`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
`-------------------------------------------------------x
`
`
`
`TIFFANY AND COMPANY and
`TIFFANY (NJ) LLC,
`
`Plaintiffs,
`
`-v-
`
`COSTCO WHOLESALE CORP.,
`
`Defendant.
`
`-------------------------------------------------------x
`
`No. 13CV1041-LTS-DCF
`
`MEMORANDUM OPINION AND ORDER
`
`By Opinion and Order dated September 8, 2015 (“Summary Judgment Opinion,”
`
`docket entry no. 175), the Court granted summary judgment in favor of Plaintiffs (collectively,
`
`“Tiffany”), holding Costco liable for trademark infringement and trademark counterfeiting under
`
`the Lanham Act with respect to engagement rings sold under certain signage that referenced the
`
`mark “Tiffany” as a standalone term. The recitation of undisputed facts and the conclusions of
`
`law set forth in the Summary Judgment Opinion are incorporated herein by reference. A jury
`
`trial on Tiffany’s claims for monetary recovery in the form of profits and statutory damages
`
`pursuant to 15 U.S.C. Section 11171, and punitive damages pursuant to New York state law, was
`
`held from September 19, 2016, to October 5, 2016. The jury rendered unanimous verdicts that
`
`Costco’s relevant profits – those derived from sales of rings “using display case signage that
`
`included the ‘Tiffany’ mark as a standalone term, not combined with any immediately following
`
`115 U.S.C. § 1117(c) permits the plaintiff in a case involving the use of a counterfeit
`mark to elect, at any time before final judgment is rendered, to recover an award of statutory
`damages instead of profits.
`POST TRIAL.WPD
`
`VERSION AUGUST 14, 2017
`
`1
`
`
`
`Case 1:13-cv-01041-LTS-DCF Document 438 Filed 08/14/17 Page 2 of 17
`
`modifier such as ‘setting,’ ‘set’ or ‘style’” – totaled $3,700,000, that such profits are inadequate
`
`to compensate Tiffany, that $5,500,000 would be a just award of profits, and that Tiffany is
`
`entitled to an award of statutory damages for the same conduct in the amount of $2,000,000 and
`
`punitive damages for such conduct in the amount of $8,250,000.
`
`On October 20, 2016, the Court issued an order directing the parties to address
`
`whether and to what extent the jury’s verdict should be treated as advisory with respect to: (a)
`
`the determination of Costco’s relevant profits; (b) whether that profit determination was
`
`inadequate or excessive as an amount to be recovered by Tiffany in light of the nature of
`
`Costco’s wrongful conduct; and, if so, (c) what amount would be just as an award of profits. The
`
`parties were also directed to address: whether there are any “extenuating circumstances” within
`
`the meaning of 15 U.S.C. § 1117(b) that preclude the trebling of the profits award; whether and
`
`to what extent equitable and injunctive relief ought to be granted; and whether the jury’s verdict
`
`is supported by the weight of the evidence and otherwise authorized under the law. (See docket
`
`entry no. 387.) The parties’ familiarity with the underlying background of the case and the trial
`
`evidence is assumed.
`
`This Memorandum Opinion and Order includes the Court’s findings of fact and
`
`conclusions of law with respect to the issues of Costco’s profits and the appropriate recovery
`
`thereof and Tiffany’s entitlement to equitable relief, and addresses the parties’ additional
`
`arguments. The Court has considered thoroughly the trial record and all of the parties’
`
`submissions. As explained below, Tiffany is entitled to recover $3.7 million as profits for
`
`trademark infringement, trebled, if it does not instead elect to recover statutory damages.
`
`Tiffany is also entitled to recover the jury’s punitive damages award of $8.25 million.
`
`POST TRIAL.WPD
`
`VERSION AUGUST 14, 2017
`
`2
`
`
`
`Case 1:13-cv-01041-LTS-DCF Document 438 Filed 08/14/17 Page 3 of 17
`
`I.
