tiffany v. costco, 1-13-cv-01041-lts-dcf (s.d.n.y.) (apr. 17, 2013 brief in support of tiffany's...

7/28/2019 Tiffany v. Costco, 1-13-CV-01041-LTS-DCF (S.D.N.Y.) (Apr. 17, 2013 brief in support of Tiffany's motion to dismiss

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DICKSTEIN SHAPIRO LLPJeffrey A. MitchellDon Abraham1633 BroadwayNew York, New York 10019-6708

Telephone: (212) 277-6500Facsimile: (212) [email protected]@dicksteinshapiro.comAttorneys for PlaintiffsTiffany and Company and Tiffany (NJ) LLC

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK

TIFFANY AND COMPANY andTIFFANY (NJ) LLC,

Plaintiffs,

v.

COSTCO WHOLESALE CORPORATION,

Defendant.

)

)))))))))))

No. 13 CV 1041 (LTS)(DCF)ECF Case

PLAINTIFFS MEMORANDUM OF LAW IN SUPPORT OF MOTION PURSUANT

TO FEDERAL RULE OF CIVIL PROCEDURE 56 FOR SUMMARY JUDGMENT

DISMISSING COUNTERCLAIM OR, IN THE ALTERNATIVE, TO DISMISS

COUNTERCLAIM PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(c)

Case 1:13-cv-01041-LTS-DCF Document 16 Filed 04/17/13 Page 1 of 30


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TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES .......................................................................................................... ii

PRELIMINARY STATEMENT .....................................................................................................1

FACTS RELEVANT TO THIS MOTION ......................................................................................6

A. Background ..............................................................................................................6

B. The Counterclaim .....................................................................................................8

ARGUMENT .................................................................................................................................10

POINT I THE OBJECTIVE OF TRADEMARK PROTECTION .......................................10

A. The Tiffany Mark is not Generic .........................................................................11

B. An Incontestable Mark ...........................................................................................12

C. A Famous Trademark ............................................................................................13

D. Tiffany is Indisputably both Incontestable and Famous, and Entitled to theStrongest Protection Available under the Trademark Laws ..................................14

POINT II THE TIFFANY MARK IS NOT GENERIC AS A MATTER OF LAW ...........16

POINT III DISCOVERY IS NOT REQUIRED BEFORE SUMMARY JUDGMENTMAY BE GRANTED, FAILING WHICH, JUDGMENT ON THEPLEADINGS IS APPROPRIATE .........................................................................22

A. Pre-Discovery Summary Judgment .......................................................................22

B. Judgment on the Pleadings.....................................................................................23

CONCLUSION ..............................................................................................................................25



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TABLE OF AUTHORITIES

CASES Page(s)

Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4 (2d Cir. 1976) ........................11, 12

Brass v. Am. Film Techs., Inc., 987 F.2d 142 (2d Cir. 1993) ........................................................24

Burton v. Stratton, 12 F. 696 (C.C.E.D. Mich. 1882) ..............................................................21, 22

Coca-Cola Co. v. Stevenson, 276 F. 1010 (S.D. Ill. 1920) ..............................................................5

Deere & Co. v. MTD Prods., Inc., 41 F.3d 39 (2d Cir. 1994) .......................................................13

Diaz v. Ward, 437 F. Supp. 678 (S.D.N.Y. 1977) .........................................................................24

DuPont Cellophane Co. v. Waxed Prods. Co., 85 F.2d 75 (2d Cir. 1936) ....................................16

Eli & Lilly Co. v. Natural Answers, Inc., 86 F. Supp. 2d 834 (S.D. Ind. 2000),affd, 233 F.3d 456 (7th Cir. 2000) ...................................................................................12, 13

Enesco Corp. v. Price/Costco Inc., 146 F.3d 1083 (9th Cir. 1998) ...............................................20

Esso, Inc. v. Standard Oil Co., 98 F.2d 1 (8th Cir. 1938)..............................................................10

Farouk Sys., Inc. v. Costco Wholesale Corp., 700 F. Supp. 2d 780 (S.D. Tex. 2010) ..................20

Farouk Sys., Inc. v. Costco Wholesale Corp., No. 4:09-cv-3499, 2012 WL 360184(S.D. Tex. Feb. 2, 2012)...........................................................................................................20

Feathercombs, Inc. v. Solo Prods. Corp., 306 F.2d 251 (2d Cir. 1962) ........................................21

First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763 (2d Cir. 1994) ..................................24

Jacobs v. Beecham, 221 U.S. 263 (1911) ......................................................................................19

King-Seeley Thermos Co. v. Aladdin Indus., Inc., 321 F.2d 577 (2d Cir. 1963) .................4, 16, 21

Lawrence Mfg. Co. v. Tenn. Mfg. Co., 138 U.S. 537 (1891) .........................................................22

Lorillard Tobacco Co. v. Jamelis Grocery, Inc., 378 F. Supp. 2d 448 (S.D.N.Y. 2005) ........12, 13

Marks v. Polaroid Corp., 129 F. Supp. 243 (D. Mass. 1955), affd, 237 F.2d 428(1st Cir. 1956) ................................................................................................................4, 20, 21

McGregor-Doniger, Inc. v. Drizzle, Inc., 599 F.2d 1126 (2d Cir. 1979) ..........................10, 11, 12

Mil-Mar Shoe Co. v Shonac Corp., 75 F.3d 1153 (7th Cir. 1996) ................................................11



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CASES (cont.) Page(s)

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Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208 (2d Cir. 1999), abrogated on othergrounds byMoseley v. Secret Catalogue, Inc., 537 U.S. 418 (2003) ......................................12

Paddington Partners v. Bouchard, 34 F.3d 1132 (2d Cir. 1994) ..................................................23

Park N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189 (1985) .........................................12, 13

Patel v. Contemporary Classics of Beverly Hills, 259 F.3d 123 (2d Cir. 2001)............................23

Raymond v. U.S. Capitol Police Bd., 157 F. Supp. 2d 50 (D.D.C. 2001) ................................22, 23

Rolex Watch U.S.A., Inc. v. Rolex Deli Corp., No. 11 cv 9321 (BSJ),2012 WL 5177517 (S.D.N.Y. Oct. 18, 2012) ..........................................................................12

S & S Realty Corp. v. Kleer-Vu Indus., Inc., 575 F.2d 1040 (2d Cir. 1978)..................................24

S.S. Kresge Co. v. United Factory Outlet, Inc., 598 F.2d 694 (1st Cir. 1979) ..............................11

Shade v. Pennsylvania, Dept of Transp., 394 F. Supp. 1237 (M.D. Pa. 1975) ............................24

Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178 (5th Cir. 1980) ..................................................11, 12

Telechron, Inc. v. Telicon Corp., 198 F.2d 903 (3d Cir. 1952) .....................................................21

Tiffany & Broadway, Inc. v. Commissioner of Patents & Trademarks ,167 F. Supp. 2d 949 (S.D. Tex. 2001) ...............................................................................14, 15

Tiffany & Co. v. Bos. Club, Inc., 231 F. Supp. 836 (D. Mass. 1964) ............................................15

Tiffany & Co. v. Tiffany Tile Corp., 345 F.2d 214 (C.C.P.A. 1965)..............................................15

