Friday Fake Out: The Sultans of SWAIN- the aftermath of Tiffany's epic counterfeiting battle over Costco


Admit it: while you may have gone to Costco for bulk toilet paper, party supplies and the occasional hot dog at the food court, there is something intriguing about the jewelry section- specifically when it boasts $10K "Tiffany & Co." rings for a mere $2500. How can that be? Costco certainly is the place where discounts run plentiful, but this seems too good to be true. Here's a little secret: it is. Last summer, Tiffany & Co filed a law suit against Costco for copyright infringement. The jist was this: the big box retailer was trying to make it *seem* like they had discounted Tiffany items (read: diamonds). The real deal: they didn't. 


Judge Swain, a federal judge in the Southern District of New York ruled  Tiffany & Co may recover at least $19.4 million in damages from Costco Wholesale Corp over the warehouse club chain's illegal sale of counterfeit diamond engagement rings bearing the "Tiffany" name. 

The judge permanently barred Costco from selling anything that Tiffany did not make as "Tiffany" products, unless it uses modifying language suggesting that the products have, for example, a Tiffany "setting" or "style." 

He also spoke to the damage that Costco is doing to the Tiffany brand by selling roughly 2,500 rings using the "Tiffany" name. 

What costs is he talking about? Check it: 

Counterfeit industry: revenues $461 billion a year (globally)

The cost to US businesses: $200 billion annually

Job loss: Counterfeit merchandise is directly responsible for the loss of more than 750,000 American jobs.

Percentage of world trade of counterfeit goods: Approximately 5%-7% of the world trade is in counterfeit goods.

Trade losses: U.S. companies suffer $9 billion in trade losses due to international copyright piracy. (source for all facts: IACC)

Why is the cost so high?

Counterfeit items chips away at brand equity. When you purchase a product with a certain name, you assume you are getting a specific quality, customer service, sourcing, etc. If a retailer is selling merchandise that is un-authorized or worse, counterfeit, the customer ends up losing out in the end. There isn’t a company that can help unlawful distributors of counterfeit merchandise- brands have to be extra careful.

So before you think you are getting a sick discount on a high end/brand name necklace, ring, bracelet or earings MAKE SURE you are purchasing from a retailer with an authentication process in place or can show you provenance. Want to see more? Check out the segment we did on this for ABC World News Tonight!