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Battle of the rings: Costco countersues Tiffany over diamond ring

For Tiffany & Co., that classic robin-egg blue box and its solitaire sparkling diamond ring signal something quite specific, and the jeweler wants to make sure it stays that way.

When the Fifth Avenue luxury goods powerhouse filed a Valentine’s Day trademark lawsuit against Costco Wholesale, it probably didn’t expect the bulk-buy discounter to counter with its own charges.

Costco says the Tiffany-style solitaire ring – a diamond mounted onto a single band with six prongs, has become so mainstream that it has lost its trademark protection. 

If Costco prevails, the Tiffany name could go the way of aspirin, the escalator, the trampoline and kerosene, which all lost their trademarks as their names fell into generic use, said Gene Quinn, a patent attorney and founder of the IP Watchdog website

Read the Tiffany lawsuit (.pdf) and the Costco countersuit (.pdf)

At issue is how Costco was describing some of its diamond rings, according to the Feb. 14 lawsuit filed in the U.S. District Court, Southern District of New York. A customer notified Tiffany that a Costco in Huntington Beach, Calif. was selling discounted Tiffany rings.

A sign in the warehouse-style store stated: “605880 – PLATINUM TIFFANY VS2.1 1.00CT ROUND BRILLIANT SOLITAIRE RING 6399.99,” according to the lawsuit filed by Tiffany.

Costco, in its March 8 counterclaim, says it never told shoppers the ring or its diamond were made by Tiffany, but that the sign refers to the setting. “The style of this ring setting is commonly known as a Tiffany setting. The word Tiffany is a generic term for ring settings comprising multiple slender prongs extending upward from a base to hold a single gemstone,” Costco said.

Tiffany says it’s not buying that excuse.

“Costco’s answer seeks to muddy the waters, but one thing remains clear. The TIFFANY mark is a federally-registered incontestable trademark, has been continuously used for over 175 years and enjoys worldwide fame and recognition as designating superior goods from Tiffany & Co., and particularly Tiffany & Co. diamond engagement jewelry,” the New York-based company said in a statement emailed to NBCNews.

“When Costco used that trademark to refer to goods that had nothing whatsoever to do with Tiffany & Co., they infringed Tiffany’s trademark, while damaging both their own customers and the Tiffany brand. Costco’s counter-claim is an unfounded and weak attempt to defend its willful and infringing use of the TIFFANY trademark. We look forward to proving this in the upcoming court case.”

Contacted for this story, a Costco official said the company does not comment on litigations.

Non-members of Costco may be surprised the warehouse club offers such high-end goods. The Tiffany lawsuit points out that Costco sells legitimate high-end jewelry including Cartier, Chanel and Movado and Breitling. A check of the Costco website even reveals a 3-carat solitaire diamond ring for $99,000 (valued at $154,000.) It does not mention that the mounting is Tiffany-style.

Although jewelers say it is common to refer to a setting as a “Tiffany style,” Quinn, the patent attorney, says Costco is likely to have an expensive, uphill battle defending its use of “Tiffany” instead of “Tiffany-style.”

Given the high stakes, Tiffany will likely fight hard against Costco, Quinn said.

Otherwise, Tiffany risks becoming tiffany.