Tiffany & Co. v. Verrett, 656 F. Supp. 706 (S.D. Tex. 1986) ........................................................15

Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93 (2d Cir. 2010) ............................................................14

Tiffany (NJ) LLC v. La Tondra Moultrie, No. D2009-190 (WIPO Mar. 30, 2009),http://www.wipo.int/amc/en/domains/decisions/html/2009/d2009-0190.html .......................19

Ty Inc. v. Softbellys,Inc., 353 F.3d 528 (7th Cir. 2003) (Posner, J.) .................................4, 17, 18

Tyco Labs., Inc. v. Cutler-Hammer, Inc., 490 F. Supp. 1 (S.D.N.Y. 1980) ............................23, 24

Valley Natl Bank v. Greenwich Ins. Co., 254 F. Supp. 2d 448 (S.D.N.Y. 2003) .........................23

William R. Warner & Co. v. Eli Lilly & Co., 265 U.S. 526 (1924) ...............................................11

Zatarains, Inc., v. Oak Grove Smokehouse, Inc., 698 F.2d 786 (5th Cir. 1983), abrogatedon other grounds byKP Permanent Make-Up, Inc. v. Lasting Impression I, Inc.,543 U.S. 111 (2004) ...........................................................................................................11, 12



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STATUTES & RULES

15 U.S.C. 1065 ............................................................................................................................13

15 U.S.C 1112 ...............................................................................................................................6

15 U.S.C. 1115(b) .......................................................................................................................12

15 U.S.C. 1125(c)(1) ...................................................................................................................13

15 U.S.C. 1125(c)(2)(A) .............................................................................................................13

37 C.F.R. 6.1 .................................................................................................................................6

Fed. R. Civ. P. 56(b) ......................................................................................................................22

OTHER AUTHORITIES

Fred. R. Shapiro, The Most-Cited Legal Scholars, 29 J.Legal Studies 409 (Jan. 2000)...............17



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PRELIMINARY STATEMENT

Defendant was caught red-handed offering rings for sale it identified as TIFFANY,

which they were not. Faced with the prospect of certain liability, it filed a counterclaim that

incredibly challenges the Tiffany trademark itself as generic and unenforceable, but only as it

applies to one particular jewelry design. Hoping that will be enough to turn the tables on

plaintiffs and put into play the Tiffany name itself, defendant is banking on the liberal rules of

pleading to keep alive through expensive discovery a claim that is made up out of whole cloth.

However, judgment of dismissal is appropriate where, as here, there is no circumstance in which

a claim can succeed, even if no discovery has yet been taken. The counterclaim presents such a

claim.

Tiffany and Company is the world-renowned manufacturer and retailer of high-end

jewelry and accessories. It licenses from its affiliate, Tiffany (NJ) LLC, the trademarks for

which the Tiffany companies are famous, and which have come to stand for the highest of

quality and first class service in the minds of consumers (collectively, the plaintiffs are referred

to as Tiffany). Defendant Costco Wholesale Corporation (Costco or defendant) is,

according to its 2012 Annual Report (Mitchell Decl. Ex. B, at Ex. 3), 1 the seventh largest retailer

in the world, and has a business model the polar opposite from Tiffany. It operates more than

600 giant no-frills warehouse stores accessible only to paid members, and prides itself on

keeping costs down by limiting selection, offering bare-bones dcor, and having a generous

return policy in exchange for little to no customer service.

1 Copies of the pleadings are annexed as Exhibits A, B and C to the accompanyingDeclaration of Jeffrey A. Mitchell in Support of Plaintiffs Motion for Summary Judgment or, inthe Alternative, for Judgment on the Pleadings, dated April 17, 2013 (the MitchellDeclaration).



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In November 2012, Tiffany was tipped off by a customer that Costco was selling two

styles of engagement rings at its Huntington Beach, California store as TIFFANY. Upon

investigation, Tiffany discovered alongside one engagement ring in that Costco warehouse a

point-of-sale (POS) sign which read, PLATINUM TIFFANY .70 VS2, 1 ROUND

DIAMOND RING, and beside another was one that said, PLATINUM TIFFANY VS2.1

1.00CT ROUND BRILLIANT SOLITAIRE RING. (Compl. 5; Mitchell Decl. Ex. D.)

Neither was a Tiffany ring. They were selling for $3,199.99 and $6,499.99 respectively, not

prices that, given Costcos reputation for selling brand name products at discount, would

necessarily alert customers that the rings were counterfeit.

2

After confronting defendant, Tiffany learned that Costco had apparently been selling

rings in its stores that it falsely identified as TIFFANY for years (Compl. 6), so it promptly

filed suit to protect its valuable intellectual property rights. Given the notoriety of the parties, the

case received international news coverage. To help stem an avalanche of negative publicity,

according to media reports, Costcos CEO sent an e-mail to all employees on February 18, 2013

in which he conceded, In retrospect, it would have been better had we not used that description

the way we did. (Mitchell Decl. Ex. E.)

Following that e-mail, Costco filed its responsive pleading. Instead of just admitting the

truth, Costco crafted a feeble justification for its misconduct. Its Answer and Counterclaim,

which includes a media-friendly two page preamble and a drawing, acknowledged that Costco

had knowingly used Tiffanys trademark as charged, but claimed it didnt mean Tiffany the

company when it said TIFFANY in the POS signs which described Tiffany replica rings

2 The rings were displayed without packaging within a locked glass case in a holder thatobscured the lower half of the ring, both inside and outside, so the only brand labeling visiblewas TIFFANY on the POS signs. (Mitchell Decl. Ex. D.)



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alongside them. The POS signs were supposedly referring to the style of the rings themselves,

which Costco claims everyone calls Tiffany, as if the word alone stands for some generic

design of an item, and not, as nearly everyone else in America knows, a famous brand.

According to Costco, whether a member was from Los Angeles, Omaha, Birmingham or

Albuquerque, each was so savvy and sophisticated that he or she knew Costco didnt mean

Tiffany when it said TIFFANY in POS signs.

The Counterclaim tries to justify the unjustifiable by claiming [t]he word Tiffany is a

generic term for a ring setting comprising multiple slender prongs extending upward from a base

to hold a single gemstone, exemplified by the type of setting depicted on page 1, above, and by

settings depicted, described, or referred to in Exhibit 1 as Tiffany settings. (Counterclaim 9.)

According to Costco, anyone selling engagement rings with prongs holding a single gemstone, a

class so broad it probably encompasses most engagement rings sold in the world, can call them

Tiffany. Costco therefore asks the Court to [d]eclare, adjudge, and decree that the TNJ

Registrations are invalid insofar as they purport to evidence claims of right to exclude use of the

word Tiffany to describe or refer to Tiffany settings. (Id. at 9.) There is no authority for the

Court to grant such relief.

Tiffany is known worldwide for its fine jewelry products, and holds a valid, subsisting,

incontestable and famous trademark for the word Tiffany in International Class 14 (which

covers, among other categories, jewelry), as well as a stylized capital letter TIFFANY for

jewelry in U.S. Class 28. It has maintained the TIFFANY mark for nearly a century and a

half. Tiffany therefore has the unassailable exclusive right to use the word Tiffany to describe

any jewelry product or design, and Costcos intentional use of its mark to label Costco rings

constitutes counterfeiting under 15 U.S.C. 1114(1).



