Tiffany Forced to Pay Millions to Swatch Group

Tiffany Watches


by John Sealander  

How Swatch Group and Tiffany & Company turned a “perfect”
partnership into one of the watch industry’s most bitter disputes.

When the powerful Swatch Group and luxury retailer Tiffany and Company agreed to join forces to produce Tiffany and Company branded timepieces in 2007, almost everybody thought that the relationship was a win-win situation for both parties. The Swatch Group was the world’s largest watch manufacturer, bringing us many of the most widely recognized high-end brands like Breguet, Blancpain, Harry Winston, Glashütte Original, Omega, Longines, and Rado. Tiffany and Company was one of the world’s most prestigious jewelry manufacturers and retailers. Together, it was expected that these two industry giants could dominate the all-important “jewelry watch” segment of the industry.

What actually happened was a surprise to everyone. When the Swatch Group debuted it’s first Tiffany and Company watch collection at Baselworld in 2009, Tiffany insiders were extremely disappointed. They felt that the collection wasn’t up to Tiffany’s high standards and were reluctant to sell the watches in their stores. Obviously, the Swatch Group didn’t agree. As the world’s leading watch manufacturer, they felt the new collection was exactly what Tiffany and Company needed to succeed.

The Fall of a Potentially Great Partnership

As the strategic alliance between Tiffany & Company and the Swatch Group began to deteriorate, it became apparent that Swatch did not want Tiffany watches to directly compete with its existing luxury watch brands. By designing Tiffany & Company branded timepieces to fit in a distinct market segment that was somewhere in between ultra luxury brands like Harry Winston and Breguet and mainstream high-end brands like Omega and Longines, Swatch believed it was maximizing selling opportunities without cannibalizing any of their existing brands.

Tiffany and Company simply felt that the Swatch designed watches were not as elegant and classy as they should have been and refused to promote them. Relations between the two companies went downhill from there when the Swatch Group filed suit against Tiffany and Company and Tiffany counter-sued. Each party claimed a range of contractual breaches that stemmed from Tiffany and Company’s allegations that Swatch had provided than with an inferior product and Swatch’s claim that by refusing to promote the watches, Tiffany had made it impossible for the Swatch Group to sell them.

After years of legal battles and binding arbitration, the powerful Swatch Group prevailed, winning an unprecedented $450 million dollar judgment against Tiffany and Company for breach of contract. This was only a small fraction of the 3.8 billion in Swiss Francs that the Swatch Group initially wanted in damages. The counter-suit filed by Tiffany and Company went nowhere and was eventually completely dismissed by the arbitration court in the Netherlands.

Lessons Learned

Even though the record $450 million dollar judgment was more money than Tiffany made during the entire prior year, the company will survive. Tiffany learned an expensive but very valuable lesson during this experience. If they want to make watches that live up to their own high standards, they’d better do it themselves. The Swatch Group apparently learned its own lessons as well. The company never abandoned its desire to become a major player in the jewelry watch segment and when the opportunity arose, it simply bought Tiffany competitor Harry Winston outright instead of attempting another partnership.

Now that this monumental dispute is finally over, there is a lesson that companies in every industry need to learn: when powerful companies join forces, there is always a danger in having shared decision-making power.

About Gevril Group

Gevril GroupGevril Group is the exclusive US representative for select European watch brands, distributing and servicing luxury, fashion and sports timepieces at a wide range of price points. Gevril Group also operates a full-service watch repair department staffed by master Swiss watchmakers. Contact Gevril Group by email or by calling 845-425-9882.

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The Tiffany Setting: Trademark, or Generic Term?

A 'Tiffany Setting' Engagement Ring


by John Sealander  

Has the World’s Favorite Engagement Ring Style
Finally Achieved “Kleenex Status?”

When Charles Lewis Tiffany was looking for a ring with more “shine” he ended up inventing the world’s favorite engagement ring style. Before the arrival of the Tiffany setting in 1886, all diamonds were set in a bezel, so only the crown was visible. To expose more of the diamond’s surface and enhance the stone’s sparkle, Tiffany and the company’s gemologists developed a new type of setting using several raised claws designed to hold a diamond securely while exposing much more of the stone for viewing.

This new style of setting, called “the most brilliant ring ever” by fans, quickly became the world’s favorite type of engagement ring. The ubiquitous Tiffany Setting is now so popular that it is used colloquially throughout the jewelry industry to describe any multi-pronged solitaire ring setting. Although many now think the term Tiffany Setting has reached “Kleenex status” and become a generic part of the language, Tiffany & Company does not agree.

When Does A Brand Name Become A Generic Term?

