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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 Costco counterclaim)

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 Costco counterclaim)

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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 Costco counterclaim)
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 Costco counterclaim)

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DICKSTEIN SHAPIRO LLP Jeffrey A. Mitchell Don Abraham 1633 Broadway New York, New York 10019-6708 Telephone: (212) 277-6500 Facsimile: (212) 277-6501 mitchellj@dicksteinshapiro.com abrahamd@dicksteinshapiro.com Attorneys for Plaintiffs Tiffany and Company and Tiffany (NJ) LLC UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK TIFFANY AND COMPANY and TIFFANY (NJ) LLC, Plaintiffs, v. COSTCO WHOLESALE CORPORATION, Defendant. ) ) ) ) ) No. 13 CV 1041 (LTS)(DCF) ) ECF Case ) ) ) ) ) )

PLAINTIFF’S’ 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)

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TABLE OF CONTENTS Page TABLE OF AUTHORITIES .......................................................................................................... ii PRELIMINARY STATEMENT .....................................................................................................1 FACTS RELEVANT TO THIS MOTION ......................................................................................6 A. B. Background ..............................................................................................................6 The Counterclaim.....................................................................................................8

ARGUMENT .................................................................................................................................10 POINT I A. B. C. D. POINT II POINT III THE OBJECTIVE OF TRADEMARK PROTECTION .......................................10 The Tiffany® Mark is not Generic .........................................................................11 An Incontestable Mark ...........................................................................................12 A Famous Trademark ............................................................................................13 Tiffany® is Indisputably both Incontestable and Famous, and Entitled to the Strongest Protection Available under the Trademark Laws ..................................14 THE TIFFANY® MARK IS NOT GENERIC AS A MATTER OF LAW ...........16 DISCOVERY IS NOT REQUIRED BEFORE SUMMARY JUDGMENT MAY BE GRANTED, FAILING WHICH, JUDGMENT ON THE PLEADINGS IS APPROPRIATE .........................................................................22 Pre-Discovery Summary Judgment .......................................................................22 Judgment on the Pleadings.....................................................................................23

A. B.

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), aff’d, 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), aff’d, 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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Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208 (2d Cir. 1999), abrogated on other grounds by Moseley 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, Dep’t 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. Softbelly’s, 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 Nat’l 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), abrogated on other grounds by KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111 (2004) ...........................................................................................................11, 12 iii
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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 décor, and having a generous return policy in exchange for little to no customer service.

Copies of the pleadings are annexed as Exhibits A, B and C to the accompanying Declaration of Jeffrey A. Mitchell in Support of Plaintiffs’ Motion for Summary Judgment or, in the Alternative, for Judgment on the Pleadings, dated April 17, 2013 (the “Mitchell Declaration”).

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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 Costco’s 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, Costco’s 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 Tiffany’s trademark as charged, but claimed it didn’t mean Tiffany the company when it said “TIFFANY” in the POS signs which described Tiffany replica rings

The rings were displayed without packaging within a locked glass case in a holder that obscured the lower half of the ring, both inside and outside, so the only brand labeling visible was “TIFFANY” on the POS signs. (Mitchell Decl. Ex. D.) 2
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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 didn’t 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 Costco’s 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 mark Tiffany® in block letters is generic. To the contrary, it recognizes and accepts Tiffany’s 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 Tiffany’s website, which says: This round brilliant diamond solitaire in a six-prong setting was designed by Charles Lewis Tiffany over a century ago. It lifts the stone up into the light where its precise faceting can release its superior brilliance, dispersion and scintillation. The Tiffany Setting has been copied but never equaled.