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Costco does not claim the markTiffany in block letters is generic. To the contrary, it

recognizes and accepts Tiffanys superior rights to that mark in all forms of jewelry except one,

pronged engagement rings. With respect to pronged engagement rings only, Costco asks that

the word jewelry be narrowed to excise them from coverage and protection. There is no

authority for a Court to create sub-categories for portions of trademark classes, and parse words

such as jewelry to allow otherwise incontestable trademarks to become public only for some

jewelry products and not others.

For a mark to become generic, it must have lost all significance as a source identifier and

become the popular name for the product itself.

3

Here, even the Counterclaim admits that is not

the case since not only will the Tiffany mark remain incontestable for other jewelry items, it

will even remain incontestable for other types of engagement rings. If Costco were to have its

way, a jewelry display case could contain bracelets, earrings, necklaces, pendants, and pronged

and non-pronged engagement rings all labeled TIFFANY, but only the items that are not

engagement rings with multiple slender prongs would be counterfeit even if all were not made

by Tiffany. Such relief itself would create the inherent customer confusion and market chaos

trademarks are supposed to prevent.

A real Tiffany setting, which was originated by Tiffany in 1886, is described on

Tiffanys website, which says:

This round brilliant diamond solitaire in a six-prong setting was designed byCharles Lewis Tiffany over a century ago. It lifts the stone up into the light whereits precise faceting can release its superior brilliance, dispersion and scintillation.The Tiffany Setting has been copied but never equaled.

3 See discussion infra Point II (citing Ty Inc. v. Softbellys,Inc., 353 F.3d 528, 531-32 (7thCir. 2003) (Posner, J.); Marks v. Polaroid Corp., 129 F. Supp. 243, 270 (D. Mass. 1955), affd,237 F.2d 428 (1st Cir. 1956); King-Seeley Thermos Co. v. Aladdin Indus., Inc., 321 F.2d 577,580 (2d Cir. 1963) (citing Marks, 129 F. Supp. at 270)).



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(Mitchell Decl. Ex. F;see also Reply to Counterclaim 4.)

Tiffany does not claim an exclusive right to the design it originated, a point which the

Counterclaim intentionally confuses. What Tiffany does have, however, is the exclusive right to

use its incontestable and famous trademarkTiffany for any jewelry product or design, including

its own setting made to Tiffanys proprietary and exacting standards. The mark Tiffany

identifies the source of Tiffanys own products and designs, a fundamental purpose for

trademark protection. Tiffany has the exclusive right to use its mark as an adjective alongside

any noun that designates a jewelry product or design, whether that word is setting, diamond,

jewelry, bracelet or anything else. Such a use cannot turn the word Tiffany generic, no

matter how successful the modified noun becomes as a product or design.

This is not a case like thermos or cellophane where the trademark itself became

generic over time because it was eventually the only way to describe the product class. The

fallacy of the Counterclaim is best illustrated by an example. Coke is an incontestable

trademark held by the Coca Cola Company. It is also a word used colloquially to describe a

famous flavor of soft drink. Costco, which also manufactures products under its Kirkland

Signature house brand, cannot call its own soft drink Coke flavor even if its taste mimics that

of real Coke.4

Trademarks distinguish products of one manufacturer from another. The more

famous the product, the more valuable trademark protection becomes. Tiffany did not seek a

trademark on the phrase Tiffany setting. Instead, it properly used its incontestable trademark

Tiffany as an adjective to modify the noun setting, no different than in other circumstances

4 See, e.g., Coca-Cola Co. v. Stevenson, 276 F. 1010, 1017 (S.D. Ill. 1920) (The claim

that Genuine Coca and Cola Flavor is truthfully descriptive of the flavor of defendants productis disposed of by Coca Cola Co. v. Koke Co. of America, 254 U.S. 143, 41 Sup. Ct. 113, 65 L.Ed. ;Davids Co. v. Davids, 233 U.S. 461, 34 Sup. Ct. 648, 58 L. Ed. 1046; Coca-Cola Co. v.Nashville Syrup Co. (D.C.) 200 Fed. 157.).



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where it modifies words like ring, jewelry, bracelet, diamond, or others. The mark

standing alone, derived from the last name of Tiffanys founder, is plainly not generic, and

Costco does not claim otherwise. It cannot become generic simply because the mark is joined

with a noun to describe a design originated by Tiffany which itself has become famous.

Accordingly, Tiffany is entitled to judgment dismissing the Counterclaim.

FACTS RELEVANT TO THIS MOTION

A. BackgroundTiffany owns and controls 97 separate trademarks. (Mitchell Decl. Ex. G.) Among them

is Registration No. 1,228,409 for the word Tiffany in International Class 14.5

That mark, with

a first use in commerce date of 1868, covers decorative art objects made in whole or in party

of precious or semi-precious metalsnamely, figurines, boxes, bowls, trays, and flowers, jewelry,

semi-precious stones, and natural and cultured pearls, in Class 14 (U.S. Cl. 28). (Mitchell Decl.

Ex. H.)6 Tiffany is among the strongest of trademarks, qualifying as both famous under

15 U.S.C. 1125(c)(2), and incontestable pursuant to 15 U.S.C. 1065. Though the

Counterclaim alleges the mark is generic when used in one particular context, it is undisputed

that Tiffany, standing alone, is not generic, having been derived from the last name of Tiffanys

founder, Charles Lewis Tiffany. It is used by Tiffany as a brand, and refers to a wide variety of

products not only in the jewelry category, but many others as well. Even though Tiffany has

5The Trademark Act authorizes the Director to establish a classification of goods and

services, 15 U.S.C 1112, which is implemented through 37 C.F.R. 6.1, entitledInternational schedule of classes of goods and services. Classification 14 of 37 C.F.R. 6.1includes jewelry, precious metals, and precious stones. The classification system is establishedby treaty among member nations of the Nice Union, the United States being one of thosemembers.

6 Tiffany also holds Registration No. 133,063 for the stylized mark in all capital lettersTIFFANY in U.S. Class 28 for jewelry for personal wear, not including watches; preciousstones, and flat and hollow ware made of or plated with precious metal. (Mitchell Decl. Ex. I.)



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never sought separate trademark protection for the phrase Tiffany setting, defendant

nevertheless seeks a declaration by its counterclaim that as long as the reference is to an

engagement ring with prongs, and not some other jewelry item, anyone should be able to call it

Tiffany.7

Annexed to the Counterclaim is an exhibit that purports to show why, referencing various

colloquial uses apparently made by others of the phrase Tiffany setting. Rather than

demonstrate that the phrase even has one particular generic meaning, the examples prove the

opposite. One source, a publication called the Dictionary of Gems and Gemology, says the

diamond used for the setting is generally round in shape, and there needs to be a six high

prong head (frequently four prong). Another source,How to Buy a Diamond, wrongly says the

setting is named after . . . Louis C. Tiffany, instead of Charles Lewis Tiffany, his father, and

the stone is held by four to six prongs, depending on the shape of the diamond. Wedding

Planning for Dummies says, A six-prong setting is often called a Tiffany setting. Wikipedia

claims a Tiffany setting is a set of prongs (called a claw, crown, or coronet) that hold a

gemstone and attach it to a plain band ring. . . . It is named after Tiffany & Co., which

popularized it. A publication called Jewelers Resource says there must be six long, slender

prongs, but goes on to say it is [o]ften incorrectly used to refer to any single prong set stone.

