Updated Thursday, February 14, 2013 at 06:41 PM
A Tiffany & Co. subsidiary is suing Costco, claiming the wholesale club operator has been selling engagement rings wrongly labeled "Tiffany" rings.
The high-end jeweler filed lawsuit in U.S. District Court in New York on Thursday.
Tiffany and Company alleges trademark infringement, counterfeiting, unfair competition, injury to business reputation, false advertising and deceptive business practices. The company says the rings are not in fact Tiffany rings, nor are they in any way properly associated with Tiffany.
The retailer said that a customer alerted Tiffany in November to the sale of what was promoted on in-store signs as "Tiffany" diamond engagement rings at a Costco store in Huntington Beach, Calif.
Tiffany immediately launched an investigation and said that it learned that Costco has been selling different types of rings for many years identified as "Tiffany" rings, without the company's knowledge. The jewelry retailer said that Costco led its customers to believe they were buying authentic Tiffany products at significant discounts.
"We now know that there are at least hundreds if not thousands of Costco members who think they bought a Tiffany engagement ring at Costco, which they didn't," Jeffrey Mitchell, Tiffany's counsel in the case, said in a statement. "Costco knew what it was doing when it used the Tiffany trademark to sell rings that had nothing to do with Tiffany. This is not the kind of behavior people expect from a company like Costco, and this case will shed a much needed light on this outrageous behavior."
A representative for Costco Wholesale Corp. in Issaquah, Wash., could not be reached immediately for comment. Costco is the world's largest wholesale club operator with more than 600 sites worldwide.
Shares of Costco rose 39 cents to close at $102.02. Tiffany & Co. rose 25 cents to close at $63.70.