`
`Whether the Jury Verdict as to Profits is Advisory
`
`In the Summary Judgment Opinion, the Court stated that “[i]t was still an open
`
`question in the Second Circuit as to whether the accounting of profits in a trademark
`
`infringement action is an equitable or legal remedy.” (S.J. Op. at 36.) In the parties’ post-trial
`
`briefing, Costco contends that the jury verdict on the “Accounting of Profits Issues” was
`
`rendered on an equitable remedy for which there is no federal right to a jury trial, and that the
`
`Court is obligated to make an independent determination as to the accounting of profits. Tiffany,
`
`likewise, urges that “regardless of where the Court comes out on the state of the law, Tiffany
`
`believes the Court should set out findings of fact that would support the jury’s determinations,
`
`whether or not it was advisory on actual profits.” (Tiffany Br. at 3.) Although the Second
`
`Circuit has not explicitly ruled on the issue, in Gucci America, Inc. v. Weixing Li, a trademark
`
`infringement action under 15 U.S.C. Section 1117(a), the court characterized the accounting of
`
`profits sought by the plaintiff as an “equitable remedy.” 768 F.3d 122, 130 (2d Cir. 2014). The
`
`Court will treat the jury verdict as to accounting of profits as advisory and make its own
`
`findings.
`
`Even when accepting the aid of an advisory jury, the Court must make its own
`
`independent findings of fact and conclusions of law as required by Federal Rule of Civil
`
`Procedure 52(a). See, e.g., DeFelice v. American Int’l Life Assur., 112 F. 3d 61, 65 (2d Cir.
`
`1997) (noting that a trial court using an advisory jury must both make ‘its own factual findings
`
`and conclusions, in reliance upon the advisory jury’s verdict if the court so chooses, and . . .
`
`explain how it arrived at those findings and conclusions.”) The views of an advisory jury may
`
`be “an important part of the data taken into consideration in arriving at the court’s independent
`
`conclusion.” Birnbaum v. United States, 436 F. Supp. 967, 988 (E.D.N.Y. 1977).
`
`POST TRIAL.WPD
`
`VERSION AUGUST 14, 2017
`
`3
`
`
`
`Case 1:13-cv-01041-LTS-DCF Document 438 Filed 08/14/17 Page 4 of 17
`
`By way of brief background, in its Summary Judgment Opinion, the Court found
`
`that Tiffany had proven its federal and state law claims that, by displaying solitaire diamond
`
`rings in Costco stores next to signage that included the word “Tiffany” as a standalone term not
`
`combined with an immediately following modifying word such as “setting,” “set,” or “style”
`
`(“Standalone Signage”), Costco infringed Tiffany’s trademark and engaged in unfair competition
`
`under state and federal law and that Costco counterfeited the Tiffany trademark under federal
`
`law. At trial, the jury was instructed to determine what monetary relief, if any, Tiffany was
`
`entitled to recover as a result of Costco’s trademark infringement, unfair competition, and
`
`counterfeiting. Among the monetary relief categories was an accounting for profits, as to which
`
`the jury was instructed that “Tiffany is entitled to an award of all profits earned by Costco that
`
`are attributable to Costco’s misuse of Tiffany’s trademark through infringement and/or
`
`counterfeiting from February 14, 2007, to the present time.” (Court Ex. 2 at 15.) The jury was
`
`also instructed that it was to determine whether “one sign, which used the word ‘Tiffany’ on one
`
`line and the word ‘set’ at the beginning of the following line[,] was a use of ‘Tiffany’ as a
`
`standalone term or a use of ‘Tiffany set’ as a combined term in describing the merchandise.”
`
`(Id. at 16.)
`
`The Court makes the following additional findings of fact on the basis of its
`
`consideration of the entire trial record, including documentary and physical evidence, the
`
`testimony, and the demeanor and credibility of the witnesses. Costco has sold rings under
`
`signage using “Tiffany” without a following modifier since before 2007. There was no evidence
`
`as to when precisely this usage began, nor any credible evidence as to Costco’s reason for using
`
`“Tiffany” without a following modifier.
`
`Costco presented credible evidence, and the Court finds that, “Tiffany” is used
`
`POST TRIAL.WPD
`
`VERSION AUGUST 14, 2017
`
`4
`
`
`
`Case 1:13-cv-01041-LTS-DCF Document 438 Filed 08/14/17 Page 5 of 17
`
`within the jewelry industry in the context of the combined term “Tiffany setting” to denote a
`
`certain type of multipronged solitaire ring setting. Costco used the terms “Tiffany style” and
`
`“Tiffany setting,” as to which Tiffany did not assert trademark infringement or counterfeiting
`
`claims in this case, in a large proportion of its diamond ring signage. Costco also used the
`
`infringing Standalone signage to a significant degree.