If this hodgepodge of varying and erroneous descriptions shows anything, it is that the phrase

Tiffany setting, when used colloquially, has no particular meaning, even among the authors

7 The word setting may not be trademarked, any more than could the word warehouseby Costco. De Beers filed for protection of the mark Forevermark Setting, and its registrationhas theproviso that no claim is made to the exclusive right to use setting apart from the markas shown. The same proviso appears in the Costco trademark for Costco Wholesale withrespect to the word wholesale. Since Tiffany has an incontestable famous mark for jewelry,its use of that mark with the noun setting or any other is automatically protected since no oneelse can use the adjective Tiffany to describe a jewelry product or design.



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defendant has chosen to cite as examples worthy of inclusion in its pleading. Therefore, the

phrase cannot possibly be generic, even if the claim were one the Court could properly

consider.

Having first introduced the setting in the 1800s, Tiffany knows precisely what it means

when it uses the phrase Tiffany setting to describe a particular style of engagement ring

Tiffany offers for sale. It uses the designation after Tiffany and before setting, denoting

Tiffany as the source of the design. A real Tiffany setting, therefore, has six prongs and only

a round brilliant solitaire, and is made only by Tiffany to Tiffanys exacting standards. (See

Reply to Counterlcaim 4.) It does not have four prongs, other shaped stones, or come from

anyone other than Tiffany. Since the design is one for jewelry, only Tiffany, the holder of the

incontestable and famous mark Tiffany, can properly use that trademark to describe any

jewelry design, Tiffany setting included.

B. The CounterclaimThe Complaint does not charge Costco with using the phrase Tiffany setting. It alleges

it used the mark TIFFANY alone to describe two multi-thousand dollar engagement rings, the

styles of which replicated a ring with a real Tiffany setting. That use was inexcusable. The

Counterclaim tries to blur defendants blatant counterfeiting of Tiffanys mark by claiming

TIFFANY was not meant to convey that the subject rings were made by Tiffany, but rather to

describe the style of ring as one with a Tiffany setting. It therefore seeks a declaration that

anyone can call an engagement ring Tiffany if it has prongs.8

Costco did not use any brand

8Tiffany actually sells 23 different styles of pronged engagement rings, including those

with names such as Lucida, Tiffany Novo, and Tiffany Grace.http://www.tiffany.com/Engagement/Browse.aspx?mcat=148203. It only calls its six-prongsetting for a diamond solitaire with a knife-edge band the Tiffany Setting. The Counterclaimwould transform these other Tiffany styles into Tiffany settings as well, which they are not.



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name, TIFFANY included, to describe the same and other engagement rings online (Mitchell

Decl. Ex. J), and no reason offered in the Counterclaim for using TIFFANY only on in-store

signage. It could have just as easily called its rings on those signs what they really were; Costco

six prongengagement rings.9 The Counterclaim is not seeking authority to use a mark similar to

the incontestable one held by Tiffany it is asking to the Court to declare that Costco and

anyone else can use the identical mark for certain jewelry products as if there was no registration

at all, in effect sanctioning counterfeiting of certain items even though the incontestable mark

would remain for everything else, even within the class subcategory of jewelry itself.

The Counterclaim suggests that an actual controversy exists concerning the following

issues:

[W]hether the Plaintiffs have any valid legal right to exclude Costco from usingthe word Tiffany to indicate a ring has a Tiffany setting, i.e. a setting comprisingmultiple slender prongs extending upward from a base to hold a singlegemstone . . . .

. . . [W]hether this lawsuit was filed and publicized by Plaintiffs forimproper purposes, including to hinder lawful competition from Costco in theretail sale of genuine diamond rings whose quality is comparable to that of certaindiamond rings sold by [Tiffany] but are offered by Costco at lower prices than[Tiffany] offers.

(Counterclaim 10-11.)

However, Tiffany has an incontestable and famous trademark for the word Tiffany in

International Class 14 and for TIFFANY in U.S. Class 28 for jewelry items, and it is

undisputed that defendant sold rings as TIFFANY that were not made by Tiffany.

Enforcement of those and other rights in the face of such blatant counterfeiting is perfectly

appropriate. As the Complaint alleges, Costco has no business calling anything it manufactures

9Tiffany does not claim a copyright on the design of a six-prong setting. However, it has

the exclusive right to call that or any other jewelry design TIFFANY.



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Tiffany since that trademark is, and for generations has been, owned by plaintiffs. Tiffany is

therefore entitled to judgment dismissing the Counterclaim.

ARGUMENT

POINT I

THE OBJECTIVE OF TRADEMARK PROTECTION

A trademark distinguishes one product sources from another. InEsso, Inc. v. Standard

Oil Co., 98 F.2d 1 (8th Cir. 1938), where Standard Oil Company successfully sued Esso, Inc.

claiming the word mark ESSO infringed on its own trademarks, including S.O., the court

described the purpose for trademarks as follows:

Plaintiffs trade-marks had come to indicate the origin or ownership of itsproducts to which they are affixed. They distinguish them from those of others,and they served the purpose of preventing others from passing off their productsas the products of plaintiff. They are of value to plaintiff as aids in protecting itsgood will and reputation. It is the purpose of the law to protect not only theowner in his property, but to protect the public from being deceived by reason of amisleading claim that the article bearing the trade-mark is the article produced ormanufactured by the owner of the trade-mark, when in fact it is not. No one has aright to represent his goods as the goods of some one else, and when a trade-markis violated, the wrong consists in the sale of goods of one producer or

manufacturer as those of another. While a trade-mark may not in itself constituteproperty, it is a means of preserving good will, which is property. It isinseparable from good will, and it can not be disassociated from the business towhich it belongs. It is common-place to say that the trade-name for the goods of aproducer, manufacturer, or trader may not be used by another as the trade-markfor his similar, rival goods.

Id. at 5.

Trademarks have traditionally been classified into four categories for evaluating strength;

generic, descriptive, suggestive, and arbitrary or fanciful. McGregor-Doniger, Inc. v. Drizzle,

Inc., 599 F.2d 1126, 1131 (2d Cir. 1979). Fanciful marks are those that have no descriptive

qualities whatsoever, like made-up words or surnames attributed to products. Tiffany, derived



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from the last name of Tiffanys founder, is fanciful for jewelry because standing alone it does not

even purport to describe a product or service.

