17-2798-cv (L)
Tiffany, et al. v. Costco



                            UNITED STATES COURT OF APPEALS
                                FOR THE SECOND CIRCUIT

                                       August Term 2019

             (Argued: January 21, 2020                 Decided: August 17, 2020)

                                 Nos. 17-2798-cv, 19-338, 19-404

                            ––––––––––––––––––––––––––––––––––––

                            TIFFANY AND COMPANY; TIFFANY (NJ) LLC

                              Plaintiffs-Counter-Defendants-Appellees

                                               -v.-

                              COSTCO WHOLESALE CORPORATION,

                              Defendant-Counter-Claimant-Appellant

                            ––––––––––––––––––––––––––––––––––––

Before:            LEVAL, RAGGI, and LIVINGSTON, Circuit Judges.

      Tiffany brought suit against Costco under the Lanham Act and New York
law, alleging that Costco was liable for, inter alia, trademark infringement and
counterfeiting in connection with its sale of diamond engagement rings identified
by point-of-sale signs containing the word “Tiffany.” Though Costco does not
dispute that Tiffany has a valid, registered trademark for the word “Tiffany,” it
argued before the district court that it was using that word in a different, widely
recognized sense to refer to a particular style of pronged diamond setting not
exclusive to rings affiliated with Tiffany. It therefore claimed that its use of the

                                                1
term was not likely to confuse consumers—the essence of a claim for
infringement—and that even if some degree of confusion was likely, it was entitled
under the Lanham Act to the descriptive fair use of an otherwise protected mark.
The district court (Swain, J.) granted summary judgment for Tiffany, holding that
no reasonable jury could credit either of Costco’s arguments and further
concluding that Costco’s infringement constituted counterfeiting as a matter of
law. Following an advisory jury trial on the question of damages, the district court
awarded Tiffany Costco’s trebled profits along with punitive damages and
prejudgment interest, for a total of $21,010,438.35. On appeal, Costco argues that
the district court’s determination of liability was inappropriate at the summary
judgment stage. We agree. Accordingly, the judgment of the district court is
VACATED and the case is REMANDED for trial.

FOR PLAINTIFFS-COUNTER-
DEFENDANTS-APPELLEES:                 JEFFREY A. MITCHELL (Judith R. Cohen; Brett
                                      D. Katz, on the brief), Browne George Ross
                                      LLP, New York, NY, for Tiffany and Company
                                      and Tiffany (NJ) LLC.

FOR DEFENDANT-COUNTER-
CLAIMANT-APPELLANT:                   DAVID H. BERNSTEIN (Michael Schaper;
                                      Jared I. Kagan, on the brief), Debevoise &
                                      Plimpton LLP, New York, NY, for Costco
                                      Wholesale Corporation.

DEBRA ANN LIVINGSTON, Circuit Judge:

      Defendant-Counter-Claimant-Appellant Costco Wholesale Corporation

(“Costco”) appeals from an August 25, 2017 judgment of the United States District

Court for the Southern District of New York (Swain, J.) awarding Plaintiffs-

Counter-Defendants-Appellees Tiffany and Company and Tiffany (NJ) LLC

(together, “Tiffany”) trebled profits, prejudgment interest, and punitive damages


                                         2
totaling $21,010,438.35, resulting from a determination on summary judgment that

Costco was liable to Tiffany for trademark infringement and counterfeiting in

violation of the Lanham Act, 15 U.S.C. §§ 1114(1) and 1117(a) and (b), and unfair

competition in violation of New York law. 1 This suit arose from Costco’s sale of

otherwise unbranded diamond engagement rings identified by point-of-sale signs

containing the word “Tiffany.” Tiffany claimed, and the district court agreed, that

Costco’s use of a term identical to Tiffany’s trademark in connection with the sale

of engagement rings violated the Lanham Act as a matter of law.

       In response, Costco argues that “Tiffany” is not only a brand name, but also

a widely recognized descriptive term for a particular style of pronged ring setting,

and that it used the word on point-of-sale signs solely to identify engagement rings

incorporating such settings. It emphasizes, among other things, that it also sold


       1  The Lanham Act provides, in relevant part, that “Any person who shall, without
consent of the registrant . . . use in commerce any reproduction, counterfeit, copy, or
colorable imitation of a registered mark in connection with the sale . . . of any goods or
services on or in connection with which such use is likely to cause confusion, or to cause
mistake, or to deceive . . . shall be liable in a civil action by the registrant.” 15 U.S.C.
§ 1114(1)(a). A defendant found liable for the foregoing infringement must typically pay
to the plaintiff “(1) [its] profits, (2) any damages sustained by the plaintiff, and (3) the
costs of the action.” Id. § 1117(a). “In a case involving [knowing and intentional] use of a
counterfeit mark” the defendant will instead be liable for “three times such profits or
damages, whichever amount is greater, together with a reasonable attorney’s fee.” Id.
§ 1117(b). In a case involving a counterfeit mark, a plaintiff may also elect to receive
statutory damages in lieu of profits and/or damages. Id. § 1117(c).


                                             3
several other styles of unbranded diamond engagement ring identified by similar

point-of-sale signs, each of which indicated the name of the corresponding ring’s

setting style and none of which used the word “Tiffany.” In light of this and other

related evidence, Costco contends that a reasonable jury could conclude that its

use of the word “Tiffany” was not likely to confuse its customers and that, even if

some confusion was likely, Costco was entitled under the Lanham Act to use the

term “in good faith only to describe” the style of its rings. 15 U.S.C. § 1115(b)(4).

We agree and accordingly VACATE the judgment of the district court and

REMAND the case for trial.

                                 BACKGROUND

                               I.   Factual Background

      Founded in 1837 by Charles Lewis Tiffany, Tiffany is a major producer of

fine jewelry, including diamond engagement rings. Tiffany holds 97 separate

trademarks related to the company name, including registrations for the use of the

word “Tiffany” in connection with “Decorative Art Objects Made in Whole or in

Part of Precious or Semiprecious Metals,” TIFFANY, Registration No. 1,228,409,

and for the stylized word mark “Tiffany” in connection with “Jewelry for Personal

Wear,” TIFFANY, Registration No. 133,063. At some point in the late nineteenth



                                         4
century, Charles Lewis Tiffany developed and sold an engagement ring

incorporating a particular style of six-prong diamond setting. Since that time,

numerous advertisements, dictionaries, trade publications, and other documents

have referred to diamond settings reminiscent of that style as “Tiffany settings.”

      One enterprise that claims to have adopted that century-old practice is

Costco, which operates a chain of membership-only warehouse stores at which

shoppers may purchase various brand-name, store-brand, and generic goods

across numerous product categories. Among these products are diamond

engagement rings, which Costco displays along with other jewelry in display cases

near the entrance to its stores. Costco refers to its engagement rings, which are

produced specially for Costco by a supplier called R.B. Diamond Inc., as

“unbranded.” Costco sells engagement rings with a variety of setting styles, an

assortment that during the relevant time period included a bezel setting, cathedral

setting, channel setting, and the so-called Tiffany setting.