`
`Costco’s proffered explanations for the Standalone usage – that clerical workers
`
`merely copied language from jewelry suppliers’ invoices as shorthand for Tiffany settings and
`
`that Costco therefore was not engaging in intentional infringement or counterfeiting – were not
`
`credible in light of trial evidence that showed that displays of fine jewelry are an integral part of
`
`Costco’s marketing strategy, Costco made frequent internal and external references to Tiffany as
`
`a quality and style benchmark, and Costco displayed of rings with “Tiffany” Standalone Signage
`
`in proximity to displays of name-brand luxury watches. Costco’s salespeople described such
`
`rings as “Tiffany” rings in response to customer inquiries, and were not perturbed when
`
`customers who then realized that the rings were not actually manufactured by Tiffany expressed
`
`anger or upset. Costco’s upper management, in their testimony at trial and in their actions in the
`
`years prior to the trial, displayed at best a cavalier attitude toward Costco’s use of the Tiffany
`
`name in conjunction with ring sales and marketing. Additional evidence supporting the
`
`conclusion that Costco engaged in culpable standalone use of the mark “Tiffany” included
`
`Costco’s use of purported valuations identical to prices that Tiffany had actually charged for
`
`similar rings, in certificates that Costco provided to buyers of rings sold under the infringing
`
`signage.
`
`In light of this evidence, the Court finds that Tiffany is entitled to recover
`
`Costco’s profits derived not only from sales of rings under signage in which “set,” “setting” or
`
`POST TRIAL.WPD
`
`VERSION AUGUST 14, 2017
`
`5
`
`
`
`Case 1:13-cv-01041-LTS-DCF Document 438 Filed 08/14/17 Page 6 of 17
`
`“style” did not follow “Tiffany” on the same line of a given sign, but also those in which “set”
`
`was the first word of the line below one ending with the word “Tiffany.” The Court finds that
`
`Costco used Tiffany’s trademark to attract customer attention to the fine jewelry items by
`
`indicating that the items accompanied by such signage were Plaintiffs’ products although they
`
`were in actuality generic items. The fact that some sort of marking other than Tiffany’s actual
`
`marking appeared inside of the generic rings is insufficient to indicate that Costco’s use of the
`
`Tiffany mark was not an intentionally deceptive marketing ploy, as the inside markings were not
`
`visible by customers looking into the case displays and both Costco’s signage and Costco’s
`
`salespeople referred to the rings as “Tiffany.” The advisory jury verdict as to profits, which
`
`appears to have taken into account all sales associated with signage that used the “Tiffany”
`
`without a following modifier on a single line, is consistent with these findings.
`
`It is not possible to determine from Costco’s records precisely which form of
`
`signage was used with each ring sale. The evidence presented at trial consisted principally of
`
`Costco’s records of item serial numbers and inventory units for the period within the statute of
`
`limitations, sales and returns of items with such serial numbers within that period, records of the
`
`signage information associated with the items during that time period, and cash register sales
`
`information from that period showing the item numbers and sales prices of rings purchased.
`
`Because the data did not reflect how long any given item had been on display in a store as of the
`
`time of purchase, the signage data that Costco utilized to purportedly match to sales at particular
`
`points in time was not definitive.
`
`The data as to numbers of units and signage iterations produced by Costco in the
`
`course of the litigation varied somewhat from time to time. Costco also proffered vendor
`
`invoices purportedly associated with the relevant periods. Some, but not all, of the signage
`
`POST TRIAL.WPD
`
`VERSION AUGUST 14, 2017
`
`6
`
`
`
`Case 1:13-cv-01041-LTS-DCF Document 438 Filed 08/14/17 Page 7 of 17
`
`correlated to descriptions used on the invoices. The trial evidence also included a list of ring
`
`sales from February 14, 2007, to August 13, 2013, showing a total of 4,053 units sold under
`
`signage that included the word “Tiffany” for a total dollar amount of $17.1 million (Tr. 629,
`
`738), and testimony of Costco’s Chief Merchandising Officer, Douglas Schutt, in which he
`
`estimated that Costco had sent approximately 11,000 letters to persons who had purchased rings
`
`during the period where the signage “had ‘Tiffany’ anywhere in the description of that particular
`
`diamond ring.” (Id. 484, 487). Schutt did not, however, testify to independent knowledge of the
`
`figure. (Id. at 487.)
