One of the world’s leading luxury brand has filed a suit against one of the world’s largest discount retailers over allegedly false claims on engagement rings. Tiffany & Co. (NYSE: TIF) is suing Costco Wholesale Corp. (NASDAQ: COST) to find out how many of the supposedly counterfeit rings the big-box retailer sold, the source of the rings and, of course, for monetary damages.
This suit could have the same result of a similar 2004 charge that Tiffany leveled against eBay Inc. (NASDAQ: EBAY). In that case the court said it was Tiffany’s responsibility to figure out the source of the counterfeit jewelry, not eBay’s.
In this case, Costco removed the rings from its stores in December on a request from Tiffany, but Tifffany filed suit yesterday after the company said it learned that Costco had been selling the rings for “many years,” according to a report in The Wall Street Journal.
Counterfeiting of luxury goods is an issue most of us associate with emerging country economies, where the luxury brand confers a status simply on the basis of its logo, not on the quality of its goods. Whether or not Costco knew the source of the rings, the company probably should have been more suspicious of Tiffany-labelled jewelry that it could sell for half price. When something appears to be too good to be true, it usually is.