      Costco identified each of its engagement rings using small, white point-of-

sale signs that displayed certain information about the rings (ostensibly including

setting style) in uniform black text, along with their prices in larger, bold text. In

general format, but not necessarily in size, these signs resembled other point-of-



                                          5
sale signs that identified virtually all items for sale throughout Costco stores.

Costco attests that it drew the information for the point-of-sale signs in its jewelry

cases directly from descriptions supplied by vendors like R.B. Diamond.

According to Costco, the various point-of-sale signs identifying rings with a

Tiffany setting at times identified the ring setting using the phrases “Tiffany

setting,” “Tiffany set,” or “Tiffany style,” and at other times used only the word

“Tiffany” for that purpose. Costco apparently identified other setting styles in a

similarly variable manner.

      In November 2012, a Costco customer alerted Tiffany that she had observed

engagement rings that she believed were being advertised as Tiffany rings at a

Costco store in Huntington Beach, California. Tiffany engaged an investigation

service to visit that store, where investigators observed a jewelry display case

containing, among other items, one engagement ring displayed next to a sign

reading “639911 / PLATINUM TIFFANY / .70 VS2,I ROUND / DIAMOND RING

/ 3199.99” and a second ring displayed next to a sign reading “605880 /

PLATINUM TIFFANY VS2,I / 1.00CT ROUND BRILLIANT / DIAMOND

SOLITAIRE RING / 6399.99.” 2 J.A. 2,914 (emphasis in original).



      2   The slashes in the foregoing quotations indicate line breaks in the original

                                           6
      On December 10, 2012, Tiffany contacted Costco regarding the two rings its

investigators observed, asserting that “[t]he designation of the ring[s] by Costco

as ‘Tiffany’ was not only a misrepresentation of the product, but it also constitutes

infringement and counterfeiting.” J.A. 2,509. Costco maintains that within one

week, it voluntarily removed all uses of the word “Tiffany” from the signs in its

jewelry display cases and that since that time, it has not listed a setting style on

signs identifying any rings bearing the so-called Tiffany setting.

      Several months later, after Tiffany had filed the operative complaint in this

case, Costco sent a letter to all customers who had purchased engagement rings

with Tiffany settings to alert them that Tiffany had initiated the suit now on

appeal. The letter explained that Costco’s point-of-sale signs had “used the word

‘Tiffany’ to indicate that [the associated] ring had a Tiffany-style pronged setting,”

asserted that Costco “do[es] not believe [its] signs were inaccurate,” and reminded

buyers that Costco’s return policy entitled them to return their rings for a full

refund at any time. Approximately 1.3% of customers who received this letter

returned their rings to Costco.




document.


                                          7
                                II.   Procedural History

      On Valentine’s Day 2013, approximately two months after Costco ceased

using the word “Tiffany” on any signs in its jewelry display cases, Tiffany

commenced the present action against Costco in the United States District Court

for the Southern District of New York. Tiffany’s complaint alleged that Costco was

liable for trademark infringement, dilution, counterfeiting, unfair competition,

false and deceptive business practices, and false advertising in violation of the

Lanham Act and New York law. Notably, Tiffany’s complaint alleged these

various trademark violations only in connection with those of Costco’s point-of-

sale signs that included the word “Tiffany” unaccompanied by the words

“setting,” “style,” or “set.”

      In response, Costco argued that its use of the word “Tiffany” to describe

certain rings’ setting styles was not infringement and raised, inter alia, a “fair use”

affirmative defense under the Lanham Act, asserting that it used the term

“otherwise than as a mark, . . . in good faith only to describe” its ring settings. J.A.

89 (quoting 15 U.S.C. § 1115(b)(4)). Costco also filed a counterclaim seeking to

modify or partially cancel any federal trademark registrations that might prevent

retailers from using the word “Tiffany” to indicate that a ring has a Tiffany setting.



                                           8
      The case proceeded to discovery, during which time Tiffany filed an

unsuccessful   summary      judgment    motion    seeking   to   dismiss   Costco’s

counterclaim. During discovery, the parties compiled a voluminous evidentiary

record including the declarations and deposition testimony of Costco customers

and employees, expert declarations, sales records, and physical specimens of both

parties’ engagement rings and ring packaging. Following the completion of

discovery, Tiffany again moved for summary judgment, this time seeking not only

to dismiss Costco’s counterclaim but also to hold Costco liable for trademark

infringement and counterfeiting as a matter of law. Costco cross-moved for

summary judgment seeking, inter alia, dismissal of Tiffany’s counterfeiting and

punitive damages claims.

      On September 8, 2015, the district court issued an opinion and order

granting Tiffany’s summary judgment motion in its entirety, concluding that

Costco had failed to raise a genuine issue of material fact as to any of the factors

relevant to the infringement analysis, that Costco’s fair use defense failed as a

matter of law, and that Costco’s infringement constituted counterfeiting as a

matter of law. In the same order, the district court ruled that punitive damages

would not be available to Tiffany under the Lanham Act, but that they would be



                                         9
available under New York law.

      Following its determination of Costco’s liability, the district court held a trial

from September 19 through October 5, 2016 on the issue of Tiffany’s entitlement

to recovery in the form of profits and statutory damages pursuant to 15 U.S.C.

§ 1117. At trial, the district court instructed the jury that it had already found

Costco liable for trademark infringement, unfair competition under New York

law, and counterfeiting, and that Costco’s conduct was willful. The jury awarded

Tiffany $3.7 million in an accounting of Costco’s profits, a further $1.8 million on

the grounds that the award of profits was inadequate compensation, and an

additional $8.25 million in punitive damages.

      In a subsequent order, the district court characterized the accounting of

Costco’s profits as an equitable remedy and deemed the jury’s verdict on that score

to be advisory. Making its own determination as to damages, the district court

awarded Tiffany trebled profits in the amount of $11.1 million (based on the

advisory jury’s award of $3.7 million), along with the additional $8.25 million in

punitive damages awarded by the jury. 3 The district court entered its final




      315 U.S.C. § 1117(b) instructs the court to award treble profits or damages for a
knowing and intentional violation involving the use of a counterfeit mark.


                                          10
judgment and damages award, which ran to $21,010,438.35 including

prejudgment interest, on August 25, 2017.

      Costco appealed the judgment on September 8, 2017. Then, on September

22, Costco requested that the district court amend its findings under Federal Rule

of Civil Procedure 52(b); amend the judgment under Rule 59(e); and grant Costco

judgment as a matter of law or, in the alternative, a new trial under Rule 50(b).

Pursuant to Federal Rule of Appellate Procedure 4(a)(4), we stayed Costco’s

appeal pending the district court’s resolution of Costco’s motions. The district

court denied each of these motions on January 7, 2019. We removed the stay on

January 23, 2019, and this appeal followed.

                                 DISCUSSION

      We review the district court’s rulings on summary judgment de novo,

resolving all ambiguities and drawing all permissible inferences in favor of the

nonmoving party. Jones v. County of Suffolk, 936 F.3d 108, 114 (2d Cir. 2019).

Pursuant to Rule 56(a) of the Federal Rules of Civil Procedure, we will affirm a

grant of summary judgment “only where there are no genuine disputes

concerning any material facts, and where the moving party is entitled to judgment

as a matter of law,” id. (internal quotation marks omitted), or in other words,



                                       11
where no reasonable jury could return a verdict for the nonmoving party, see Holtz

v. Rockefeller & Co., 258 F.3d 62, 69 (2d Cir. 2001).