A. The Tiffany Mark is not GenericA generic term is one that is descriptive of a particular genus or class to which an

individual article or service is a member. Abercrombie & Fitch Co. v. Hunting World, Inc.,

537 F.2d 4, 9 (2d Cir. 1976). It connotes the basic nature of the articles or services, rather than

the more individualized characteristics of a particular product. Zatarains, Inc., v. Oak Grove

Smokehouse, Inc., 698 F.2d 786, 790 (5th Cir. 1983), abrogated on other grounds byKP

Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111 (2004). For example,

words like warehouse in the phrase shoe warehouse, Mil-Mar Shoe Co. v Shonac Corp.,

75 F.3d 1153 (7th Cir. 1996), and mart in connection with a store, S.S. Kresge Co. v. United

Factory Outlet, Inc., 598 F.2d 694 (1st Cir. 1979), are generic terms that cannot be trademarked.

A generic term can never become a valid trademark and cannot be registered. SeeZatarains,

Inc.,698 F.2d at 790; McGregor-Doniger, Inc., 599 F.2d at 1131; William R. Warner & Co. v.

Eli Lilly & Co., 265 U.S. 526, 529 (1924); Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1183

(5th Cir. 1980). Words can also be generic for some purposes, and fanciful for others, such as

safari, which is generic when used to describe a wildlife trip that takes place in Africa, but

fanciful when used by a retailer for shoes. Abercrombie & Fitch Co., 537 F.2d at 8, 10.

A descriptive term identifies a characteristic or quality of an article or service, such as

color, odor, function, dimensions, or ingredients, and ordinarily is not protectable as a trademark

unless it becomes distinctive by acquiring a secondary meaning in the minds of the consuming

public. Zatarains, Inc.,698 F.2d at 790.

A suggestive mark suggests, rather than describes, some particular characteristic of goods

or services, and requires the consumer to exercise imagination to draw a connection to the goods



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or services themselves. Zatarains, Inc., 698 F.2d at 791; Soweco, Inc., 617 F.2d at 1184;

Abercrombie & Fitch Co., 537 F.2d at 11. A suggestive mark is protected without the need for

proof of secondary meaning. Zatarains, Inc., 698 F.2d at 791; Abercrombie & Fitch Co.,

537 F.2d at 11.

Finally, an arbitrary or fanciful term, the category to which the Tiffany mark belongs,

bears no relationship to the products or services to which they are applied, and are protectable

without proof of secondary meaning. Zatarains, Inc., 698 F.2d at 791;McGregor-Doniger, Inc.,

599 F.2d at 1131. Thus, the strongest protection is reserved for these most highly distinctive

marks. Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208, 216 (2d Cir. 1999) (citing Abercrombie

& Fitch Co., 537 F.2d at 11), abrogated on other grounds byMoseley v. Secret Catalogue, Inc.,

537 U.S. 418 (2003)10

; Eli & Lilly Co. v. Natural Answers, Inc., 86 F. Supp. 2d 834, 848 (S.D.

Ind. 2000) (the strongest protection is reserved for a fanciful word that carries no meaning apart

from its use to identify the source of the product, and which does not describe or suggest the

function of the product it names), affd, 233 F.3d 456 (7th Cir. 2000).

B. An Incontestable MarkRegistration of a mark is conclusive evidence of the registrants exclusive right to use it.

15 U.S.C. 1115(b);see alsoPark N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 194-95

(1985); Lorillard Tobacco Co. v. Jamelis Grocery, Inc., 378 F. Supp. 2d 448, 454 (S.D.N.Y.

2005) (trademark registration isprima facie evidence that the mark is valid, the registrant owns

it, and the registrant has the exclusive right to use it). If the mark has been used continuously for

10 In 2006, Congress amended the Federal Trademark Dilution Act of 1995 and reversed theMosley abrogation. Rolex Watch U.S.A., Inc. v. Rolex Deli Corp., No. 11 cv 9321 (BSJ),2012 WL 5177517, at *3 n.5 (S.D.N.Y. Oct. 18, 2012).



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five years, the holders right to it becomes incontestable. Lorillard Tobacco Co.,

378 F. Supp. 2d at 454-55; 15 U.S.C. 1065.

An incontestable mark may not be challenged as being merely descriptive, or on the

ground that it lacks secondary meaning. Park N Fly, Inc., 469 U.S. at 196. An accused

infringer of an incontestable mark may only raise in defense that it (i) has been abandoned, (ii) is

being used to misrepresent the source goods or services, (iii) was obtained fraudulently, or (iv)

has become generic. Id. at 195. The holder of a registered mark may rely on incontestability to

enjoin infringement and . . . such an action may not be defended on the grounds that the mark is

merely descriptive. Id. at 205.

Tiffany is objectively neither generic nor descriptive. Simply because the Counterclaim

alleges the mark is generic in order to satisfy one of the foregoing criteria does not make it so.

C. A Famous TrademarkThe Tiffany mark also qualifies as famous; one which is widely recognized by the

general consuming public as a designation of a particular source of goods. 15 U.S.C.

1125(c)(2)(A). The law presumes that unauthorized use of famous marks dilutes the strong

source identification attributed to them, and proof of actual consumer confusion is therefore not

required when famous marks are at issue. 15 U.S.C. 1125(c)(1). A likelihood of dilution can

be established by showing either blurring or tarnishment of the mark. Natural Answers,

Inc., 86 F. Supp. 2d at 851. A trademark may be tarnished by association with products of

shoddy quality or not made by or to the standards of the holder of the mark, causing the

trademark to lose its ability to serve as a wholesome identifier of a plaintiffs product. Id.

(quoting Deere & Co. v. MTD Prods., Inc., 41 F.3d 39, 43 (2d Cir. 1994)).



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D. Tiffany is Indisputably both Incontestable and Famous, and Entitled to theStrongest Protection Available under the Trademark Laws

Tiffany is a world famous and incontestable mark, a finding confirmed by many courts

over the course of many years. Most recently, the Second Circuit observed in a case brought by

Tiffany against eBay about the sale of counterfeit merchandise on the eBay site:

Tiffany is a world-famous purveyor of, among other things, brandedjewelry. Since 2000, all new Tiffany jewelry sold in the United States has beenavailable exclusively through Tiffanys retail stores, catalogs, and website, andthrough its Corporate Sales Department. It does not use liquidators, sell overstockmerchandise, or put its goods on sale at discounted prices.

Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93, 97 (2d Cir. 2010) (citations omitted).

In Tiffany & Broadway, Inc. v. Commissioner of Patents & Trademarks, 167 F. Supp. 2d

949 (S.D. Tex. 2001), a challenge to the USPTOs refusal to register Tiffany for ladies shoes

was rejected. The court said the following about the Tiffany mark:

The commissioner maintains that Tiffany & Companys marks are strongbecause only Tiffany & Company has registered Tiffany for a wide variety ofgoods. It has successfully defended its marks against use on bowling balls,ceiling tiles, ceramic tiles, rare coins, perfume, restaurant services, andautomobiles.

Because Tiffany has many uses does not make it weak. Tiffany has nocontent. It is almost as arbitrary as Kodak or Exxon, being wholly constructedfor their trade name purpose. Northwest Van Lines, for example, would be astrong mark within transportation even though there are many uses of northwestbecause of its meaning. Hughes is a common surname among Americans. It isthe name of towns and roads. In aircraft and oil tools, though, it has a specialsignificance. So too with Tiffany & Company, and that leads to fame itself.