See discussion infra Point II (citing Ty Inc. v. Softbelly’s, Inc., 353 F.3d 528, 531-32 (7th Cir. 2003) (Posner, J.); Marks v. Polaroid Corp., 129 F. Supp. 243, 270 (D. Mass. 1955), aff’d, 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)). 4
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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 trademark Tiffany® for any jewelry product or design, including its own “setting” made to Tiffany’s proprietary and exacting standards. The mark Tiffany® identifies the source of Tiffany’s 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

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 defendant’s product is 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.”). 5
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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 Tiffany’s 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. Background Tiffany 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 metals−namely, 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 Tiffany’s 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

The 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, entitled “International schedule of classes of goods and services.” Classification 14 of 37 C.F.R. § 6.1 includes jewelry, precious metals, and precious stones. The classification system is established by treaty among member nations of the Nice Union, the United States being one of those members. Tiffany also holds Registration No. 133,063 for the stylized mark in all capital letters “TIFFANY” in U.S. Class 28 for “jewelry for personal wear, not including watches; precious stones, and flat and hollow ware made of or plated with precious metal.” (Mitchell Decl. Ex. I.) 6
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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 Jeweler’s 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

The word “setting” may not be trademarked, any more than could the word “warehouse” by Costco. De Beers filed for protection of the mark “Forevermark Setting,” and its registration has the proviso that “no claim is made to the exclusive right to use ‘setting’ apart from the mark as shown.” The same proviso appears in the Costco trademark for “Costco Wholesale” with respect 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 one else can use the adjective “Tiffany” to describe a jewelry product or design. 7
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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 Tiffany’s 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 Counterclaim The 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 defendant’s blatant counterfeiting of Tiffany’s 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

8

Tiffany 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-prong setting for a diamond solitaire with a knife-edge band the Tiffany® Setting. The Counterclaim would transform these other Tiffany styles into “Tiffany settings” as well, which they are not. 8
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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 prong engagement 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 using the word Tiffany to indicate a ring has a Tiffany setting, i.e. a setting comprising multiple slender prongs extending upward from a base to hold a single gemstone . . . . . . . [W]hether this lawsuit was filed and publicized by Plaintiffs for improper purposes, including to hinder lawful competition from Costco in the retail sale of genuine diamond rings whose quality is comparable to that of certain diamond 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

Tiffany 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.” 9
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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. In Esso, 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: Plaintiff’s trade-marks had come to indicate the origin or ownership of its products to which they are affixed. They distinguish them from those of others, and they served the purpose of preventing others from passing off their products as the products of plaintiff. They are of value to plaintiff as aids in protecting its good will and reputation. It is the purpose of the law to protect not only the owner in his property, but to protect the public from being deceived by reason of a misleading claim that the article bearing the trade-mark is the article produced or manufactured by the owner of the trade-mark, when in fact it is not. No one has a right to represent his goods as the goods of some one else, and when a trade-mark is 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 constitute property, it is a means of preserving good will, which is property. It is inseparable from good will, and it can not be disassociated from the business to which it belongs. It is common-place to say that the trade-name for the goods of a producer, manufacturer, or trader may not be used by another as the trade-mark for 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 Tiffany’s 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 Generic A 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 by KP 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. See Zatarains, 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 11
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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 by Moseley 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), aff’d, 233 F.3d 456 (7th Cir. 2000). B. An Incontestable Mark Registration of a mark is conclusive evidence of the registrant’s exclusive right to use it. 15 U.S.C. § 1115(b); see also Park ’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 is prima 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

In 2006, Congress amended the Federal Trademark Dilution Act of 1995 and reversed the Mosley 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). 12
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five years, the holder’s right to it becomes incontestable. 378 F. Supp. 2d at 454-55; 15 U.S.C. § 1065.