      On appeal, Costco argues that the district court erroneously granted

Tiffany’s motion for summary judgment on its infringement and counterfeiting

claims, improperly depriving Costco of the opportunity to present its case to a

jury. In particular, Costco contends that after resolving several critical facets of the

trademark infringement analysis in Tiffany’s favor without sufficiently crediting

Costco’s contrary evidence, the district court erroneously rejected Costco’s fair use

defense and held Costco liable for trademark infringement and counterfeiting as a

matter of law. For the reasons that follow, we agree that Costco has raised a

question of material fact as to its liability for trademark infringement and

counterfeiting and, relatedly, its entitlement to present its fair use defense to a jury.

Accordingly, we vacate the district court’s grant of summary judgment, and

remand the case for trial.

                       I. Tiffany’s Trademark Infringement Claim

      The district court concluded that no reasonable jury could find either that

Costco’s use of the word “Tiffany” was not likely to cause confusion with Tiffany’s

registered mark or that Costco’s use of the word constituted fair use. We conclude



                                           12
that the district court erred on both points.

                             A. Tiffany’s Infringement Claim

      Under the Lanham Act, a plaintiff alleging trademark infringement must

demonstrate that (1) “it has a valid mark that is entitled to protection” and that (2)

the defendant’s “actions are likely to cause confusion with [that] mark.” The Sports

Auth., Inc. v. Prime Hospitality Corp., 89 F.3d 955, 960 (2d Cir. 1996). “[A] plaintiff

does not have to show necessarily that consumers would believe that the

defendant’s goods or services are from the same source as those of the plaintiff.”

Id. Rather, a defendant may also be liable for trademark infringement if its “actions

are ‘likely to cause confusion, or to cause mistake, or to deceive as to the affiliation,

connection, or association’ of the defendant's goods or services with those of the

plaintiff.” Id. (quoting 15 U.S.C. § 1125(a)(1)(A)); see also Int’l Info. Sys. Sec.

Certification Consortium, Inc. v. Sec. Univ., LLC, 823 F.3d 153, 161–63 (2d Cir. 2016).

That said, the mere possibility of confusion is not enough. To prevail in a

trademark infringement action, a plaintiff must prove “a probability of confusion

. . . affecting numerous ordinary prudent purchasers.” Star Indus., Inc. v. Bacardi &

Co. Ltd., 412 F.3d 373, 383 (2d Cir. 2005) (emphasis added) (internal quotation

marks omitted).



                                           13
       With the first prong of the infringement inquiry presumptively satisfied, 4

the principal question in this appeal is whether Costco’s use of the word “Tiffany”

was likely to cause confusion with Tiffany’s registered mark. We evaluate this

question using the test articulated in Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d

492 (2d Cir. 1961) (“Polaroid”), which balances the following eight factors: (1) the

strength of the trademark; (2) the degree of similarity between the plaintiff’s mark

and the defendant’s allegedly imitative use; 5 (3) the proximity of the products and

their competitiveness with each other; (4) the likelihood that the plaintiff will

“bridge the gap” by developing a product for sale in the defendant’s market; 6 (5)



       4 The Lanham Act treats trademark registration as “conclusive evidence of the
validity of the registered mark . . . , of the registrant’s ownership of the mark, and of the
registrant’s exclusive right to use the registered mark in commerce,” 15 U.S.C. § 1115, and
Costco does not contest that Tiffany has registered “Tiffany” as a mark in connection with
the sale of jewelry.
       5  We have often referred to this factor as examining the similarity between the
plaintiff’s and defendant’s marks. See, e.g., Starbucks Corp. v. Wolfe’s Borough Coffee, Inc.,
588 F.3d 97, 115 (2d Cir. 2009). But a defendant that uses a term identical to a plaintiff’s
registered mark may be liable for infringement even if it cannot be said to use that term
“as a mark,” that is, “as a symbol to attract public attention.” Kelly-Brown v. Winfrey, 717
F.3d 295, 308 (2d Cir. 2013) (internal quotation marks omitted); see also id. at 306–07
(explaining that customer confusion may exist even where the defendant was not
attempting to establish a competing mark, and identifying cases in which we have
“allowed certain claims to proceed even where the defendant is not using the plaintiff's
mark as a mark”).
       6The district court did not consider the likelihood that Tiffany would “bridge the
gap” into Costco’s market below, and neither party argues that this factor is relevant on
appeal. As the district court correctly explained, Costco’s and Tiffany’s diamond

                                             14
evidence of actual consumer confusion; (6) evidence that the defendant adopted

the imitative term in bad faith; (7) the respective quality of the products; and (8)

the sophistication of the relevant population of consumers. See Polaroid, 287 F.2d

at 495; Starbucks Corp. v. Wolfe’s Borough Coffee, Inc., 588 F.3d 97, 115 (2d Cir. 2009).

The “evaluation of the Polaroid factors is not a mechanical process where the party

with the greatest number of factors weighing in its favor wins. Rather, a court

should focus on the ultimate question of whether consumers are likely to be

confused.” Nabisco, Inc. v. Warner-Lambert Co., 220 F.3d 43, 46 (2d Cir. 2000)

(internal quotation marks omitted).

       Though our past cases have always recognized that the “district court’s

balancing of the Polaroid factors is subject to de novo review,” some of these cases

have purported to afford “considerable deference” to district courts’ findings

“with respect to predicate facts underlying each Polaroid factor,” Playtex Prods., Inc.

v. Ga.-Pac. Corp., 390 F.3d 158, 162 (2d Cir. 2004), or even to its “finding on each

factor” generally, Natural Organics, Inc. v. Nutraceutical Corp., 426 F.3d 576, 578 (2d




engagement rings are already in competitive proximity. See, e.g., Paddington Corp. v. Attiki
Importers & Distribs., Inc., 996 F.2d 577, 586 (2d Cir. 1993) (“Since the [products] . . .
compete in the same market, the district court correctly found that the likelihood-of-
bridging-the-gap factor . . . was irrelevant.”).


                                            15
Cir. 2005); see also Cadbury Beverages, Inc. v. Cott Corp., 73 F.3d 474, 478 (2d Cir.

1996). These cases should not be read to suggest that “a district court deciding a

motion for summary judgment in a trademark infringement case has . . . greater

discretion than it would have in a non-trademark case to resolve disputed issues

of fact or draw inferences against the non-moving party.” Patsy’s Brand, Inc. v.

I.O.B. Realty, Inc., 317 F.3d 209, 216 (2d Cir. 2003), abrogated on other grounds by 4

Pillar Dynasty LLC v. N.Y. & Co., 933 F.3d 202 (2d Cir. 2019); see also Kelly-Brown v.

Winfrey, 659 F. App’x 55, 58 n.3 (2d Cir. 2016) (summary order) (noting the

inconsistency between a “considerable deference” standard and our responsibility

to review a district court’s summary judgment ruling de novo).