`
`At trial, Costco presented exhibit DTX 806, which purported to show “Gross
`
`Sales and Net Sales of Subject Rings” from February 14, 2007, through December 16, 2012, and
`
`which was color-coded and included columns showing “gross sales,” “net sales,” and “profits”
`
`associated with different item numbered rings associated with various iterations of signage.
`
`Items color-coded red in that chart were characterized as associated with signage reading
`
`“PLATINUM TIFFANY VS2.1 SET or PLATINUM TIFFANY VS2, 1 without SET”; the item
`
`color-coded yellow was characterized as associated with signage reading “SOLITAIRE
`
`TIFFANY” on the second line; and items color-coded dark green were characterized as
`
`associated with signage reading either “TIFFANY SET or TIFFANY SETTING,” and those
`
`color-coded light green as associated with signage reading “TIFFANY on Line 1 and SET on
`
`Line 2 with nothing in between.” (DTX 806.) Gross and net sales/units figures for rings from
`
`the relevant time period were also presented, with item number and signage record information,
`
`in DTX 139. The Court finds, based on the credible information included in trial record as a
`
`whole, that Tiffany carried its burden of proving that sales, net of returns, of approximately $7.2
`
`million were derived by Costco during the relevant period from Standalone Signage, including
`
`POST TRIAL.WPD
`
`VERSION AUGUST 14, 2017
`
`7
`
`
`
`Case 1:13-cv-01041-LTS-DCF Document 438 Filed 08/14/17 Page 8 of 17
`
`such signage in which the second line of the sign began with the word “set.” (DTX 139, DTX
`
`806.)
`
`Once the plaintiff seeking to recover an infringer’s profits under 15 U.S.C.
`
`section 1117(a) has proven the defendant’s sales, the defendant has the burden of proving “all
`
`elements of cost or deduction claimed” for purposes of determining the profits associated with
`
`the sales. 15 U.S.C.S. § 1117(a) (LexisNexis 2006). At trial, Costco proffered vendor invoices
`
`associated with ring sales, but principally relied in presenting its evidence of profits on a
`
`percentage figure calculated by its expert witness, Brad Cornell, who testified that he
`
`“interpreted Costco’s margin to be the price the warehouse charges the customer minus the total
`
`cost that they paid to acquire the inventory and [Cornell explained that he had] calculated that as
`
`a percentage for every single order that Costco had . . . I just took the average across all their
`
`purchases and it was 10.31.” (Tr. at 1125-26.) Costco’s Chief Merchandising Officer
`
`acknowledged, however, that “run of the mill” jewelry stores charge an estimated markup of 50-
`
`100% on their merchandise. (Tr. 443.) Tiffany’s expert witness, Brad Kaczmarek, used a
`
`multiplier of 13% in computing Costco’s profits, based on a deposition testimony by Costco’s
`
`CEO that Costco generally uses a 13% margin for jewelry sales. (Tr. 274).
`
`Tiffany also presented credible evidence that Costco’s profits are not limited to
`
`the margin between product costs and sales, but also include very substantial sums derived from
`
`warehouse membership fees. Douglas Schutt, Costco’s Chief Merchandising Officer,
`
`acknowledged that Costco’s “business model of charging the membership fee . . . is one of the
`
`things that enables [Costco] to charge less of a markup on the individual products [Costco]
`
`sell[s].” (Tr. 444.) Costco uses a “treasure hunt” marketing concept - creating “buzz” among
`
`members by offering “brand name merchandise at exceptional values” to drive frequent member
`
`POST TRIAL.WPD
`
`VERSION AUGUST 14, 2017
`
`8
`
`
`
`Case 1:13-cv-01041-LTS-DCF Document 438 Filed 08/14/17 Page 9 of 17
`
`visits and renewals. (Id. 461-63.) Kaczmarek, Tiffany’s expert, testified credibly that even the
`
`13% markup figure that he had used in his analysis is very low, and that Costco is “able to
`
`survive with that low markup because they charge membership fees annually. So they make
`
`most of their money on the membership fees and so that’s how they can actually make such
`
`small profits on the items. That’s what attracts customers to want to go to Costco.” (Tr. 281.)
