Opinion ID: 4556092
Heading Depth: 4
Heading Rank: 2

Heading: Costco’s Good Faith.

Text: In analyzing whether a defendant has acted in bad faith, the question is whether the defendant attempted “to exploit the good will and reputation of a senior user by adopting the mark with the intent to sow confusion between the two companies’ products.” Star Indus., 412 F.3d at 388. We have cautioned that “where the allegedly infringing mark is identical to the registered mark, and its use began subsequent to the plaintiff’s trade-mark registration, the defendant must carry the burden of explanation and persuasion.” Kiki Undies Corp., v. Promenade Hosiery Mills, Inc., 411 F.2d 1097, 1101 (2d Cir. 1969). But “[p]rior knowledge of a senior user’s trade mark does not necessarily give rise to an inference of bad faith and may [actually] be consistent with good faith.” Sports 22 Auth., 89 F.3d at 964 (quoting Arrow Fastener Co. v. Stanley Works, 59 F.3d 384, 397 (2d Cir. 1995)). Indeed, “the intent to compete by imitating the successful features of another’s product is vastly different from the intent to deceive purchasers as to the source of [one’s own] product.” Nora Beverages, Inc. v. Perrier Grp. of Am., Inc., 269 F.3d 114, 123 (2d Cir. 2001) (internal quotation marks and alterations omitted); see also George Basch Co. v. Blue Coral, Inc., 968 F.2d 1532, 1541 (2d Cir. 1992) (“Absent confusion, imitation of certain successful features in another’s product is not unlawful . . . .”). And as we have consistently observed, “subjective issues such as good faith are singularly inappropriate for determination on summary judgment.” Cadbury, 73 F.3d at 483 (internal quotation marks and alterations omitted) (declining to grant summary judgment on the matter of good faith even where the plaintiff’s “registered mark is identical—in style as well as in name—to [the defendant’s] adopted logo . . . [and the defendant’s] explanation is not particularly persuasive”). The district court concluded that “no rational finder of fact could conclude that Costco acted in good faith in adopting the Tiffany mark.” Tiffany, 127 F. Supp. 3d at 252 (emphasis added). It cited several pieces of evidence proffered by Tiffany, including an email from a Costco employee indicating that Costco’s jewelry boxes 23 should have a more “Tiffany or upscale look,” the deposition testimony of a Costco inventory control specialist who acknowledged that she took no action in response to two emails ostensibly indicating customer and employee confusion over the source of Costco’s rings, and photographs and emails that suggest efforts by Costco to “copy Tiffany’s designs by making references to Tiffany designs and sharing links to Tiffany’s website [in communications with vendors].” Id. at 251– 52. The district court acknowledged Costco’s contrary evidence that it had never attempted to adopt the Tiffany mark, that its signs actually used the word “Tiffany” as a brand-independent description of a particular style of diamond setting, and that those signs merely reflected information provided by its own suppliers. Id. at 252. The court nonetheless concluded that a jury could not reasonably credit an argument that “Costco jewelry buyers used the word ‘Tiffany’ in a generic sense when communicating with vendors, while at the same time asking those vendors to copy Tiffany & Co. designs, and that signage incorporating the word ‘Tiffany’ on the resulting merchandise was nothing more than clerical duplication of a generic reference from an invoice.” Id. Again, we disagree. 24 Although a jury could reasonably draw the conclusion that Costco’s interest in emulating Tiffany’s designs spilled over into an intent to mislead buyers as to the origins of its own jewelry, it could also reasonably conclude that Costco intended to borrow “certain successful features [from Tiffany’s] product” without implying that Tiffany actually produced or endorsed the jewelry at issue. George Basch Co., 968 F.2d at 1541. We have consistently recognized that intent to copy a product’s useful, nonprotected attributes should not be equated automatically with an intent to deceive. See Nora Beverages, 269 F.3d at 123. Therefore, Costco’s admitted intent to sell jewelry that looks like Tiffany’s—as opposed to an intent to have its jewelry pass as Tiffany’s—cannot be enough to justify a finding that Costco acted in bad faith in connection with Tiffany’s trademark infringement claim. In concluding otherwise, the district court overlooked substantial evidence that Costco did not attempt to sow confusion among its customers. As the district court recognized in its good faith analysis, two Costco representatives—a diamond buyer and an assistant general merchandise manager—submitted declarations affirming that Costco inventory control personnel took the term “Tiffany” directly from vendor descriptions, that the representatives understood 25 Tiffany as a “generic style name,” and that indeed it was “the only name . . . used to denote [that] type of pronged setting.” 10 J.A. 2,927. Costco backed these claims with evidence that the term “Tiffany” has been used as a generic descriptor—both explicitly in conjunction with a word like “setting” and implicitly by itself—in thousands of advertisements, dictionaries, trade publications, and other public documents since the late 1800s. And as the district court recognized elsewhere in its decision, Costco presented evidence that its rings were not branded with Tiffany’s mark (and indeed were branded with R.B. Diamond’s logo instead); that the rings came in unbranded containers bearing no resemblance to Tiffany’s distinctive robin’s-egg blue packaging; that buyers received Costco-branded receipts, appraisal forms, and other sales documents; and that Costco’s return policy permitted customers to return their rings any time after purchase. 11 10As far as we can tell, Tiffany’s only reply to this evidence is that after Costco voluntarily stopped using the name “Tiffany” on its signs, it was still able to describe those rings’ settings as “Solitaire.” But “Solitaire,” which describes any single gem in a simple setting, is undeniably a less descriptive term than “Tiffany,” which ostensibly describes a specific type of six-prong setting. 11Both Tiffany and Costco point to a customer email asking whether the word “Tiffany” on the label referred to the “Tiffany setting or Tiffany brand,” J.A. 15,333. Consistent with Costco’s argument that it acted in good faith, a Costco employee responded to the customer’s email that “[i]t means Tiffany setting.” Id. at 15,334. Notably, the jury could also consider this email as evidence of an absence of actual customer confusion. See Nora Beverages, 269 F.3d at 124 (“Inquiries about the relationship between the owner of a mark and an alleged infringer do not amount to actual confusion. Indeed, 26 Crediting this evidence, a reasonable jury could conclude that Costco did not intend to mislead its customers and that signs bearing the word “Tiffany” were the product of a good-faith attempt to communicate to its customers the setting style of certain rings that it sold. 12