      Though “considerable deference” has become an oft-repeated incantation

since we first observed in Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co. “that the

district court’s detailed findings on each of the Polaroid factors are entitled to

considerable deference,” 799 F.2d 867, 873 (2d Cir. 1986) (citing Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 250 & n.6 (1986), for the proposition that a “district court’s

findings of fact on summary judgment, although not required, ‘are extremely

helpful to a reviewing court’”), we have never purported to expand a district

court’s license to make factual findings at summary judgment beyond those very



                                           16
limited circumstances in which “the uncontroverted evidence and the reasonable

inferences to be drawn in the nonmoving party’s favor” support only a single

conclusion, see Hunt v. Cromartie, 526 U.S. 541, 553 (1999). In other words, a district

court will be authorized to find the sorts of facts that are entitled to deference only

in circumstances in which the traditional summary judgment standard has been

satisfied. And even when it is so authorized, “its subsidiary conclusions as to each

Polaroid factor . . . are not immune from appellate review.” Patsy’s Brand, 317 F.3d

at 216.

      As in any other area of law, then, “[i]f a factual inference must be drawn to

arrive at a particular finding on a Polaroid factor, and if a reasonable trier of fact

could reach a different conclusion, the district court may not properly resolve that

issue on summary judgment.” Cadbury, 73 F.3d at 478; see also Liberty Lobby, 477

U.S. at 249 (“[A]t the summary judgment stage the judge’s function is not himself

to weigh the evidence and determine the truth . . . but to determine whether there

is a genuine issue for trial.”). Moreover, insofar as the determination of whether

one of the Polaroid factors favors one party or another involves a legal judgment—

which it often does 7—we must review that determination de novo. See Knight v.



      7   “For example, there is a considerable component of law in the determination

                                          17
State Univ. of N.Y. at Stony Brook, 880 F.3d 636, 640 (2d Cir. 2018) (“We review

questions of law de novo.”). Accordingly, in the majority of cases, we should review

de novo both a district court’s determinations as to each Polaroid factor and its

ultimate balancing of those factors.

      Here, the district court found that “Costco has proffered no evidence that

raises a disputed issue of material fact with respect to any of the Polaroid factors”

and that Tiffany therefore “demonstrated a likelihood of confusion” sufficient to

warrant summary judgment in its favor as to its trademark infringement claims.

Tiffany & Co. v. Costco Wholesale Corp., 127 F. Supp. 3d 241, 247 (S.D.N.Y. 2015). On

appeal, Costco principally contests the district court’s analysis of three of these

factors: whether Costco’s customers were actually confused, whether Costco

adopted Tiffany’s mark in bad faith, and whether the relevant population of

consumers was sufficiently sophisticated to avoid confusion. We conclude that

Costco has raised a triable question as to each of these factors and, by extension,

the ultimate issue of whether Costco’s actions generated a likelihood of customer

confusion.




whether a mark has the degree of strength necessary to weigh in favor of the party
claiming infringement.” Patsy’s Brand, 317 F.3d at 216.


                                         18
                                   1. Actual Confusion

      Concluding that Tiffany had established actual customer confusion as a

matter of law, the district court pointed to two categories of evidence proffered by

Tiffany. First, it referred to the deposition testimony of six Costco customers, each

of whom alleged that he or she was confused by Costco’s point-of-sale signs.

Second, it described the results of a customer confusion survey and report created

by Tiffany’s expert, Dr. Jacob Jacoby. Dr. Jacoby’s report included responses from

944 people surveyed through the internet, 606 of whom identified themselves as

Costco patrons who thought that “they [or their significant other] would consider

buying a diamond engagement ring at Costco that cost at least $2,500.” J.A. 1,452.

Jacoby estimated that of these 606 responders—each of whom was shown a photo

of a diamond engagement ring alongside one of Costco’s point-of-sale signs, 8

either in isolation or after seeing photos of other branded items sold by Costco—

“more than two out of five . . . were likely confused into believing that Tiffany &

Co. was the source of the rings.” Id. at 1,454. The district court deemed this

evidence unrebutted and concluded that Costco had failed to raise a factual




      8 The sign in Dr. Jacoby’s survey read “639911 / PLATINUM TIFFANY / .70CT
VS2,I ROUND / DIAMOND RING / 3199.99.” J.A. 1,539 (emphasis in original).


                                         19
question as to whether customers were actually confused by its use of the word

“Tiffany” on its signs. For the following reasons, we disagree.

      To begin, Costco did seek to rebut Tiffany’s evidence of confusion. First, it

argued that the testimony of six customers—out of the 3,349 customers who

purchased Tiffany-set rings at Costco during the relevant period—was only de

minimis evidence of confusion and insufficient to resolve the issue definitively

against Costco. Second, and more importantly, it submitted a report from its own

expert, Dr. Russel S. Winer, criticizing Dr. Jacoby’s survey methodology and

results. Dr. Winer opined that Dr. Jacoby should have targeted only customers

with a “present purchase interest in buying a diamond ring,” and that Dr. Jacoby’s

actual survey respondents “could not have been a group whose perceptions

provided any valid or reliable predictor of past or future Costco diamond ring

purchaser beliefs.” Id. at 4,226. Dr. Winer further asserted that Dr. Jacoby’s study

was fatally flawed due to “artificial, contrived and biasing” stimuli that “ignore[d]

the reality of the customer purchase process.” Id. at 4,228. For example, Dr. Winer

noted that rather than showing survey responders a point-of-sale sign as it would

have appeared to customers—in a display case surrounded by other rings

identified by “other tags . . . , some of which would have other setting and style



                                         20
types indicated”—Jacoby’s survey showed them only a single ring and sign in

isolation. 9 Id. at 4,305. Winer also assessed that on top of these flawed survey

conditions, Dr. Jacoby’s screening questions, which required responders to sort

words into brand names and descriptive words, “trained” those responders to

“bias[] the responses in favor of selecting Tiffany as a brand identifier.” Id. at 4,303.

      We conclude that this evidence was sufficient to raise a question as to

whether potential buyers of Costco’s diamond engagement rings were actually

confused by the appearance of the word “Tiffany” on Costco’s signs. In concluding

otherwise, the district court observed that Dr. Winer’s criticisms go to the weight

of Tiffany’s evidence rather than its admissibility and that he did not perform his

own survey to demonstrate affirmatively that Costco’s customers were not

confused. But the weight to be given to a particular piece of evidence can be

determinative of whether the moving party is entitled to summary judgment or



      9  Dr. Winer asserted in his report that although both of the images Dr. Jacoby
provided in his survey—one depicting only a single point-of-sale sign and the other
depicting a small section of a Costco display case—provided insufficient context to
replicate the experience of actual customers in a Costco store, the decrease in putative
confusion among the survey respondents who saw the more contextual image was
“striking.” J.A. 4,305. A jury was entitled to consider, as Dr. Winer did, “how the
percentage [of customers identifying ‘Tiffany’ as a descriptive word rather than a brand]
might have changed had the context provided been comparable to the real world
experience.” Id. at 4,307.


                                           21
whether a jury could find a material fact favorable to the non-moving party. And

in the circumstances here, neither of the putative shortcomings on which the

district court relied is sufficient to resolve the customer-confusion factor in

Tiffany’s favor as a matter of law. Tiffany bears the burden of proof on its own

motion for summary judgment. Resolving all factual inferences in Costco’s favor,

a reasonable jury could find that Tiffany failed to present sufficiently persuasive

evidence to meet that burden.