`
`The Lanham Act provides that “[i]n assessing profits the plaintiff shall be
`
`required to prove defendant’s sales only; defendant must prove all elements of cost or deduction
`
`claimed.” 15 U.S.C.S. § 1117(a) (LexisNexis 2006); see also GTFM, Inc. v. Solid Clothing,
`
`Inc., 215 F. Supp. 2d 273, 304 (S.D.N.Y. 2002) (“This sequence of proof . . . places the burden
`
`of proving costs on the party with the superior access to such information, namely the infringing
`
`defendant.” (quoting Am. Honda Motor Co., Inc. v. Two Wheel Corp., 918 F.2d 1060, 1063 (2d
`
`Cir. 1990)). “[A] plaintiff is not entitled to profits demonstrably not attributable to the unlawful
`
`use of his mark, but . . . the burden of proving any deduction for sales not based on the infringing
`
`mark falls upon the infringer.” Int’l Star Class Yacht Racing Ass’n v. Tommy Hilfiger U.S.A.,
`
`146 F.3d 66, 72 (quoting Mishawaka Rubber & Woolen Mfg. Co. v. S.S. Kresge Co., 316 U.S.
`
`203, 206 (1942)) (internal quotation marks and citations omitted). Furthermore, where, as here,
`
`the Court has determined that the infringer acted willfully,2 the Court must analyze the claimed
`
`cost set-offs “with particular rigor,” requiring the court to “give extra scrutiny to the categories
`
`of overhead expenses claimed by the infringer to insure that each category is directly and validly
`
`connected to the sale and production of the infringing product.” Audemars Piguet Holding S.A.
`
`v. Swiss Watch Int’l., Inc., 42 F. Supp. 3d 540, 544 (S.D.N.Y. 2014) (internal quotation marks
`
`and citations omitted). In addition, 15 U.S.C. Section 1117(a) provides, “[i]f the court shall find
`
`2See Summary Judgment Opinion at 33.
`POST TRIAL.WPD
`VERSION AUGUST 14, 2017
`
`9
`
`
`
`Case 1:13-cv-01041-LTS-DCF Document 438 Filed 08/14/17 Page 10 of 17
`
`the amount of recovery based on profits is either inadequate or excessive the court may in its
`
`discretion enter judgment for such sum as the court shall find to be just, according to the
`
`circumstances of the case.”
`
`The Court finds that Costco has failed to prove that its profits on sales of rings
`
`under Standalone Signage were limited to the 10.31% margin computed by Costco’s damages
`
`expert. That margin is artificially small, and was made possible chiefly by the subsidizing
`
`impact of membership fees, which are themselves enhanced by the pull of the “treasure hunt”
`
`tactic in which Costco uses extraordinary bargains on brand-name merchandise to pull customers
`
`into its stores. Fine jewelry is the first display case customers encounter in Costco’s standard
`
`store layout, along with name-branded luxury watches. (Tr. 451-452, 466-467, 470.) In light of
`
`the role of the membership fees in Costco’s business model and of its use of Tiffany’s mark in
`
`selling fine jewelry, which is prominently displayed at the entrance of the stores to catch the eye
`
`of the customer, the Court finds it necessary and appropriate as an equitable matter to impute a
`
`sufficient portion of the membership revenue to the sale of these rings to bring the recoverable
`
`profit margin on the rings into the profit margin range of a typical run-of-the-mill jewelry store,
`
`which is approximately 50-100%. The Court further finds that the advisory jury’s award of $3.7
`
`million in profits on the Standalone Signage sales, a figure that is slightly more than 50% of the
`
`sales revenue proven in connection with those sales, constitutes a just and appropriate award of
`
`Costco’s profits attributable to the infringing sales.
