A Trademark Diamond Setting in the Rough: The Risk of Trademark “Genericide”

On Valentine’s Day last year, in a very unromantic gesture, Tiffany & Co. sued Costco Wholesale Corp. for allegedly selling knock-off engagement rings under the “Tiffany” trademark in a California store. The point of sale signs in the Costco store read:

639911 – Platinum Tiffany.70CT, VS2, 1 Round Diamond Ring – 3199.99 ” and “605880 – Platinum Tiffany VS2.1 1.00CT Round Brilliant Diamond Solitaire Ring – 6399.99.

Tiffany’s brought the lawsuit on its own turf in the Southern District of New York, asserting the following claims: trademark infringement, dilution, counterfeiting, unfair competition, injury to business reputation, false and deceptive business practices and false advertising. Tiffany argued that Costco sells high-end branded jewelry at a discount, such as Cartier. Therefore, Tiffany argued, consumers are likely to be confused that the “Tiffany” rings sold at Costco are rings made by Tiffany.

In response to the complaint, Costco went on the offensive and filed a counterclaim. In part, Costco argued “Tiffany is a generic term for ring settings comprising of multiple slender prongs extending upward from a base to hold a single gemstone.” In support of its counterclaim, Costco cited various dictionaries where “Tiffany” is defined as a jewelry setting C.L. Tiffany designed in 1886. Costco contended that through time, the words “Tiffany” and “Tiffany setting” have entered American English as generic terms for a type of a pronged ring setting. In short, Costco argued it wasn’t using “Tiffany” as a trademark, but rather as a good faith description of a ring setting.

Costco also pointed to several historical examples of where trademarks had become “genericized,” meaning the principal significance of the trademark had become the indication of the nature or class of the good for which it is used, rather than on indication of the good’s origin. Notable examples of trademarks that have become genericized include “aspirin” for acetyl salicylic acid, “cellophane” for transparent cellulose sheets and films, “escalator” for a moving stairway, “Murphy Bed” for a bed that folds into a closet, and “pilates” for a form of exercise. In these cases, despite any effort on the trademark owners’ part to police its marks, the marks had become generic. As a result, the trademark owners could not foreclose others from using the marks in commerce. This can be true even for marks that have become incontestable under trademark law.

Tiffany filed a motion to dismiss Costco’s counterclaim that the “Tiffany” mark had become generic. In its motion, Tiffany argued that the primary significance of the “Tiffany” mark to the public is that of the “iconic [Tiffany] jewelry company.” Tiffany also called Costco's argument “a claim that is made up out of whole cloth” and said Costco was trying to “turn the tables” on legitimate claims of trademark infringement.

In its recent decision, the court found that while none of the evidence Costco submitted was conclusive, the evidence taken together and read in the light most favorable to Costco in a pre-discovery context “was sufficient to frame a genuine factual dispute as to whether the terms ‘Tiffany’ and/or ‘Tiffany Setting’ have a primarily generic meaning in the minds of members of the general public in the context of ring settings.” Accordingly, the court denied Tiffany’s motion to dismiss the counterclaim.

The court’s denial of Tiffany’s motion to dismiss means that the case will proceed to discovery on both parties’ claims, meaning there is a chance that Tiffany, although the plaintiff, could face a finding that its “Tiffany” marks used in connection with the ring setting are generic and thus available for use by Costco and others. The potential risk of a finding of genericide is likely all the more of a bitter pill for Tiffany to swallow given Costco changed its marketing after Tiffany complained, and Costco reportedly only sold 2,500 of the allegedly infringing rings.

What this all means: Although the transformation of a trademark into a generic trademark is rare, it should be a concern for any trademark owner. So what can you do to avoid your brand from becoming a generic name? Although there is no surefire rule, the following measures can definitely help prevent genericide:

• Register your trademark to cover the actual goods or services for which the trademark is used in commerce;
• Do not use your trademark as a noun or verb and, instead, always use a generic term next to your trademark (e.g. “Xerox copy” and not “a xerox”; and “to copy” and not “to xerox);
• Diligently monitor how your trademark is used publicly, internally, and by competitors;
• Use the ® or ℠, or ™ symbols with your trademark as appropriate to notify the public and members of the trade of your trademark ownership rights;
• Create guidelines on how to use your trademark correctly in commerce; and
• Take action against misuses, including generic use, of your trademark.

If you require assistance with developing a trademark strategy to avoid genericide, you may contact us at apayne@infolawgroup.com.