                                2. Costco’s Good Faith.

      In analyzing whether a defendant has acted in bad faith, the question is

whether the defendant attempted “to exploit the good will and reputation of a

senior user by adopting the mark with the intent to sow confusion between the

two companies’ products.” Star Indus., 412 F.3d at 388. We have cautioned that

“where the allegedly infringing mark is identical to the registered mark, and its

use began subsequent to the plaintiff’s trade-mark registration, the defendant

must carry the burden of explanation and persuasion.” Kiki Undies Corp., v.

Promenade Hosiery Mills, Inc., 411 F.2d 1097, 1101 (2d Cir. 1969). But “[p]rior

knowledge of a senior user’s trade mark does not necessarily give rise to an

inference of bad faith and may [actually] be consistent with good faith.” Sports



                                        22
Auth., 89 F.3d at 964 (quoting Arrow Fastener Co. v. Stanley Works, 59 F.3d 384, 397

(2d Cir. 1995)). Indeed, “the intent to compete by imitating the successful features

of another’s product is vastly different from the intent to deceive purchasers as to

the source of [one’s own] product.” Nora Beverages, Inc. v. Perrier Grp. of Am., Inc.,

269 F.3d 114, 123 (2d Cir. 2001) (internal quotation marks and alterations omitted);

see also George Basch Co. v. Blue Coral, Inc., 968 F.2d 1532, 1541 (2d Cir. 1992)

(“Absent confusion, imitation of certain successful features in another’s product is

not unlawful . . . .”). And as we have consistently observed, “subjective issues such

as good faith are singularly inappropriate for determination on summary

judgment.” Cadbury, 73 F.3d at 483 (internal quotation marks and alterations

omitted) (declining to grant summary judgment on the matter of good faith even

where the plaintiff’s “registered mark is identical—in style as well as in name—to

[the defendant’s] adopted logo . . . [and the defendant’s] explanation is not

particularly persuasive”).

      The district court concluded that “no rational finder of fact could conclude

that Costco acted in good faith in adopting the Tiffany mark.” Tiffany, 127 F. Supp.

3d at 252 (emphasis added). It cited several pieces of evidence proffered by Tiffany,

including an email from a Costco employee indicating that Costco’s jewelry boxes



                                         23
should have a more “Tiffany or upscale look,” the deposition testimony of a Costco

inventory control specialist who acknowledged that she took no action in response

to two emails ostensibly indicating customer and employee confusion over the

source of Costco’s rings, and photographs and emails that suggest efforts by

Costco to “copy Tiffany’s designs by making references to Tiffany designs and

sharing links to Tiffany’s website [in communications with vendors].” Id. at 251–

52.

      The district court acknowledged Costco’s contrary evidence that it had

never attempted to adopt the Tiffany mark, that its signs actually used the word

“Tiffany” as a brand-independent description of a particular style of diamond

setting, and that those signs merely reflected information provided by its own

suppliers. Id. at 252. The court nonetheless concluded that a jury could not

reasonably credit an argument that “Costco jewelry buyers used the word

‘Tiffany’ in a generic sense when communicating with vendors, while at the same

time asking those vendors to copy Tiffany & Co. designs, and that signage

incorporating the word ‘Tiffany’ on the resulting merchandise was nothing more

than clerical duplication of a generic reference from an invoice.” Id. Again, we

disagree.



                                       24
         Although a jury could reasonably draw the conclusion that Costco’s interest

in emulating Tiffany’s designs spilled over into an intent to mislead buyers as to

the origins of its own jewelry, it could also reasonably conclude that Costco

intended to borrow “certain successful features [from Tiffany’s] product” without

implying that Tiffany actually produced or endorsed the jewelry at issue. George

Basch Co., 968 F.2d at 1541. We have consistently recognized that intent to copy a

product’s useful, nonprotected attributes should not be equated automatically

with an intent to deceive. See Nora Beverages, 269 F.3d at 123. Therefore, Costco’s

admitted intent to sell jewelry that looks like Tiffany’s—as opposed to an intent to

have its jewelry pass as Tiffany’s—cannot be enough to justify a finding that

Costco acted in bad faith in connection with Tiffany’s trademark infringement

claim.

         In concluding otherwise, the district court overlooked substantial evidence

that Costco did not attempt to sow confusion among its customers. As the district

court recognized in its good faith analysis, two Costco representatives—a

diamond buyer and an assistant general merchandise manager—submitted

declarations affirming that Costco inventory control personnel took the term

“Tiffany” directly from vendor descriptions, that the representatives understood



                                          25
Tiffany as a “generic style name,” and that indeed it was “the only name . . . used

to denote [that] type of pronged setting.” 10 J.A. 2,927. Costco backed these claims

with evidence that the term “Tiffany” has been used as a generic descriptor—both

explicitly in conjunction with a word like “setting” and implicitly by itself—in

thousands of advertisements, dictionaries, trade publications, and other public

documents since the late 1800s. And as the district court recognized elsewhere in

its decision, Costco presented evidence that its rings were not branded with

Tiffany’s mark (and indeed were branded with R.B. Diamond’s logo instead); that

the rings came in unbranded containers bearing no resemblance to Tiffany’s

distinctive robin’s-egg blue packaging; that buyers received Costco-branded

receipts, appraisal forms, and other sales documents; and that Costco’s return

policy permitted customers to return their rings any time after purchase. 11


       10As far as we can tell, Tiffany’s only reply to this evidence is that after Costco
voluntarily stopped using the name “Tiffany” on its signs, it was still able to describe
those rings’ settings as “Solitaire.” But “Solitaire,” which describes any single gem in a
simple setting, is undeniably a less descriptive term than “Tiffany,” which ostensibly
describes a specific type of six-prong setting.
       11Both Tiffany and Costco point to a customer email asking whether the word
“Tiffany” on the label referred to the “Tiffany setting or Tiffany brand,” J.A. 15,333.
Consistent with Costco’s argument that it acted in good faith, a Costco employee
responded to the customer’s email that “[i]t means Tiffany setting.” Id. at 15,334. Notably,
the jury could also consider this email as evidence of an absence of actual customer
confusion. See Nora Beverages, 269 F.3d at 124 (“Inquiries about the relationship between
the owner of a mark and an alleged infringer do not amount to actual confusion. Indeed,

                                            26
Crediting this evidence, a reasonable jury could conclude that Costco did not

intend to mislead its customers and that signs bearing the word “Tiffany” were

the product of a good-faith attempt to communicate to its customers the setting

style of certain rings that it sold. 12

                                  3. Consumer Sophistication

       “Our analysis of consumer sophistication ‘consider[s] the general

impression of the ordinary purchaser, buying under the normally prevalent

conditions of the market and giving the attention such purchasers usually give in

buying that class of goods.’” Star Indus., 412 F.3d at 390 (quoting Sports Auth., 89

F.3d at 965); see also Streetwise Maps, Inc. v. VanDam, Inc., 159 F.3d 739, 746 (2d Cir.