`
`The Court does not, however, concur in the jury’s further finding that the $3.7
`
`million figure is inadequate, such that an additional award of $1.8 million, raising the profit
`
`recovery figure to $5.5 million, is necessary. Tiffany is therefore entitled to $3.7 million as its
`
`award of Costco’s profits from infringing sales of the diamond rings under Standalone Signage.
`
`POST TRIAL.WPD
`
`VERSION AUGUST 14, 2017
`
`10
`
`
`
`Case 1:13-cv-01041-LTS-DCF Document 438 Filed 08/14/17 Page 11 of 17
`
`II.
`
`Trebling of the Profits Award
`
`Pursuant to 15 U.S.C. Section 1117(b) (LexisNexis 2006), “the court shall, unless
`
`the court finds extenuating circumstances, enter judgment for three times such profits or
`
`damages [calculated under 1117(a)], whichever is greater, together with a reasonable attorney’s
`
`fee . . . .” Id.; see also Fendi S.A.S. Di. Paola Fendi E Sorelle v. Cosmetic World, Ltd., 642 F.
`
`Supp. 1143, 1147 (S.D.N.Y. 1986). Costco, essentially reiterating its rejected trial and summary
`
`judgment arguments that its standalone use of “Tiffany” was a shorthand reference to alleged
`
`jewelry industry “generic” usage of “Tiffany” as the name for a style of ring setting, argues that
`
`extenuating circumstances render inappropriate trebling of the profits award as damages for its
`
`counterfeiting of Tiffany’s mark. Extenuating circumstances will be present only in “a rare
`
`case,” such as in the case of “an unsophisticated individual, operating on a small scale, for whom
`
`the imposition of treble damages would mean that he or she would be unable to support his or
`
`her family.” Koon Chun Hing Kee Soy & Sauce Factory, Ltd v. Star Mark Mgmt., Inc., 628 F.
`
`Supp. 2d 312, 325 (E.D.N.Y. 2009) (internal quotation marks and citations omitted).
`
`Costco has not established that any “extenuating circumstances” warrant denial of
`
`a treble award. Costco is a large corporation with billions of dollars in annual sales and profits.
`
`(See PTX 17A.0025, 28, 46, 47 (Costco has annual sales of over $113 billion, and made $2.4
`
`billion in profits in 2014)). Its arguments draw on good faith and genericism positions that were
`
`clearly rejected by the jury, which found Costco liable for substantial punitive damages, and are
`
`also rejected by this Court based on its own evaluation of the evidence. Accordingly, the Court
`
`finds that there are no “extenuating circumstances” warranting the denial of treble damages and
`
`that Tiffany is entitled to recover awarded $11.1 million, or three times the amount of Costco’s
`
`POST TRIAL.WPD
`
`VERSION AUGUST 14, 2017
`
`11
`
`
`
`Case 1:13-cv-01041-LTS-DCF Document 438 Filed 08/14/17 Page 12 of 17
`
`profits of $3.7 million, under 15 U.S.C. Section 1117. For the same reasons, the Court further
`
`finds that Tiffany is entitled to recover its reasonable attorney’s fees. See 15 U.S.C. § 1117(b).
`
`III.
`
`Punitive Damages Award
`
`The jury found that Tiffany was entitled to punitive damages, and awarded
`
`Tiffany punitive damages in the amount of $8.25 million. Costco contends that the punitive
`
`damages are not authorized under New York law in the absence of a valid claim for
`
`compensatory damages, and that the amount awarded is contrary to the weight of the evidence
`
`and excessive.
`
`Under New York law, “[a] demand or request for punitive damages is parasitic
`
`and possesses no viability absent its attachment to a substantive cause of action.” Rocanova v.
`
`Equitable Life Assurance Society of United States, 83 N.Y.2d 603, 616 (N.Y. 1994). The cases
`
`cited by Costco stand for the uncontroversial proposition that there can be no “stand-alone”
`
`punitive damages claim if there is no longer a compensatory cause of action remaining. It goes
`
`without saying that there were substantive causes of action to which the punitive damages
`
`request attached in this case.
