Costco Owes Tiffany $19M for Selling Fake Rings, Judge Rules

Costco owes Tiffany more than $19 million for fake rings it reportedly sold under the name of the famed jeweler, a federal judge ruled on Monday.

U.S. District Judge Laura Taylor Swain said Costco must pay Tiffany $11.1 million in profits plus interest, in addition to $8.25 million previously ordered in punitive damages for selling imitation Tiffany rings to customers, Fortune magazine reported.

CNN Money reported the judge initially granted summary judgment to Tiffany in 2015, saying that Costco was liable for trademark infringement and trademark counterfeiting.

Tiffany & Co. had originally sued Costco in 2013 for selling 2,500 counterfeit rings and appropriating its trademark without permission, Fortune said. Costco countered by charging that "Tiffany" was a generic term referring to the ring setting made famous by the company.

Swain said, though, that Costco's defense was "not credible" because the displays of fine jewelry were a key part of the company's marketing strategy, Reuters reported.

"(Salespeople) described such rings as 'Tiffany' rings in response to customer inquiries, and were not perturbed when customers who then realized that the rings were not actually manufactured by Tiffany expressed anger or upset," Swain said in her ruling.

Swain added that she found Costco's leadership "displayed at best a cavalier attitude toward Costco's use of the Tiffany name in conjunction with ring sales and marketing," per Reuters.

Leigh Harlan, Tiffany's general counsel, said Swain's ruling "sends a clear and powerful message" to other companies attempting to infringe on the jewelers trademark.

"We brought this case because we felt a responsibility to protect the value of our customers' purchases and to ensure that Costco's customers were not misled," Harlan said.

Costco said in statement that it plans on appealing the judgment, CNN Money said.

"This was not a case about counterfeiting in the common understanding of that word," Costco stated, per CNN. "Costco was not selling imitation Tiffany & Co. rings."

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