1998). In general, “the more sophisticated the purchaser, the less likely he or she

will be confused by the presence of similar marks in the marketplace.” Savin Corp.




such inquiries are arguably premised upon a lack of confusion between the products such
as to inspire the inquiry itself.” (emphasis in original)).
       12A jury would also be entitled to infer good faith from Costco’s conduct after
Tiffany asserted that Costco’s had infringed its trademark. Costco offered evidence that
it voluntarily ceased using the word “Tiffany” on its product signs within a week of
receiving Tiffany’s demand letter. And after Tiffany filed its complaint, Costco wrote to
all purchasers of Costco rings bearing a Tiffany-style setting alerting them to Tiffany’s
claim and reminding them of their right to return their purchase at any time for a full
refund. While Tiffany disputes certain of these facts, we assume in assessing Tiffany’s
motion for summary judgment that a jury would resolve those disputes in Costco’s favor.


                                           27
v. Savin Grp., 391 F.3d 439, 461 (2d Cir. 2004). Likewise, “[t]he greater the value of

an article[,] the more careful the typical consumer can be expected to be.”

Manhattan Indus., Inc. v. Sweater Bee by Banff, Ltd., 627 F.2d 628, 631 (2d Cir. 1980)

(internal quotation marks omitted). Although sophistication may usually be

proven by direct evidence, including expert opinions or surveys, “in some cases a

court is entitled to reach a conclusion about consumer sophistication based solely

on the nature of the product or its price.” Star Indus., 412 F.3d at 390.

      The district court correctly identified the competing expert reports

submitted by Dr. Jacoby and Dr. Winer as the principal evidence on the question

of customer sophistication. As indicated above, Dr. Jacoby’s study assumed that

survey responders who said they “would consider buying a diamond engagement

ring at Costco” were representative of customers who would likely interact with

Costco’s allegedly infringing point-of-sale signs. Tiffany offered no other evidence

regarding the sophistication of the relevant consumer population. In response, Dr.

Winer countered that the purchase of an engagement ring is a “high involvement”

transaction, and that actual purchasers—as opposed to those who merely “would

consider buying an engagement ring”—have, or acquire, substantial “subject

matter knowledge and familiarity with the relevant vocabulary.” J.A. 4,226.



                                          28
      The district court nonetheless determined that Costco failed to raise a

question as to whether its customers were sufficiently sophisticated that its use of

the word “Tiffany” would not create confusion. As in its analysis of actual

confusion, the district court concluded that Costco’s evidence goes only to “the

weight that Tiffany’s evidence should be accorded, and fails to provide competing

affirmative evidence regarding the relevant population of consumers.” Tiffany, 127

F. Supp. 3d at 254. Once again, its appraisal erroneously shifted Tiffany’s burden

onto Costco. As explained above, the weight of a piece of evidence can be

determinative as to whether summary judgment is appropriate. What’s more, it is

simply incorrect to say that Costco proffered no affirmative evidence regarding

customer sophistication. As the district court otherwise described, Costco did offer

evidence, in the form of Dr. Winer’s declaration, that “[i]n the case of purchasing

a diamond ring, . . . actual prospective purchasers proximal to the purchase

decision definitely know more than people not in the market.” J.A. 4,300. And as

Dr. Winer’s report further opined:

      [A] group of ‘actively in the market’ prospective diamond ring buyers
      would clearly be more attuned to the marketing of diamond rings, the
      jargon associated with diamond rings, and the shopping process and
      experience associated with diamond rings, and thus be more
      knowledgeable about whether the word Tiffany in the context of the
      small product labels referred to the ‘Tiffany & Co.’ brand or was being


                                        29
      used to describe a particular type of ring setting.

      Id. Indeed, we have previously recognized that “[t]he purchaser of a

diamond ring, particularly of a wedding or engagement ring, will be most

discriminating in his purchase, and make it carefully and deliberately.” J.R. Wood

& Sons, Inc. v. Reese Jewelry Corp., 278 F.2d 157, 159 (2d Cir. 1960). A jury could

reasonably conclude, by crediting Costco’s evidence and rejecting Tiffany’s, that

the relevant population of consumers would be sufficiently attentive and

discriminating as to recognize that Tiffany had nothing to do with Costco’s

diamond engagement rings.

                    4. Overall Likelihood of Customer Confusion

      We conclude that Costco’s evidence has, when considered in the aggregate,

created a genuine question as to the likelihood of customer confusion. See Star

Indus., 412 F.3d at 383. Our conclusion rests primarily on the combination of (1)

Costco’s evidence that “Tiffany” is a broadly recognized term denoting a

particular style of pronged ring setting and (2) its further indications, backed by

prior pronouncements of this Court, that purchasers of diamond engagement

rings educate themselves so as to become discerning consumers.

      Affording full credit to this evidence, a jury could reasonably conclude that



                                         30
consumers of diamond engagement rings would know or learn that “Tiffany”

describes a style of setting not unique to rings manufactured by Tiffany, and

recognized that Costco used the term only in that descriptive sense. Such

consumers may also be distinctly capable of recognizing that Costco’s rings were

not manufactured by Tiffany—based, for example, on their price, place of

purchase, packaging, or paperwork—and consequently be particularly unlikely to

be confused by any aspect of Costco’s point-of-sale signs. Moreover, any Costco

customer looking at a Tiffany-set ring identified by a sign that includes the word

“Tiffany” would also see a jewelry case full of other unbranded rings, each

identified by a sign indicating its own setting type in a similar or identical way.

      To be sure, Tiffany has made a persuasive (and essentially unrebutted)

showing that the general public associates its famous brand with high-quality

engagement rings that compete directly with those sold by Costco. But even the

potential for confusion inherent in such circumstances cannot dictate a judgment

for Tiffany in light of Costco’s evidence that engagement-ring purchasers exercise

care and become savvy, and that the context Costco provided at the point of sale

was sufficient for those careful customers to recognize that its signs used “Tiffany”

only as a generic descriptor. In short, Costco’s use of the word “Tiffany” to



                                         31
describe engagement rings may have created a possibility of confusion. It may even

be the more reasonable inference that confusion was likely. But in light of Costco’s

competing evidence—and Tiffany’s failure to demonstrate that actual purchasers

would not recognize the word “Tiffany” as denoting a commonly used setting

style—we decline to hold that no reasonable jury could find that Costco’s signs

were not confusing. 13 See Island Software & Comput. Serv., Inc. v. Microsoft Corp.,

413 F.3d 257, 264 (2d Cir. 2005) (“[A]t the summary judgment stage, [even if one]

inference . . . seems the better of the possible inferences that can be drawn, we must

still draw all inferences in favor of the non-moving party.”).

                                B. Costco’s Fair Use Defense

      To avoid liability for infringement, however, Costco need not rely on a jury

to reject Tiffany’s claim that Costco’s actions created a likelihood of confusion.

Contrary to the district court’s holding, Costco is also entitled to present its fair

use affirmative defense at trial. The Lanham Act provides that when a party “uses

the words constituting [a registered] mark in a purely descriptive sense, this use



      13   Because liability for trademark infringement under New York law mirrors
liability under the Lanham Act, see Standard & Poor’s Corp., Inc. v. Commodity Exchange,
Inc., 683 F.2d 704, 708 (2d Cir. 1982), the district court likewise should not have granted
Tiffany’s motion for summary judgment in connection with its state-law infringement
claim.


