Tiffany. The word alone conjures up images of elegance – beautiful diamond jewelry, magnificent stained glass, Audrey Hepburn, Fifth Avenue.  The name also provides an excellent illustration of some important points of trademark law.

Founded in 1837 by Charles Lewis Tiffany, Tiffany & Co. is now arguably the world’s best known jeweler.  The company claims to have introduced the first-ever mail-order catalog in the United States, the Blue Book^®.  Tiffany jewels have been featured in Hollywood films and on Hollywood stars on the red carpet.  Its flagship store in Manhattan played a central role in the classic film Breakfast at Tiffany’s.  The company is the owner of dozens of trademark registrations for the Tiffany name, the famous robin’s-egg blue box, and other marks.

Which brings us to trademark law lesson #1.  The renown of the Tiffany brand illustrates perfectly how trademark law treats surnames.  The general rule is that surnames cannot be protected as trademarks because it would be unfair and a restraint on competition if one trader were able to keep competitors out of the market simply because they had the same last name.  One generally ought to be able to use one’s own name in trade.  The exception to this rule, however, is that a surname can be protectable and registrable if it has acquired distinctiveness—that is, if through long-term exclusive use and promotion of the name as a brand, consumers have come to recognize it as a trademark identifying a particular source.  The name loses its primary meaning as a surname, and gains a secondary meaning as a trademark.  This is precisely what has happened with the 175-year old Tiffany brand.

Trademark law lesson #2, however, reminds us that a trademark can become too famous.  Sometimes a mark can become so dominant in its market that it can become synonymous with the products it identifies—it becomes generic.  Generic terms are completely unenforceable, and “genericide” is irreversible, and so it is potentially catastrophic for a famous brand owner.  This happened with former trademarks such as cellophane and (more recently) thermos, and it is a battle which the owners of the Jeep, Kleenex, and Xerox brands must fight every day.

It is against this backdrop that Costco Wholesale Corp. found itself in hot water after it began selling diamond jewelry and using the word Tiffany to describe the settings.  Tiffany & Co. promptly objected and filed suit.  Costco claimed that it was using the word “Tiffany” in a generic sense—that it had become the generic word for the ring setting in question.  Costco was, in effect, defending itself by trying to make Tiffany & Co. a victim of its own success.

Tiffany & Co. introduced survey evidence showing that an astonishing nine out of ten respondents recognize “Tiffany” as a brand and not merely as a generic term.  Costco was ultimately unable to overcome the evidence of the fame and strength of the Tiffany mark, but its case may have been hurt even more by documents that emerged in discovery showing that Costco had instructed its vendors to copy Tiffany & Co. designs.  Thus, after more than two years of bitterly-contested litigation, a federal judge in New York this week issued summary judgment in favor of Tiffany & Co. on liability issues, finding that Costco had committed trademark infringement and counterfeiting, and had done so willfully and in bad faith.  A trial on damages (potentially including punitive damages and fees) now awaits.

This leads us to trademark law lesson #3—genericide is not easy to prove, particularly when there is evidence of unclean hands on the other side of the scale.  But owners of famous trademarks can take steps to avoid genericide, including aggressive enforcement (as Tiffany & Co. did in this case) as well as proactive initiatives to educate the public and press about trademark rights and proper trademark use.

The case is Tiffany & Co. v. Costco Wholesale Corp., case number 1:13-cv-01041, in the U.S. District Court for the Southern District of New York.