There is no question that Tiffany & Company is famous. See, e.g., SykesLaboratory, Inc. v. Kalvin, 610 F.Supp. 849, 858 (C.D.Cal. 1985)([t]he dilution

doctrine is available to protect distinctive marks as exemplified by such famousnames as Tiffany, Polaroid, Rolls Royce, and Kodak. Tiffany, Rolls, andRoyce were surnames, and Polaroid and Kodak were neologisms.) The officeincluded eighteen news articles where Tiffany & Company was identified as afamous business.

. . . Over the years, it [Tiffany & Company] has built a high degree ofconsumer recognition and beliefin the quality of its merchandise. Tiffany and



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Tiffany & Co. have acquired a distinctsecondary meaning for consumers forquality craftsmanship, integrity, and reliability.

Id. at 952-53 (emphasis added).

When a District Court in Texas enjoined use of the name Tiffany Estate Buyers by an

estate jewelry business in Tiffany & Co. v. Verrett, 656 F. Supp. 706, 707 (S.D. Tex. 1986), it

found that:

[Tiffany] is one of the most famous and well-respected manufacturers andmerchants of such products in the United States. It has achieved a reputation ofsuperlative quality both in the trade and among the public at large.

Id. (emphasis added). It then added:

In addition, the reputation of the mark has been enhanced by consumerrecognition during a century and a half, and by reference to Plaintiff and itsproducts, and by television broadcasts. The Tiffany mark has become universallyknown to the trade and the public as indicating products of the highest qualityand workmanship.

Id. at 708 (emphasis added).

In Tiffany & Co. v. Tiffany Tile Corp., 345 F.2d 214, 215 (C.C.P.A. 1965), the defendant

tried to register a ceramic tile as Tiffany Tile, which the Trademark Trial and Appeal Board

initially permitted. The Court of Customs and Patent Appeals disagreed, in particular because

Tiffany is such a famous name, and a symbol of good taste and quality. The court concluded:

[T]he average purchaser seeing such a well-known mark as Tiffany on theinvolved goods would be likely to assume they emanated from the same source[Tiffany].

Id.11 See alsoTiffany & Co. v. Bos. Club, Inc., 231 F. Supp. 836, 839 (D. Mass. 1964) (Tiffany

has spent substantial sums to promote its trademark and maintain its reputation on articles such

11Costcos claim is even worse than the one rejected in the Tiffany Tile Corp. case. Here

Costco seeks a declaration that it can call certain jewelry items Tiffany in particular, prongedengagement rings in the very class where Tiffany holds its incontestable and famoustrademark, and within which Costco concedes it will remain incontestable and famous for allother forms of jewelry, including engagement rings without prongs.



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as silverware, jewelry, china, glassware, leather goods, clocks, watches, and brushes for so long

that the Tiffany mark has become widely and favorably known to the general public as

identifying Tiffany & Co. and the merchandise sold and distributed by it as being of high quality).

Costco cannot dispute the fame and incontestability of the Tiffany mark, or all of the

positive attributes found by the many courts to be associated by the public with it.

POINT II

THE TIFFANY MARK IS NOT GENERIC AS A MATTER OF LAW

Costcos counterclaim rests on the false premise that an incontestable trademark, like

Tiffany, can itself become generic when it is used in conjunction with a generic term to

describe a particular jewelry design. However, to be found generic, a mark itself must have lost

its inherent distinctiveness over time, and become the only way to describe a product class. For

example, thermos is now the way containers that retain heat and cold are referred to, regardless

of source, King-Seeley Thermos Co. v. Aladdin Indus., Inc., 321 F.2d 577, 579 (2d Cir. 1963),

and cellophane means plastic wrap, even though both of those words were once trademarked,

DuPont Cellophane Co. v. Waxed Prods. Co., 85 F.2d 75 (2d Cir. 1936). But, a fanciful mark

like Tiffany has never been invalidated for one particular use within a sub-category of a

trademark class, but otherwise stayed incontestable for all other uses in that same class.

Because the Tiffany mark has never been abandoned, nor was it obtained by fraud,

defendant turned to genericness to try and make its claim look as if it satisfies one of the

conditions to challenge an incontestable mark identified by the Supreme Court in ParkN Fly,

Inc. However, stuck with the unassailable fact that the word Tiffany itself is not generic for

jewelry, Costco had to fudge the claim by alleging the word is generic only when it is used to

describe engagement rings with multiple slender prongs extending upward to hold a single

gemstone. With respect to other engagement rings, or any other jewelry, for that matter, it



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admits Tiffany is not generic. That concession alone is fatal to the Counterclaim, and entitles

Tiffany to judgment dismissing it.

For a mark to be found generic, it must have lost allsignificance as a source identifier

and become the name of the product class itself. In Ty Inc. v. Softbellys, Inc., 353 F.3d 528,

531-32 (7th Cir. 2003) (Posner, J.), the issue before the court was whether beanies had become

generic for a certain type of plush toy originated by Ty called Beanie Babies. Renowned

Seventh Circuit Judge Richard Posner12 explained the huge divide a complaining party must

breach before a mark can be declared generic. He said:

To determine that a trademark is generic and thus pitch it into the publicdomain is a fateful step. It penalizes the trademark owner for his success inmaking the trademark a household name and forces him to scramble to find a newtrademark. And it may confuse consumers who continue to associate thetrademark with the owners brand when they encounter what they thought a brandname on another sellers brand. . . . The fateful step ordinarily is not taken untilthe trademark has gone so far toward becoming theexclusive descriptor of theproduct that sellers of competing brands cannot compete effectively without

using the name to designate the product they are selling. Imagine the pickle thatsellers would be in if they were forbidden to use brassiere, cellophane,escalator, thermos, yo-yo, or dry ice to denote products all beingformer trademarks that have become generic terms. The problem is not thatlanguage is so impoverished that no other words could be used to denote theseproducts, but that if no other words have emerged as synonyms it may be difficultfor a seller forbidden to use one of the trademarked words or phrases tocommunicate effectively with consumers.

Id. at 531-32 (bold and underline added).

Here, Tiffany alone is not a descriptor at all, let alone the exclusive descriptor of any

product. It only describes a product or design as a Tiffany when it is connected to a noun, like

ring, bracelet, or necklace. To say an incontestable trademark becomes generic for only

12 The Journal of Legal Studies has identified Judge Richard Allen Posner of the UnitedStates Court of Appeals for the Seventh Circuit, as the most cited legal scholar in the 20thcentury. Fred. R. Shapiro, The Most-Cited Legal Scholars, 29 J.Legal Studies 409, 424 (Jan.2000).



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certain word combinations, most especially combinations that describe products or designs that

fall within the very class in which the mark is and has been registered for more than a century,

has no support in any statute or case. Indeed, if that were the law, no trademark would ever be

safe.

Costco intentionally confuses the circumstance of marks themselves that describe a

product likeBand Aid orKleenex from those that are used as an adjective to denote the

source of a product or service. And, even with respect to those incredibly famous marks, they

are not treated as generic, in part because the holder joined those trademarks with the word

brand (Band Aid brand adhesive bandages, Kleenex brand tissues, etc.). Tiffany is

fanciful, and not even arguably descriptive as a standalone trademark. Therefore, its use with the

word setting cannot throw the mark into the public domain. As Judge Posner explained:

Sometimes a trademark owner will sponsor a generic term precisely in

order to avoid its mark from becoming generic. Xerox succeeded with copier,and Sanka was saved from becoming generic by the emergence of decaf todenote the product of which Sanka was long the best-known brand.