`
`Costco also argues that, because Tiffany only sought an accounting of profits and
`
`not “actual damages,” it is precluded from seeking punitive damages. Although some courts in
`
`the Second Circuit have drawn a distinction between actual damages and profits for the purposes
`
`of the Lanham Act, others have characterized both as “actual damages” available under the
`
`Lanham Act. See, e.g., Malletier v. Artex Creative Int’l Corp., 687 F. Supp. 2d 347, 356
`
`(S.D.N.Y. 2010). Furthermore, the Lanham Act itself contemplates the possibility of an award
`
`of statutory damages (sought here), which permits consideration of both punitive and
`
`POST TRIAL.WPD
`
`VERSION AUGUST 14, 2017
`
`12
`
`
`
`Case 1:13-cv-01041-LTS-DCF Document 438 Filed 08/14/17 Page 13 of 17
`
`compensatory factors, without the need to establish profits or actual damages in the recognition
`
`that such measures of monetary relief may be difficult to prove in these cases. See All-Star-
`
`Marketing Grp., LLC v. Media Brands Co., Ltd., 775 F. Supp. 2d 613, 621-22 (S.D.N.Y. 2011).
`
`The provision for statutory damages in the Lanham Act thus explicitly provides a mechanism to
`
`compensate plaintiffs even in the absence of proof of actual damages or profits. Malletier v.
`
`Carducci Leather Fashions, Inc., 648 F. Supp. 2d 501, 504 (S.D.N.Y. 2009) (“where . . . a
`
`defendant is shown to have acted willfully, a statutory award should incorporate not only a
`
`compensatory, but also a punitive component . . .”); Polo Ralph Lauren, L.P. v. 3M Trading Co.,
`
`Inc., No. 97 CV 4824, 1999 WL 33740332 (S.D.N.Y. Apr. 19, 1999), at *5 (“Jud[ing] by [the
`
`Copyright Act’s] standards, an award of statutory damages is designed to serve both
`
`compensatory and punitive purposes.”) Accordingly, the Court finds that punitive damages are
`
`not preluded in this case by Tiffany’s pursuit of an accounting of profits and statutory damages
`
`rather than “actual damages.”
`
`The issues of whether punitive damages were warranted and, if so, of how much
`
`punitive damages to award were within the province of the jury, and the jury’s decision cannot
`
`be set aside unless “there exists such a complete absence of evidence supporting the verdict that
`
`the jury’s findings could only have been the result of sheer surmise and conjecture, or the
`
`evidence in favor of the movant is so overwhelming that reasonable and fair minded persons
`
`could not arrive at a verdict against it.” Providencia V. ex rel. K.V. v. Schultze, No. 02 CV
`
`9516, 2009 WL 890057, at *1 (S.D.N.Y. Apr. 2, 2009) (quoting Brady v. Wal-Mart Stores, Inc.,
`
`531 F. 3d 127, 133 (2d Cir. 2008) (internal quotation marks omitted)). As the Court stated in its
`
`Summary Judgment Opinion, “Tiffany . . . proffered [in connection with that motion practice]
`
`evidence upon which the finder of fact could conclude that Costco’s behavior satisfied the
`
`POST TRIAL.WPD
`
`VERSION AUGUST 14, 2017
`
`13
`
`
`
`Case 1:13-cv-01041-LTS-DCF Document 438 Filed 08/14/17 Page 14 of 17
`
`‘gross, wanton or willful’ standard” required for awarding punitive damages.” (Docket entry no.
`
`175 at 34.) Even more evidence of conduct supporting punitive damages was adduced at trial,
`
`including evidence of the conduct and attitude of Costco’s senior executives towards use of the
`
`“Tiffany” mark and the lawsuit, customer confusion, and marketing strategies designed to
`
`invoke an association with Tiffany. Given that there plainly was enough evidence to support the
`
`jury’s award of punitive damages, the jury’s finding that punitive damages were warranted will
`
`not be disturbed.