Lorillard Tobacco Co.,

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 Trademark The 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 “ʻproducts of shoddy qualityʼ” 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 ʻwholesome identifierʼ of a plaintiff’s 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 the
Strongest 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, branded jewelry. Since 2000, all new Tiffany jewelry sold in the United States has been available exclusively through Tiffany’s retail stores, catalogs, and website, and through its Corporate Sales Department. It does not use liquidators, sell overstock merchandise, 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 USPTO’s refusal to register “Tiffany” for ladies’ shoes was rejected. The court said the following about the Tiffany® mark: The commissioner maintains that Tiffany & Company’s marks are strong because only Tiffany & Company has registered “Tiffany” for a wide variety of goods. It has successfully defended its marks against use on bowling balls, ceiling tiles, ceramic tiles, rare coins, perfume, restaurant services, and automobiles. Because Tiffany has many uses does not make it weak. Tiffany has no content. It is almost as arbitrary as Kodak or Exxon, being wholly constructed for their trade name purpose. Northwest Van Lines, for example, would be a strong mark within transportation even though there are many uses of “northwest” because of its meaning. Hughes is a common surname among Americans. It is the name of towns and roads. In aircraft and oil tools, though, it has a special significance. So too with Tiffany & Company, and that leads to fame itself. There is no question that Tiffany & Company is famous. See, e.g., Sykes Laboratory, 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 famous names as ‘Tiffany,’ ‘Polaroid,’ ‘Rolls Royce,’ and ‘Kodak.’” Tiffany, Rolls, and Royce were surnames, and Polaroid and Kodak were neologisms.) The office included eighteen news articles where Tiffany & Company was identified as a famous business. . . . Over the years, it [Tiffany & Company] has built a high degree of consumer recognition and belief in the quality of its merchandise. “Tiffany” and 14
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“Tiffany & Co.” have acquired a distinct secondary meaning for consumers for quality 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 and merchants of such products in the United States. It has achieved a reputation of superlative 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 consumer recognition during a century and a half, and by reference to Plaintiff and its products, and by television broadcasts. The Tiffany mark has become universally known to the trade and the public as indicating products of the highest quality and 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 the involved goods would be likely to assume they emanated from the same source [Tiffany]. Id.11 See also Tiffany & 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 Costco’s 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, pronged engagement rings – in the very class where Tiffany holds its incontestable and famous trademark, and within which Costco concedes it will remain incontestable and famous for all other forms of jewelry, including engagement rings without prongs. 15
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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 Costco’s 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 Park ʼN 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 16
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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 all significance as a source identifier and become the name of the product class itself. In Ty Inc. v. Softbelly’s, 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 public domain is a fateful step. It penalizes the trademark owner for his success in making the trademark a household name and forces him to scramble to find a new trademark. And it may confuse consumers who continue to associate the trademark with the owner’s brand when they encounter what they thought a brand name on another seller’s brand. . . . The fateful step ordinarily is not taken until the trademark has gone so far toward becoming the exclusive descriptor of the product that sellers of competing brands cannot compete effectively without using the name to designate the product they are selling. Imagine the pickle that sellers would be in if they were forbidden to use “brassiere,” “cellophane,” “escalator,” “thermos,” “yo-yo,” or “dry ice” to denote products − all being former trademarks that have become generic terms. The problem is not that language is so impoverished that no other words could be used to denote these products, but that if no other words have emerged as synonyms it may be difficult for a seller forbidden to use one of the trademarked words or phrases to communicate 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

