”. And it is worth noting that the Tiffany setting is the default engagement ring style – it’s become truly ubiquitous.

$19.4 million, while not an unpleasant amount to receive, is not going to bolster the fortunes of the legendary American jeweler. But the real value from this ruling is worth far more: the continued protection of Tiffany’s brand exclusivity and identity.

In a luxury market swamped by lower quality, mass made products, that brand identity is worth considerably more than the diamonds Tiffany is so famous for.

Disclosure
Dominion holds Tiffany & Co. in its Global Trends Luxury Fund.

 


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