`
`Finally, Costco contends that the punitive damages award of $8.25 million is
`
`excessive under New York law and as a matter of due process. The Court notes that at the outset
`
`that Costco is a company with billions of dollars in annual revenue. In making its excessiveness
`
`argument, Costco presumes that the other elements of the verdict were invalid—namely, that
`
`there was an absence of actual damages and that the maximum permissible profits award was
`
`$381,718 (i.e., 10.31 percent of $3.7 million). Using the $3.7 million profits figure set here by
`
`the Court (or even the $2 million statutory damages award figure) as the benchmark, however,
`
`the punitive damages award of $8.25 million is comfortably within the four-to-one benchmark
`
`referenced by the Supreme Court in State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408,
`
`425 (2003). Indeed, in one of the cases cited by Costco, the court awarded punitive damages that
`
`were close to six times the compensatory damages award. See Getty Petroleum Corp. v. Island
`
`Transp. Corp., 862 F.2d 10, 12-14 (2d Cir. 1988). Accordingly, the Jury’s punitive damages
`
`award of $8.25 million is neither unconstitutional nor otherwise excessive.
`
`POST TRIAL.WPD
`
`VERSION AUGUST 14, 2017
`
`14
`
`
`
`Case 1:13-cv-01041-LTS-DCF Document 438 Filed 08/14/17 Page 15 of 17
`
`IV.
`
`Injunctive Relief
`
`Costco does not object to the imposition of a permanent injunction, arguing only
`
`that further relief in the nature of damages is unnecessary to punish or deter the company from
`
`further violations of Tiffany’s rights. The Court finds that imposition of a permanent injunction
`
`is warranted, and that such relief necessary to deter Costco from pursuing further illegitimate
`
`efforts to trade on the fame of Tiffany’s mark and the reputation of Tiffany’s goods. The Court
`
`finds that Tiffany has demonstrated that (1) it is likely to suffer irreparable harm to its name and
`
`good will in the absence of a permanent injunction; (2) that Tiffany has no adequate remedy at
`
`law; (3) that the balance of hardships weighs in Tiffany’s favor and (4) that the public interest
`
`would not be disserved by the issuance of a permanent injunction. See eBay, Inc. v. MercExch.
`
`L.L.C., 547 U.S. 388, 391 (2005).
`
`It is hereby ordered that Costco is permanently enjoined from using the mark
`
`TIFFANY as a standalone term, not combined with any immediately following modifiers such as
`
`“setting,” “set” or “style,” in connection with its advisement and/or sale of any products not
`
`manufactured by Plaintiffs or their affiliates.
`
`V.
`
`Consistency of the Verdicts with the Law and the Evidence
`
`Although Costco has not made explicit motions under Rule 50(b) and 59, it has
`
`made a number of arguments that implicate the weight and propriety of the evidence. Costco’s
`
`legal challenges to the verdicts have been rejected in the foregoing portions of this Memorandum
`
`Opinion. Costco’s arguments with respect to the evidentiary bases of the jury’s implicit
`
`conclusions concerning the extent and reprehensibility of Costco’s wrongful conduct are
`
`POST TRIAL.WPD
`
`VERSION AUGUST 14, 2017
`
`15
`
`
`
`Case 1:13-cv-01041-LTS-DCF Document 438 Filed 08/14/17 Page 16 of 17
`
`similarly meritless. Costco made its arguments concerning the admissibility of evidence and its
`
`weight in the course of the trial. Costco has demonstrated no proper basis in its submissions for
`
`finding that any of the Court’s evidentiary rulings were improper, and the Court finds that the
`
`verdicts reached by the jury as to basic profits, statutory damages and punitive damages were
`
`well supported by the evidence.
`
`CONCLUSION
`
`Treating the jury’s verdict as advisory only as to the recovery of profits, the Court
`
`finds that Plaintiffs are entitled to recover trebled profits of $11.1 million, and judgment will be
`
`entered in their favor in that amount, plus prejudgment interest at the annual rate set under 26
`
`U.S.C. § 6621(a)(2) for the period from February 15, 2013, through the date of judgment and
`
`punitive damages of $8.25 million, unless Plaintiffs file within seven (7) days from the date
`
`hereof a written election to instead recover the $2 million in statutory and $8.25 million in
`
`punitive damages awarded by the jury.
`
`Costco is permanently enjoined from using the mark TIFFANY as a standalone
`
`term, not combined with any immediately following modifiers such as “setting,” “set” or “style,”
`
`in connection with its ad