The Journal of Legal Studies has identified Judge Richard Allen Posner of the United States Court of Appeals for the Seventh Circuit, as the most cited legal scholar in the 20th century. Fred. R. Shapiro, The Most-Cited Legal Scholars, 29 J. Legal Studies 409, 424 (Jan. 2000). 17
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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 – like Band Aid® or Kleenex® – 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” to denote 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 Circuit’s illustration. That does not make the mark Tiffany® 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) LLC’s trademark TIFFANY is incorporated into the disputed domain name in its entirety with the adjunction of the descriptive term “jewelry” and the number “925”. The term “jewelry” is an obvious reference to one of the products for which the Complainants are wellknown. The Complainants do not mention whether “925” is or is not a reference to a product or a product range. 18
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The addition of the generic term “jewelry” and the number “925” is not sufficient to exclude confusing similarity with the TIFFANY trademark. The adjunction of the term “jewelry” actually reinforces the association with the Complainants to the extent the Complainants notably sell jewelry. It is likely that internet users will make the link between the trademark TIFFANY and said 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 of Jacobs v. Beecham, 221 U.S. 263 (1911), was confronted with the use by defendant of the phrase “Beecham’s 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 defendant’s method of advertising, he does not simply say that he 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 Beecham’s Pills. The only sense in which “Beecham’s Pills” can be said to have become a designation of the article is that Beecham, so far as appears, is the only man who has made it. But there 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 Beecham’s Pills is to call them the plaintiff’s pills. The statement that the defendant makes them does not save the fraud. That is not what the public would notice or is intended to notice, and, if it did, its natural interpretation would be that the defendant had bought the original business out and was carrying it on. It would be unfair, even if we could assume, as we cannot, that the defendant uses the plaintiff’s 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. In Marks v. Polaroid Corp., 129 F. Supp. 243, 270 (D. Mass. 1955), aff’d, 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 of distinctiveness of the trademark, one would have to be blind to deny that there has been widespread generic use of the word “polaroid”. This use has been so widespread in fact that it has found its way to the lexicographers, though most dictionary definitions quoted also recognize that the word is a trademark. It is further evidence that the use of “polaroid” as a common noun has extended to stereoscopic viewers as well as to polarizing material in other applications. As I view the cases, a defendant alleging invalidity of a trademark for genericness must show that to the consuming public as a whole the word has lost all its trademark significance. That such is the burden placed on a defendant in cases like this one seems evident from the courts’ findings in dicta in Du Pont The 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 hair iron and awarded statutory damages. Farouk Sys., Inc. v. Costco Wholesale Corp., No. 4:09-cv3499, 2012 WL 360184 (S.D. Tex. Feb. 2, 2012); see also Farouk Sys., Inc. v. Costco Wholesale Corp., 700 F. Supp. 2d 780 (S.D. Tex. 2010) (motion to dismiss denied). In 2006, Costco was accused of selling fake Picassos with fabricated certificates of authenticity, which it promptly removed from the market. Daphné Anglès & Carol Kino, Picasso’s 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 Chinese artist, 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 at http://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.3d 1083 (9th Cir. 1998). 20
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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 trademark “Polaroid” has come to be so public and in such universal use that nobody can be deceived by the use of it. Where the possibility of some deception remains real and 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 the principal significance of the word must be its indication of the nature or class of an article, rather than an indication of its origin) (citing Marks, 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. In Burton 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. pertinently said: 21
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But if the primary object of the trade-mark be to indicate the origin or ownership, the mere fact that the article has obtained such a wide sale that the mark has also become indicative of quality is not of itself sufficient to debar the owner of protection or make it the common property of the trade. To otherwise hold 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 of protection. Id.; see also Lawrence 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 (citing Burton, 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 Judgment The 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 complaint and the plaintiff’s affidavits in opposition to the motion for summary judgment, however, the plaintiff fails to present any genuine issues of material fact. Even if given the opportunity to conduct discovery, the plaintiff would not be able to 22
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establish a prima-facie case for any of her claims. Accordingly, this case falls into the unusual category in which the court will grant the defendant’s motion for summary judgment before any discovery has begun. Id. Rule 56(f) “is a safeguard against premature grants of summary judgment.” Valley Nat’l 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 in Paddington Partners v. Bouchard, 34 F.3d 1132, 1138 (2d Cir. 1994) said: A court can reject a request for discovery, even if properly and timely made through a Rule 56(f) affidavit, if it deems the request to be based on speculation as to what potentially could be discovered. “Rule 56(f) is not a shield against all summary judgment motions. Litigants seeking relief under the rule must show that the material sought is germane to the defense, and that it is neither cumulative nor speculative,” and a “ʻbare assertion’ that the evidence supporting a plaintiff’s allegation is in the hands of the defendant is insufficient to justify a denial 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 Contemporary Mission, 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 Pleadings In 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-movant’s pleadings); Diaz v. Ward, 437 F. Supp. 678, 681 (S.D.N.Y. 1977);, Shade v. Pennsylvania, Dep’t 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 plaintiff’s 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 Costco’s

Counterclaim as a matter of law.

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CONCLUSION For all the foregoing reasons, Tiffany’s Motion to Dismiss the Counterclaim should be granted in all respects. Dated: New York, New York April 17, 2013 Respectfully submitted, DICKSTEIN SHAPIRO LLP By: s/Jeffrey A. Mitchell Jeffrey A. Mitchell Don Abraham 1633 Broadway New York, New York 10019-6708 Telephone: (212) 277-6500 Facsimile: (212) 277-6501 mitchellj@dicksteinshapiro.com abrahamd@dicksteinshapiro.com Attorneys for Plaintiffs Tiffany and Company and Tiffany (NJ) LLC

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