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Tag: counterfeit

Tiffany’s Triumph in Costco Trademark Case

When you think about shopping for engagement rings, Costco Wholesale Corporation probably isn’t the first retailer that comes to mind. However, the warehouse club chain was desperately trying to claim a growing share of the fine jewelry market – by offering “Tiffany” diamond engagement rings. In doing so, Costco has been charged with trademark infringement and trademark counterfeiting against world-famous luxury retailer, Tiffany & Co.

A federal judge has ruled that Costco owes Tiffany & Co. a settlement of $19.4 million for selling generic diamond rings falsely marketed on in-store signage as “Tiffany.”

The ruling comes four years after Tiffany & Co. originally filed a cease and desist against Costco. Even though Costco immediately removed all “Tiffany” signage from the rings and even offered to refund customers’ money, Tiffany still pursued a suit against the retailer. Why? To defend its biggest asset: the value and cachet of its brand.

Costco argued that it used “Tiffany” as a generic term to describe the style of setting. Costco claimed “Tiffany” had become an industry-standard, generic term for the six-pronged gem mount created by Charles Tiffany in the 19th century. Further exacerbating the situation, Costco even asked for a declaratory judgment that would cancel Tiffany’s trademark rights to the name when used to describe ring settings.

“This was not a case about counterfeiting in the common understanding of that word—Costco was not selling imitation Tiffany & Co rings,” Costco said.

But the luxury jeweler did not take lightly to its trademarked and registered name being challenged. Nor should they.

Brands risk losing millions of dollars if they don’t protect their trademarks. The more famous the brand, the more valuable trademark protection becomes.

As one of the world’s best-known luxury retailers, Tiffany has built an iconic brand associated with exceptional quality, value, reputation and name recognition. The public has come to associate Tiffany engagement rings with high quality and prestige. A Tiffany engagement ring from Costco guts this perception.

Even being indirectly associated with anything cheap has the potential to make the price of jewelry plummet dramatically. If Costco had continued to use the Tiffany name, their reputation as a low-price retailer could have had a detrimental effect on the overall value of Tiffany & Co.’s jewelry.

“We brought this case because we felt a responsibility to protect the value of our customers’ purchases,” a company spokesman said. “It is critically important that the Tiffany name not be used to sell any engagement ring that is not our own.”

According to a Bain & Co. report, Tiffany “claims the largest share of the female mind in the U.S.” when it comes to name recognition in jewelry brands. Given the fact that Tiffany has struggled in recent years to command consumer attention in an oversaturated luxury market, defending their trademark and their reputation was a no brainer.

In addition to paying Tiffany, Costco can never again use the word “Tiffany” to sell products as a standalone. Bye, Felicia!

Attention Walmart.com Shoppers: Now Offering Counterfeits

In an effort to compete with Amazon, Walmart.com has significantly increased its product selection by offering items from third-party sellers. While third-party offerings provide consumers with more options, online shoppers may want to proceed with caution.

Launched in 2009, Walmart’s Marketplace allowed select retailers to list their products on Walmart.com. Recent partnerships have ballooned Walmart.com’s product selection from 10 million to more than 50 million items in the past year alone. All of which is due to an increased number of third-party marketplace sellers.

By offering a wider selection, Walmart.com has become more attractive to online shoppers. The site is now the 3rd-most-visited e-commerce site in the U.S., with 89 million unique visitors per month, according to comScore.

But with this success has come a problem that troubles open marketplace retailers like Amazon.com and eBay: the sale of counterfeit products.

The Counterfeit Report has repeatedly found and submitted complaints to Walmart, authorized by the trademark holders, for counterfeit items found on its website. Yet months later, some items remain while others are removed, but then are relisted.

As the top retailer in the U.S., most consumers would perceive Walmart as a trustworthy merchant of authentic goods. But online shoppers, who are unaware of third-party items, misplace their confidence when shopping online at Walmart.com.

Walmart Marketplace items include items from international companies, like China – the counterfeit capital of the world. These items show up right alongside Walmart’s own inventory leaving little differentiation between the store’s verified merchandise and potentially counterfeit third-party goods.

Walmart has recently been criticized for not monitoring its marketplace counterfeit problem. The Counterfeit Report, a self-described consumer advocate and watchdog, “has repeatedly found and submitted complaints to Walmart, authorized by the trademark holders, for counterfeit items found on its website. Yet months later, some items remain while others are removed, but then are relisted.”

While it’s impossible to prevent counterfeits completely in an open market, Walmart is failing to remove even reported counterfeits from their site. You’d think a nationally recognized brand like Walmart would be proactive to protect their customers from fakes. For the time being, Walmart.com shoppers may want to steer clear of the online aisles.

What’s your take? Does the risk of purchasing counterfeit products affect your willingness to shop through Walmart.com?

RELATED: Prime Issues: Keeping Counterfeits Off Amazon

Prime Issues: Keeping Counterfeits Off Amazon

Much has changed since Amazon.com opened its virtual doors on the World Wide Web in July 1995. Today, the world’s largest online retailer offers 500 million products sold by 2 million sellers; many of which are third-party vendors. In fact, 50 percent of units purchased last year were sold by third-party sellers.

While many third-party sellers are legitimate enterprises like major retailers and brands and small business, Amazon basically lets anyone sell nearly anything on its platform – including Chinese manufacturers. Notorious for counterfeit products, sales from Chinese-based sellers have more than doubled on Amazon’s marketplaces in recent years.

Oftentimes, consumers are unaware that their items are from unknown and unvetted sellers overseas. Unsuspecting customers may perceive a fake item as legitimate because of the Fulfillment by Amazon (FBA) endorsement. But this designation only means that the item is being packaged and shipped by Amazons fulfillment centers. Furthermore, Amazon commingles inventory – bundling together multiple third-party sellers – so that a counterfeit item could be sent to an Amazon facility by one merchant but sold by another.

Customers aren’t the only ones complaining. The company has begun to face legal pressure from brands including Apple and Birkenstock for allegedly enabling the widespread sale of counterfeits on the platform.

As a marketplace, Amazon isn’t legally responsible for keeping counterfeit items off the site; they are only required to respond to complaints and take action when fakes are brought to the company’s attention.

While Amazon has an anti-counterfeiting policy and recently announced a meager attempt to protect trademarked merchandise, critics say Amazon has not made it a priority to manage the influx of counterfeits. In fact, there’s not a single mention of the word counterfeit in their 2016 Annual Report.

The sale of counterfeit products, including any products that have been illegally replicated, reproduced, or manufactured, is strictly prohibited.”  

With a such a vast, global selling platform, it seems impossible for Amazon to police the millions of items sold by third-party sellers. But if Amazon wants to maintain any consumer trust, they need to do much more to close their counterfeit loopholes.

RELATED: ATTENTION WALMART.COM SHOPPERS: NOW OFFERING COUNTERFEITS