The issue of whether the word “Tiffany” is now a generic term for these popular ring settings has now reached a New York federal judge. Tiffany & Company has sued discount giant Costco for selling counterfeit rings that it claims are falsely advertised as Tiffany. Costco denies the claim, saying that the company never intended to sell “Tiffany rings,” only unbranded rings having a generic Tiffany style setting. “Our rings have no brand name embossed on them, are returnable at Costco, and come with a Costco appraisal,” said a Costco spokesperson. To bolster their claim, Costco has point out that popular books like Wedding Planning for Dummies and Dictionary of Gems and Gemology, as well as advertisements from many retailers already use the term “Tiffany setting” generically.

Tiffany & Company still thinks that the setting invented by company founder Charles Lewis Tiffany is theirs and theirs alone. “When Costco used the Tiffany trademark to refer to goods that had nothing whatsoever to do with Tiffany & Company, they infringed Tiffany’s trademark, while damaging both their own customers and the Tiffany brand,” said company spokeswoman Linda Buckley.

Litigation as a Form of Manipulation

Did Costco customers really think they were buying a Tiffany ring? Or is this just another frivolous lawsuit designed to preserve the stature of the luxury jeweler? Our language is constantly evolving. Many brands and slogans that were once exclusive to a manufacturer have become generic trademarks. Can you imagine not being able to use the term Band Aid, Frisbee, Kitty Litter, Thermos, Kleenex, Ping Pong, Velcro, and Q-Tip? These are all popular brand names that have become generic as a result of their popularity and widespread use. Will the term “Tiffany setting” become the next to join the growing list of names that have simply become part of the language? Costco says the term has already become generic. Tiffany & Company disagrees. Now it’s up to a judge to decide. One thing is certain. This law suit provides for many people another good example of excessive litigation in the United States.

About Gevril Group

Gevril GroupGevril Group is the exclusive US representative for select European watch brands, distributing and servicing luxury, fashion and sports timepieces at a wide range of price points. Gevril Group also operates a full-service watch repair department staffed by master Swiss watchmakers.

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Tiffany Sends Costco an Expensive Valentine

Tiffany Ring


by John Sealander  

Tiffany Accuses Costco of Engaging in Selling
Counterfeit Tiffany Engagement Rings

On February 14, 2013 luxury retailer Tiffany and Company filed suit against Costco Wholesale Corporation for engaging in selling counterfeit diamond Tiffany engagement rings at their Huntington Beach, California store. A customer alerted Tiffany that the discount giant had been selling diamond engagement rings clearly marked by in-store signage as “Tiffany.” A subsequent investigation revealed that the rings in question, one marked platinum Tiffany .70 cts. VS2 round and the other marked Tiffany VS2 1 ct. round were not Tiffany rings at all.

It is believed that hundreds, if not thousands, of Costco customers may still think they purchased a genuine Tiffany ring from Costco, since the retailer has apparently been selling different styles of rings for many years that it falsely identified on in-store signage as ‘Tiffany. “This is not the kind of behavior people expect from a company like Costco,” said Tiffany lawyer Jeffrey Mitchell. “Everyone knows that buying something on a street corner or over the Internet from an unknown source is risky. Until now, no one would have thought it could be risky to buy brand name merchandise from Costco as well.”

The Tiffany lawsuit seeks at least $2 million in damages, an injunction against Costco from using the Tiffany name, and asks Costco to “publicly admit its misconduct” to all customers who bought any rings labeled as “Tiffany.”

None of the rings identified at the Huntington Beach store as “Tiffany” were, in fact, genuine Tiffany rings. They were not manufactured by Tiffany. They were not approved by, licensed by, or in any way associated with Tiffany, according to the legal papers filed on Valentine’s Day in New York federal court.

Counterfeit Goods in the Luxury Industry

The luxury goods industry has always had problems with counterfeiting. Usually these counterfeit items are sold on street corners or over the Internet. Never before has a reputable retailer been accused of selling counterfeit goods in their own stores. The lesson for anyone thinking about purchasing luxury items like jewelry or watches is that it is still important to know where the merchandise comes from. It is always safest to buy directly from the manufacturer or one of their authorized representatives. If you don’t buy from an authorized source, you can never be sure of what you are getting.

Every year, luxury “fakes” get harder and harder to detect. That’s why it is more important than ever to buy rings, jewelry, watches, and other luxury items from a reputable source. To view Gevril Group’s list of authorized jewelers and fine watch dealers, visit the company’s Where to Buy web page. This page is not a fake! It’s simply the best way to find an authorized jeweler or watch dealer in your area.

About Gevril Group

Gevril GroupGevril Group is the exclusive US representative for select European watch brands, distributing and servicing luxury, fashion and sports timepieces at a wide range of price points. Gevril Group also operates a full-service watch repair department staffed by master Swiss watchmakers.

Please subscribe to the Gevril Group newsletter and blog updates. Reader comments are welcome.