Likelihood of Confusion Surveys/Infringement

Tiffany vs. Costco: Possible Types of Litigation Surveys

tiffany ring

In February, 2013, Tiffany & Co. filed a trademark suit against Costco, accusing Costco of, among other charges, trademark infringement, dilution, counterfeiting, unfair competition, false and deceptive business practices, and false advertising.

 

Despite the long list of charges, the central issue in the case is straight forward. Tiffany wants Costco to stop referring to certain types of diamond engagement rings as having “Tiffany” settings. While Costco claims that consumers understand this term to refer to a common setting for a diamond, Tiffany claims the term refers to Tiffany & Co, the retailer.

 

This case is between two large companies who run successful brands and have a lot at stake. If this matter is not settled soon, both sides may find that they need to conduct intellectual property surveys, particularly on issues such as likelihood of confusion, genericness, or secondary meaning. This post describes the core issues and explains the types of intellectual property surveys each party might decide to conduct.

 

The Basics of Surveys for Confusion, Genericness, and Secondary Meaning

 

The matter focuses on a particular type of setting for an engagement ring. A Tiffany-style solitaire ring has a diamond mounted onto a single band with six slender prongs.

 

Costco says this is a generic term for a type of setting popularized by Tiffany’s founder back in 1886. Costco maintains that the term “Tiffany setting” is commonly used, and even appears in the dictionary. As Costco’s lawyer has stated, “It’s like Phillips screwdriver, it’s like Murphy bed, it’s like Ferris wheel.”

 

Tiffany argues that by using this term, Costco is creating a likelihood of confusion with rings sold by Tiffany. After all, Costco is known for selling other high-end goods which come from well-known manufacturers. Tiffany also claims that Costco has described some of the rings as Tiffany rings, not just as having “Tiffany settings.”

 

Costco maintains that the likelihood of confusion is low – its rings are sold in plain beige gift boxes, which do not resemble Tiffany’s well-known blue boxes, and Costco sells its rings with a Costco receipt, not a Tiffany’s receipt.

 

Tiffany counters that at retail, Costco referred to this type of ring as a “Tiffany ring,” which, says Tiffany, has the potential to confuse consumers. As Tiffany wrote in its initial complaint, “We now know that there are at least hundreds if not thousands of Costco members who think they bought a Tiffany engagement ring at Costco”.

 

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

 

Given how much is at stake, both sides are likely to undertake litigation surveys, particularly on issues such as likelihood of confusion, genericness, and secondary meaning. The remainder of this post explains all three types of litigation surveys and how they might fit into the case. (Disclaimer: I have not been engaged by either side. I’m writing this post based on what materials in the public domain and my experience. Also, the surveys described below address word marks and not trade dress or product design.)

 

Likelihood of Confusion, Confusion Surveys, and Tiffany Settings

 

One of the central issues in the case is the likelihood of confusion, which measures whether or not consumers believe that the particular ring setting sold at Costco comes from Tiffany, or was endorsed or approved by Tiffany for sale at Costco. The Lanham Act and other regulations allow manufacturers to protect their brands from marketplace confusion, and protect consumers from business practices that cause confusion or mistakes about the source of products or services.

 

Courts have a number of standards to evaluate the likelihood of confusion; for example, depending on the jurisdiction, courts may use use guidelines such as the Sleekcraft Factors or the Polaroid Factors to evaluate whether consumers are likely to be confused. Confusion surveys are one of the most common methods of measuring the likelihood of confusion.

 

I’ve written about confusion surveys before, and you can read my posts on confusion surveys here. There are two main formats for confusion surveys, often called Eveready or Lineup. For either format, the survey tests whether or not consumers are likely to believe that the settings in question come from, or were approved or endorsed by, Tiffany & Co.

 

Genericness Surveys and Tiffany Settings

 

A second question in this matter is whether “Tiffany setting” is a generic term for a type of setting with a single gemstone mounted on multiple prongs. This issue might be addressed by conducting a genericness survey.

 

There are two primary formats for conducting genericness surveys. In one format, called “Teflon,” respondents are told about the difference between a generic term and a brand name, given examples of each, tested on the difference, and then asked to sort a series of terms as either generic or representing a brand name.

 

In another format, called “Thermos,” respondents are asked questions to elicit the names that they would use to ask for a type of product, or describe a type of product. In the original Thermos case, respondents were asked questions to determine, among other things, what they would call an item that kept beverages cold or hot.

 

This article in The Trademark Reporter provides more detail on both types of genericness surveys.

 

Secondary Meaning Surveys and Tiffany Settings

 

Secondary meaning may also be the subject of surveys in this matter. A secondary meaning survey measures whether customers associate a trademark or trade dress with a single source, and, for some secondary meaning surveys, whether they associate that source with the plaintiff or with the defendant.

 

In this matter, a secondary meaning survey might measure the percentage of respondents who have heard of the term “Tiffany setting”, and who associate it as coming from only one company. It might also measure whether consumers associate that term specifically with Tiffany & Co. Alternatively, a secondary meaning survey may measure secondary meaning relating to the specific setting.

 

To find out more about secondary meaning surveys, watch this video on How to Measure Secondary Meaning in a Litigation Survey.

 

In my opinion, a secondary meaning survey is likely to show either that the term “Tiffany setting” is associated with the retailer Tiffany & Co., or not. It is more difficult to predict whether consumers would associate a picture of a specific ring setting with Tiffany & Co.

 

Litigation Surveys, Confusion, Genericness, and Secondary Meaning

 

I’ve written in this post about the role that a confusion survey, a genericness survey, and a survey of secondary meaning might play in this matter. The matter is made more complicated because it involves both trademarks, such as “Tiffany,” and trade dress, such as the look of a particular type of setting.

 

Stay tuned. I’ll write more on this matter as it proceeds.

 

Bruce Isaacson, President
Dr. Bruce Isaacson
President
MMR Strategy Group

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