                                            32
may qualify as permissible fair use.” Kelly-Brown v. Winfrey, 717 F.3d 295, 308 (2d

Cir. 2013). Crucially, a defendant may raise a fair use defense even where the

challenged material is likely to cause some confusion. See KP Permanent Make-Up,

Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 121–22 (2004). To demonstrate fair use,

a defendant must establish that it used the allegedly infringing term “(1) other

than as a mark, (2) in a descriptive sense, and (3) in good faith.” JA Apparel Corp.

v. Abboud, 568 F.3d 390, 400 (2d Cir. 2009) (internal quotation marks omitted); see

also 15 U.S.C. § 1115(b)(4).

       The district court rejected Costco’s fair use defense at summary judgment

on the basis that—for the same reasons that underpinned its Polaroid analysis—

Costco’s evidence was insufficient to establish that it used the word “Tiffany” in

good faith. 14 Having resolved the motion on the basis of good faith alone, the

district court did not consider the other factors pertinent to the fair use defense.

On appeal, Costco argues that the record contains sufficient evidence to support




       14The “good faith” prong of the fair use analysis is essentially identical to the same
prong of the Polaroid analysis and “concerns the question whether the user of a mark
intended to create consumer confusion as to source or sponsorship.” JA Apparel, 568 F.3d
at 401 (quoting EMI Catalogue P’ship v. Hill, Holliday, Connors, Cosmopulos Inc., 228 F.3d
56, 66–67 (2d Cir. 2000)).




                                             33
each prong of its affirmative defense. We agree. For the reasons stated above, the

district court should not have concluded that no question of material fact exists on

the question of Costco’s good faith. For the reasons that follow, we likewise

conclude that Costco created a triable question as to the remaining factors of the

fair use analysis.

                                    1. Use “As a Mark”

      A defendant uses a term “as a mark” when it employs it “as a symbol to

attract public attention,” Kelly-Brown, 717 F.3d at 306 (internal quotation marks

omitted), or “to identify and distinguish . . . goods [or services] . . . and to indicate

[their] source,” 15 U.S.C. § 1127. Whether a defendant has done so may entail an

investigation into, inter alia, whether the challenged material appeared on the

product “itself, on its packaging, or in any other advertising or promotional

materials related to [the] product,” and the degree to which “defendants were

trying to create, through repetition . . . a[n] association between [themselves] and

the [mark].” Kelly-Brown, 717 F.3d at 310–11 (internal quotation marks omitted).

      A jury could reasonably conclude that Costco did not use the term “Tiffany”

as a trademark. Tiffany’s own evidence indicates that Costco typically identifies

the trademark associated with its branded products as the first word on the



                                           34
product label. 15 For this litigation, Costco produced hundreds of examples of

signs for its engagement rings, none of which began with the word “Tiffany” or

any other brand name. Instead, Costco’s evidence demonstrates that it displayed

the word “Tiffany” in the exact same manner (including typeface, size, color, and

relative location on the signs) that it displayed setting information for other

engagement rings. Costco also proffered evidence that the word “Tiffany” did not

appear on any of its rings or ring packaging, and that the rings actually bore the

logo of a different manufacturer. See Car-Freshner Corp. v. S.C. Johnson & Son, Inc.,

70 F.3d 267, 270 (2d Cir. 1995) (explaining that a defendant’s display of its own

trademark on a tree-shaped car freshener suggested that the product’s shape was

used otherwise than as a mark).

                                    2. Descriptive Use

      Whether a phrase is descriptive refers to its tendency to describe the goods

in question in a broad sense, including not only “words that describe a

characteristic of the goods[] such as size or quality,” but also words or images that




      15 Costco’s evidence indicates that when it did sell genuine Tiffany merchandise,
“Tiffany” was indeed the first word on the accompanying signs. Both parties agree,
however, that Costco has never sold engagement rings produced by Tiffany in its
American stores.


                                          35
more abstractly identify some information about the goods in question.

Cosmetically Sealed Indus. v. Chesebrough-Pond’s USA Co., 125 F.3d 28, 30 (2d Cir.

1997) (citing Car-Freshner Corp, 70 F.3d at 269–70 (concluding that a car freshener’s

pine-tree shape was a fair use of a protected image because the shape indicated

both the product’s scent and the season in which it was sold)).

      Here, a jury could reasonably find that Costco used the term “Tiffany”

descriptively, based on Costco’s evidence that (1) “Tiffany” has a descriptive

meaning independent of Tiffany’s brand and (2) Costco intended to and did

invoke that meaning when it created its point-of-sale signs. As noted above, Costco

has identified over a century’s worth of documents suggesting that “Tiffany”—

both alone and in conjunction with words like “ring,” “setting,” “style,” or

“mounting”—is widely understood to refer to a particular type of pronged

diamond setting. And as Costco’s employees attested in their declarations, both

they and their vendors understood the term to be the only precise way to describe

that style. Costco also presented unrebutted evidence that it used the term

“Tiffany” exclusively on signs identifying rings bearing a Tiffany setting, and that

it displayed the same set of information for engagement rings of all styles. In other

words, Costco would generally display a diamond ring with a cathedral or bezel



                                         36
diamond setting along with a sign displaying the word “Cathedral” or “Bezel” in

the same way that a sign identifying a diamond ring with a Tiffany setting would

display the word “Tiffany.”

      Tiffany, for its part, resists the conclusion that the term “Tiffany” is

amenable to descriptive use—or indeed any use other than as a mark—within the

jewelry industry. It argues that “no case has ever bisected a trademark to allow the

same word to be used exclusively by the trademark holder to denote the source of

goods for every product in a registered class except one,” and that doing so here

would bring about the “absurd” result that “Tiffany” could be a source identifier

for rings of other styles, but a descriptive term for rings in the so-called “Tiffany”

style. Appellees’ Br. 10.

      Tiffany’s argument fundamentally misunderstands our caselaw. There is

nothing inherently absurd about a single word’s being both a source identifier and

a descriptive term within the same product class. See Abercrombie & Fitch Co. v.

Hunting World, Inc., 537 F.2d 4, 9 (2d Cir. 1976) (“[T]he same term may be put to

different uses with respect to a single product.” (citing 15 U.S.C. § 1115(b)(4))). To

the extent that “Tiffany” actually does have the descriptive meaning Costco

submits that it does, Tiffany’s putative “absurd” result is nothing more than the



                                         37
predictable reality of a legal regime in which “trademark rights may be acquired

in a word or image with descriptive qualities.” Car-Freshner, 70 F.3d at 269. And

within that reality, it is well established that “the public’s right to use descriptive

words or images in good faith in their ordinary descriptive sense must prevail over

the exclusivity claims of the trademark owner.” 16 Id.

