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

Heading: Tiffany’s Trademark Counterfeiting Claim

Text: Having determined that Costco’s use of the word “Tiffany” constituted trademark infringement, the district court proceeded to conclude as a matter of law that Costco’s infringement involved a counterfeit mark.17 Under the Lanham Act, “[a] counterfeit is a ‘spurious mark which is identical with, or substantially indistinguishable from, a registered mark.’” Kelly-Brown, 717 F.3d at 314 (quoting 15 U.S.C. § 1127). Echoing its principal infringement analysis, the district court held that Costco’s conduct had necessarily involved such a mark because it had “utilized a word mark identical to the one that Tiffany has registered” and done 17 In a Lanham Act litigation, a plaintiff who has employed “a counterfeit mark”— as opposed to a mere “colorable imitation” or other infringing usage—is subject to heightened statutory penalties. See 15 U.S.C. § 1117. “In a case involving the use of a counterfeit mark,” a Lanham Act plaintiff may elect to recover, in lieu of the standard profits and damages available for mere infringement, “an award of statutory damages . . . not less than $1,000 or more than $200,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed.” 15 U.S.C. § 1117(c). Even greater penalties are available upon a finding that a defendant used a counterfeit mark willfully. If a defendant has “intentionally us[ed] a mark or designation, knowing that such mark or designation is a counterfeit mark,” and the plaintiff elects to pursue standard profits and damages, the court “shall, unless [it] finds extenuating circumstances, enter judgment for three times [defendant’s] profits or [plaintiff’s] damages, whichever amount is greater, together with a reasonable attorney’s fee.” Id. § 1117(b). And if a plaintiff elects instead to pursue statutory damages, a “court [that] finds that the use of the counterfeit mark was willful,” may impose damages of up to “$2,000,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed.” Id. § 1117(c)(2). In this case, after holding Costco liable for willful trademark counterfeiting as a matter of law, the district court awarded Tiffany treble profits pursuant to § 1117(b). 40 so with the “intent to confuse customers as to the source of the rings,” rendering its “use of the Tiffany mark . . . ‘spurious’ as a matter of law.” Tiffany, 127 F. Supp. 3d at 255. Because it was inappropriate to hold Costco liable for trademark infringement at the summary judgment stage—and because counterfeiting is merely an aggravated form of infringement—we vacate the district court’s judgment as to counterfeiting as well. 18 18 We cannot conclude on the record here that no reasonable jury could find in favor of Tiffany on the counterfeiting claim, and we therefore affirm the district court's denial of Costco's motion for summary judgment as to this claim. We do note that it is likely inappropriate to impose liability for trademark counterfeiting when a defendant is able to establish—with or without the other two elements of the fair use defense—that it used a term identical to the registered mark otherwise than as a mark. In order for material to qualify as “counterfeit” under the Lanham Act, it must be a “spurious mark.” 15 U.S.C. § 1127. A “spurious” mark, in turn, is one that is “fake” and “[d]eceptively suggest[s] an erroneous origin.” Spurious, Black’s Law Dictionary (11th ed. 2019). We fail to see how a term can be a “fake” mark if it is not actually used as a mark, or how a term can “deceptively suggest an erroneous origin” if it is not used as a means to indicate origin in the first place. See 15 U.S.C. § 1127 (defining “trademark” and “service mark” as “any word, name, symbol, or device, or any combination thereof” used “to indicate the source” of goods and services). Terms not used as a mark may still generate confusion as to “affiliation, connection, . . . association[,] . . . sponsorship or approval,” id. § 1125(a)(1)(A), or “misrepresent the nature, characteristics, qualities, or geographic origin” of a good or service, id. § 1125(a)(1)(B), and therefore constitute trademark infringement. See Int’l Info. Sys. Sec. Certification Consortium, 823 F.3d at 161 (“[P]rotection is not exclusively limited . . . to cases in which there may be confusion as to source.”); Kelly-Brown, 717 F.3d at 308 (“Lanham Act plaintiffs [need not] show that the defendant was using the allegedly infringing content ‘as a mark’ . . . in order to establish consumer confusion.”). But because terms not used as marks are not “spurious,” they cannot, as a matter of law, be counterfeit. 41