Id. at 532 (emphasis added). That is precisely what Tiffany did joined its incontestable mark

Tiffany with the generic word setting, no different than Xerox or Sanka in the Seventh

Circuits illustration. That does not make the markTiffany generic. To the contrary, it protects

it.

In an arbitration brought by Tiffany before the World Intellectual Property Organization

(WIPO) concerning use of an internet domain name tiffanyjewelry925.com, an arbitrator made

the following finding about the combination of the mark Tiffany with a generic term:

The Complainant Tiffany (NJ) LLCs trademark TIFFANY isincorporated into the disputed domain name in its entirety with the adjunction ofthe descriptive term jewelry and the number 925. The term jewelry is anobvious reference to one of the products for which the Complainants are well-known. The Complainants do not mention whether 925 is or is not a referenceto a product or a product range.



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The addition of the generic term jewelry and the number 925 is notsufficient to exclude confusing similarity with the TIFFANY trademark.

The adjunction of the term jewelry actually reinforces the associationwith the Complainants to the extent the Complainants notably sell jewelry. It islikely that internet users will make the link between the trademark TIFFANY andsaid product.

Tiffany (NJ) LLC v. La Tondra Moultrie, No. D2009-190 (WIPO Mar. 30, 2009),

http://www.wipo.int/amc/en/domains/decisions/html/2009/d2009-0190.html (citations omitted)

(Mitchell Decl. Ex. K).

Justice Oliver Wendell Holmes, in the famous case ofJacobs v. Beecham, 221 U.S. 263

(1911), was confronted with the use by defendant of the phrase Beechams Pills to describe

pills similar to but not made by Beecham, and about which Beecham complained. He observed,

writing for a unanimous Supreme Court:

As to the defendants method of advertising, he does not simply say thathe has the Beecham formula, as in Saxlehner v. Wagner, 216 U.S. 375, 54 L. ed.525, 30 Sup. Ct. Rep. 298, but he says that he makes Beechams Pills. The onlysense in which Beechams Pills can be said to have become a designation of thearticle is that Beecham, so far as appears, is the only man who has made it. Butthere is nothing generic in the designation. It is in the highest degree individual,

and means the producer as much as the product.

Id. at 272. In finding for the plaintiff, the Court held:

To call pills Beechams Pills is to call them the plaintiffs pills. The statementthat the defendant makes them does not save the fraud. That is not what thepublic would notice or is intended to notice, and, if it did, its natural interpretationwould be that the defendant had bought the original business out and was carryingit on. It would be unfair, even if we could assume, as we cannot, that thedefendant uses the plaintiffs formula for his pills. McLean v. Fleming, 96 U.S.245, 252, 24 L. ed. 828, 831 .Millington v. Fox, 3 Myl. & C. 338, 352; Gilman v.

Hunnewell, 122 Mass. 139, 148.

Id.

All one need do is substitute the word Tiffany for Beecham in the foregoing quote to

reach the same conclusion here. Indeed, since Costco concedes the Tiffany mark will remain



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valid and incontestable for other jewelry items, including even engagement rings that do not

have prongs, how is the public ever to know the nuanced distinction it asks the Court to sanction

between authentic Tiffany jewelry which carries the real brand, from items bearing the same

trademark, but made by others simply because of the arrangement of prongs?13

Widespread use of a mark to describe a product or service is also not enough. InMarks

v. Polaroid Corp., 129 F. Supp. 243, 270 (D. Mass. 1955), affd, 237 F.2d 428 (1st Cir. 1956),

the counterclaim defendant argued polaroid had become the generic designation for a class of

products which polarized light, and had lost trademark significance. Id. at 270. In rejecting that

a mark can become generic simply by widespread use, the court said:

On the showing made by plaintiffs on the question of loss ofdistinctiveness of the trademark, one would have to be blind to deny that there hasbeen widespread generic use of the word polaroid. This use has been sowidespread in fact that it has found its way to the lexicographers, though mostdictionary definitions quoted also recognize that the word is a trademark. It isfurther evidence that the use of polaroid as a common noun has extended tostereoscopic viewers as well as to polarizing material in other applications.

As I view the cases, a defendant alleging invalidity of a trademark forgenericness must show that to the consuming public as a whole the word has lostall its trademark significance. That such is the burden placed on a defendant incases like this one seems evident from the courts findings in dicta in Du Pont

13The Counterclaim is even more suspect when viewed with the backdrop of prior

counterfeiting claims made against Costco. In 2011, a jury found Costco sold a counterfeit hairiron and awarded statutory damages. Farouk Sys., Inc. v. Costco Wholesale Corp., No. 4:09-cv-3499, 2012 WL 360184 (S.D. Tex. Feb. 2, 2012);see alsoFarouk Sys., Inc. v. Costco WholesaleCorp., 700 F. Supp. 2d 780 (S.D. Tex. 2010) (motion to dismiss denied). In 2006, Costco wasaccused of selling fake Picassos with fabricated certificates of authenticity, which it promptlyremoved from the market. Daphn Angls & Carol Kino, Picassos Daughter Says Drawing is a

Fake, N.Y. Times, Mar. 18, 2006, at B7, available at http://www.nytimes.com/2006/03/18/arts/design/18pica.html (Mitchell Decl. Ex. L). It was similarly charged by a famous Chineseartist, Cao Yong, of forging certificates of authenticity for counterfeit prints of his paintings.Mike Boehm, Artist settles with Costco, L.A. Times, Oct. 26, 2007, at 25, available athttp://articles.latimes.com/2007/oct/26/entertainment/et-costco26 (Mitchell Decl. Ex. M).Costco is obviously willing to take risks when it comes to the authenticity of the products it sells,and the labels it uses to describe them. See also Enesco Corp. v. Price/Costco Inc., 146 F.3d1083 (9th Cir. 1998).



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Cellophane Co. v. Waxed Products Co., 2 Cir., 85 F.2d 75, and Bayer Co. v.United Drug Co., D.C., 272 F. 505. But I cannot find that the trademarkPolaroid has come to be so public and in such universal use that nobody can bedeceived by the use of it. Where the possibility of some deception remains realand the need of competitors to satisfactorily describe their product is satisfied by

the availability of several common nouns or adjectives suitable for that purpose ,this Court will protect the interest of the owner in his trademark.

Id. (emphasis added); cf.King-Seeley Thermos Co., 321 F.2d at 580 (a mark is not generic

merely because it has some significance to the public as an indication of the nature or class of an

article, in order to be generic theprincipal significance of the wordmust be its indication of the

nature or class of an article, rather than an indication of its origin) (citingMarks, 129 F. Supp. at

270;Feathercombs, Inc. v. Solo Prods. Corp., 306 F.2d 251, 256 (2d Cir. 1962)); Telechron, Inc.

v. Telicon Corp., 198 F.2d 903, 907 (3d Cir. 1952) (court affirmed finding that Telechron had

not become the name of any article or category of articles; rather, it continued to be understood

by the public and the trade as a symbol of good will indicating merchandise from a single

source). Here, it is undisputed that the famous mark Tiffany has not lost all function as an

indication of source or origin for jewelry items, including pronged engagement rings, to the

consuming public.