      As a result, the simple fact that a defendant has trademarked a term for use

in a particular industry does not preclude a jury’s finding that the term has some

descriptive use within the same industry. See JA Apparel, 568 F.3d at 402–03

(holding that fair use may entitle a clothing company to identify its designer on




      16   That Tiffany & Co. and the Tiffany setting derive their names from a common
source—Charles Lewis Tiffany, who both founded the company and invented the
setting—does not alter this proposition. See JA Apparel, 568 F.3d at 394 (explaining that
the plaintiff’s trademark “Joseph Abboud” refers to the same individual identified in the
defendant’s ostensibly descriptive advertising materials); id. at 402–03 (explaining that
the challenged usage might nonetheless be fair use). Nor does it matter that the word
“Tiffany” is not inherently descriptive of the diamond setting at issue. One who possesses
exclusive rights in a mark by virtue of having used it in commerce can lose that right to
exclusivity—either outright or in connection with a limited application—by failing to
enforce the mark so that, through usage by others in the marketplace, it becomes generic
at least in a limited sense. The record reflects that Tiffany used the word mark “Tiffany”
in commerce as early as 1868, while the use of the term “Tiffany” to describe a particular
setting style acquired currency in the late 1800s. The record suggests no reason that
Tiffany could not have taken action in the late 1800s to prevent the use of the word
“Tiffany” descriptively in the general marketplace. Whatever Tiffany’s reasons for not
doing so, Costco’s evidence suggests that the word “Tiffany” did acquire an adjectival
meaning in the trade to identify a particular style of setting.


                                           38
advertisements even where a competitor has registered that same designer’s name

as a trademark in connection with the sale of apparel). Indeed, the fact that Tiffany

does not here challenge Costco’s use of the phrase “Tiffany set” or “Tiffany

setting” may signal an implicit recognition that some uses of its protected mark

are indeed descriptive. As we explained in JA Apparel, whether a defendant has

used a name descriptively requires “individualized consideration” of how the

defendant has used the name. Id. at 402. And as we explained above, Costco’s

evidence is sufficient for a jury to find the word “Tiffany,” when used in

conjunction with a particular six-pronged stone setting, had acquired a descriptive

meaning in the jewelry trade that did not suggest an association with the jeweler

Tiffany & Co., and that Costco used the word descriptively in that sense and in

good faith under the particular circumstances of this case. To be sure, a reasonable

jury could also reject Costco’s evidence and find that customers would not

recognize the word “Tiffany” as descriptive even with the context Costco

provided. On this record, however, that decision belongs to the jury and not to the

court.




                                         39
                        II. Tiffany’s Trademark Counterfeiting Claim

       Having determined that Costco’s use of the word “Tiffany” constituted

trademark infringement, the district court proceeded to conclude as a matter of

law that Costco’s infringement involved a counterfeit mark.17 Under the Lanham

Act, “[a] counterfeit is a ‘spurious mark which is identical with, or substantially

indistinguishable from, a registered mark.’” Kelly-Brown, 717 F.3d at 314 (quoting

15 U.S.C. § 1127). Echoing its principal infringement analysis, the district court

held that Costco’s conduct had necessarily involved such a mark because it had

“utilized a word mark identical to the one that Tiffany has registered” and done



       17 In a Lanham Act litigation, a plaintiff who has employed “a counterfeit mark”—
as opposed to a mere “colorable imitation” or other infringing usage—is subject to
heightened statutory penalties. See 15 U.S.C. § 1117. “In a case involving the use of a
counterfeit mark,” a Lanham Act plaintiff may elect to recover, in lieu of the standard
profits and damages available for mere infringement, “an award of statutory damages . .
. not less than $1,000 or more than $200,000 per counterfeit mark per type of goods or
services sold, offered for sale, or distributed.” 15 U.S.C. § 1117(c). Even greater penalties
are available upon a finding that a defendant used a counterfeit mark willfully. If a
defendant has “intentionally us[ed] a mark or designation, knowing that such mark or
designation is a counterfeit mark,” and the plaintiff elects to pursue standard profits and
damages, the court “shall, unless [it] finds extenuating circumstances, enter judgment for
three times [defendant’s] profits or [plaintiff’s] damages, whichever amount is greater,
together with a reasonable attorney’s fee.” Id. § 1117(b). And if a plaintiff elects instead
to pursue statutory damages, a “court [that] finds that the use of the counterfeit mark was
willful,” may impose damages of up to “$2,000,000 per counterfeit mark per type of goods
or services sold, offered for sale, or distributed.” Id. § 1117(c)(2). In this case, after holding
Costco liable for willful trademark counterfeiting as a matter of law, the district court
awarded Tiffany treble profits pursuant to § 1117(b).


                                               40
so with the “intent to confuse customers as to the source of the rings,” rendering

its “use of the Tiffany mark . . . ‘spurious’ as a matter of law.” Tiffany, 127 F. Supp.

3d at 255. Because it was inappropriate to hold Costco liable for trademark

infringement at the summary judgment stage—and because counterfeiting is

merely an aggravated form of infringement—we vacate the district court’s

judgment as to counterfeiting as well. 18




       18 We cannot conclude on the record here that no reasonable jury could find in
favor of Tiffany on the counterfeiting claim, and we therefore affirm the district court's
denial of Costco's motion for summary judgment as to this claim. We do note that it is
likely inappropriate to impose liability for trademark counterfeiting when a defendant is
able to establish—with or without the other two elements of the fair use defense—that it
used a term identical to the registered mark otherwise than as a mark. In order for
material to qualify as “counterfeit” under the Lanham Act, it must be a “spurious mark.”
15 U.S.C. § 1127. A “spurious” mark, in turn, is one that is “fake” and “[d]eceptively
suggest[s] an erroneous origin.” Spurious, Black’s Law Dictionary (11th ed. 2019). We fail
to see how a term can be a “fake” mark if it is not actually used as a mark, or how a term
can “deceptively suggest an erroneous origin” if it is not used as a means to indicate
origin in the first place. See 15 U.S.C. § 1127 (defining “trademark” and “service mark” as
“any word, name, symbol, or device, or any combination thereof” used “to indicate the
source” of goods and services). Terms not used as a mark may still generate confusion as
to “affiliation, connection, . . . association[,] . . . sponsorship or approval,” id.
§ 1125(a)(1)(A), or “misrepresent the nature, characteristics, qualities, or geographic
origin” of a good or service, id. § 1125(a)(1)(B), and therefore constitute trademark
infringement. See Int’l Info. Sys. Sec. Certification Consortium, 823 F.3d at 161 (“[P]rotection
is not exclusively limited . . . to cases in which there may be confusion as to source.”);
Kelly-Brown, 717 F.3d at 308 (“Lanham Act plaintiffs [need not] show that the defendant
was using the allegedly infringing content ‘as a mark’ . . . in order to establish consumer
confusion.”). But because terms not used as marks are not “spurious,” they cannot, as a
matter of law, be counterfeit.


                                              41
                   III.   Tiffany’s Entitlement to Punitive Damages

      In their briefing, both parties address the question whether—assuming

Costco’s liability for infringement—Tiffany is entitled to punitive damages under

New York law. Because we vacate the district court’s ruling as to Costco’s liability,

we decline to address the question whether punitive damages would be available

to Tiffany if a jury were to find in its favor on remand.

                                  CONCLUSION

      For the foregoing reasons, we VACATE the judgment of the district court

and REMAND the case for trial.




                                         42
