U.S. District Judge Laura Taylor Swain in Manhattan stated that Costco Wholesale Corp - the largest U.S. warehouse club chain did infringe upon Tiffany & Co's trademarks, by actually retailing counterfeit diamond engagement rings that carried the name of Tiffany, reports say.

Costco had claimed that Tiffany's trademarks were invalid as they restricted anyone else from using the "Tiffany" word in a general description of a ring setting. The judge mentioned the Costco should face a jury trial to analyse the damages.

Also, the judge noted that the evidence points to Costco having confused consumers by using the Tiffany word in their display signs. Tiffany has now been given the permission under the ruling to take Costco before a jury for damages and recovering Costco's profits from the sale of the diamond rings and punitive damages. Reports add.

The lawsuit was filed by Tiffany on Valentine's Day in February 2013, and stated it believed a host of Costco members bought engagement rings mistaking them to be Tiffany’s. The jeweller conducted an investigation and found that rings in a display case at the Huntington Beach Costco bore the word "Tiffany" and were also presented as Tiffany’s products.The jeweller also contacted Costco asking them to take out the references of Tiffany before the lawsuit and Costco had written and sent letters to its customers offering full refund upon dissatisfaction, as per reports.