Finally, there are also other ways to adequately describe the subject engagement rings

without using TIFFANY. Indeed, Costco itself did and continues to do so. Costco Item

number 639911 was sold in stores as TIFFANY, but at the same time online as Diamond

Solitaire Ring This classic solitaire features a .70 ct. round-brilliant cut diamond. Set in

platinum. (Compl. 38(g).) Just because Costco prefers to use the TIFFANY designation

does not give it the right to do so. InBurton v. Stratton, 12 F. 696, 702 (C.C.E.D. Mich. 1882), a

seller of yeast argued that a popular trademark was a mere description of the yeast itself or its

quality, and not an indicator of its origin. In finding for the trademark holder, the court

pertinently said:



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But if the primary object of the trade-mark be to indicate the origin orownership, the mere fact that the article has obtained such a wide sale that themark has also become indicative of quality is not of itself sufficient to debar theowner of protection or make it the common property of the trade. To otherwisehold would be to deprive the owner of the exclusive use of his trade-mark just at

the time when it had become most valuable to him and stood most in need ofprotection.

Id.;see alsoLawrence Mfg. Co. v. Tenn. Mfg. Co., 138 U.S. 537, 547-48 (1891) (mere fact that

article has obtained such a wide sale that it has also become indicative of quality is not of itself

sufficient to debar owner from protection (citingBurton, 12 F. 696)). This has been the law of

trademark since the 1800s.

Entry of judgment dismissing the Counterclaim is therefore appropriate.

POINT III

DISCOVERY IS NOT REQUIRED BEFORE SUMMARY JUDGMENT MAY BE

GRANTED, FAILING WHICH, JUDGMENT ON THE PLEADINGS IS APPROPRIATE

A. Pre-Discovery Summary JudgmentThe Counterclaim presumes the Court has the authority to invalidate an incontestable

fanciful trademark for only one particular use in a trademark class. It does not. Accordingly,

summary judgment dismissing the counterclaim is appropriate. Rule 56(b) of the Federal Rules

of Civil Procedure expressly provides that such a motion may be made at any time until 30 days

after the close of all discovery. Fed. R. Civ. P. 56(b). While pre-discovery summary judgment

is an exceptional remedy, it is appropriate where a party cannot prevail on a claim. For example,

in a discrimination case where no material issue of fact could be raised, pre-discovery summary

judgment was entered. Raymond v. U.S. Capitol Police Bd., 157 F. Supp. 2d 50, 55 (D.D.C.

2001). The court observed:

In this case, the parties have not begun discovery. Based on the complaintand the plaintiffs affidavits in opposition to the motion for summary judgment,however, the plaintiff fails to present any genuine issues of material fact. Even ifgiven the opportunity to conduct discovery, the plaintiff would not be able to



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establish a prima-facie case for any of her claims. Accordingly, this case fallsinto the unusual category in which the court will grant the defendants motion forsummary judgment before any discovery has begun.

Id.

Rule 56(f) is a safeguard against premature grants of summary judgment. Valley Natl

Bank v. Greenwich Ins. Co., 254 F. Supp. 2d 448, 454 (S.D.N.Y. 2003). Even then, the Court

must look at the discovery a party may claim is required, and then determine whether it could

possibly change the outcome. The Second Circuit inPaddington Partners v. Bouchard, 34 F.3d

1132, 1138 (2d Cir. 1994) said:

A court can reject a request for discovery, even if properly and timelymade through a Rule 56(f) affidavit, if it deems the request to be based onspeculation as to what potentially could be discovered. Rule 56(f) is not a shieldagainst all summary judgment motions. Litigants seeking relief under the rulemust show that the material sought is germane to the defense, and that it is neithercumulative nor speculative, and a bare assertion that the evidence supporting aplaintiffs allegation is in the hands of the defendant is insufficient to justify adenial of a motion for summary judgment under Rule 56(f). Sundsvallsbanken v.Fondmetal, Inc., 624 F.Supp. 811, 815 (S.D.N.Y.1985) (quoting ContemporaryMission, Inc. v. United States Postal Service, 648 F.2d 97, 107 (2d Cir.1981)).

In this day and age, with the inordinate cost associated with the retrieval and production

of electronically stored information alone, not to mention other forms of discovery, a party

should not be subjected to those costs on a claim that has no merit. Costco cannot invalidate the

fanciful Tiffany trademark for one jewelry use only. Accordingly, discovery about that claim

would be a complete waste of resources.

B. Judgment on the PleadingsIn a motion pursuant to Rule 12(c) of the Federal Rules of Civil Procedure for judgment

on the pleadings, the court must accept as true the well pleaded material facts alleged in the

complaint. Patel v. Contemporary Classics of Beverly Hills, 259 F.3d 123, 126 (2d Cir. 2001);

Tyco Labs., Inc. v. Cutler-Hammer, Inc., 490 F. Supp. 1, 4 (S.D.N.Y. 1980). However,



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conclusions of law or unwarranted deductions of fact are not admitted. First Nationwide Bank

v. Gelt Funding Corp., 27 F.3d 763, 771 (2d Cir. 1994) (citation omitted) (internal quotation

marks omitted);see also Tyco Labs., Inc., 490 F. Supp. at 4 (a court need not accept as admitted

mere legal conclusions or characterizations contained in the non-movants pleadings); Diaz v.

Ward, 437 F. Supp. 678, 681 (S.D.N.Y. 1977);, Shade v. Pennsylvania, Dept of Transp.,

394 F. Supp. 1237, 1243 (M.D. Pa. 1975);, S & S Realty Corp. v. Kleer-Vu Indus., Inc., 575 F.2d

1040, 1044 (2d Cir. 1978).

A court may also consider factual allegations in the complaint, documents incorporated

by reference into the complaint, matters of which judicial notice may be taken, and documents

either in the plaintiffs possession or of which the plaintiff had knowledge and relied on in

bringing suit. Brass v. Am. Film Techs., Inc., 987 F.2d 142, 150 (2d Cir. 1993).

Here, Costco has not alleged, nor can it in good faith allege, that the Tiffany trademark

itself is a generic term that has lost all its trademark significance as a source identifier to the

consuming public. Accordingly, Tiffany is entitled to judgment dismissing Costcos

Counterclaim as a matter of law.



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CONCLUSION

For all the foregoing reasons, Tiffanys Motion to Dismiss the Counterclaim should be

granted in all respects.

Dated: New York, New YorkApril 17, 2013

Respectfully submitted,

DICKSTEIN SHAPIRO LLP

By: s/Jeffrey A. MitchellJeffrey A. MitchellDon Abraham

1633 BroadwayNew York, New York 10019-6708Telephone: (212) 277-6500Facsimile: (212) [email protected]@dicksteinshapiro.comAttorneys for PlaintiffsTiffany and Company and Tiffany (NJ) LLC


tiffany v. costco, 1-13-cv-01041-lts-dcf (s.d.n.y.) (apr. 17, 2013 brief in support of tiffany's...

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