Charles & Colvard Confronts Morion

By Gary Roskin, G.G., FGA, Senior Editor -- JCK Online, 3/1/2001 2:00:00 AM

Charles & Colvard, formerly known as C3, is telling the Morion Co. of Brighton, Mass., to stop selling synthetic moissanite crystals. Charles & Colvard owns the patent to the synthetic jewel.

A letter to Morion from Charles & Colvard's legal representatives, Womble, Carlyle, Sandridge & Rice, states: "We hereby require Morion Company by February 5, 2001, to (1) cease all sales and offers for sale of synthetic moissanite crystals for use as gemstones within the United States and other countries and 2) confirm in writing that all advertising and offers for sale of synthetic moissanite gemstones have been withdrawn. Please be advised that this firm will take all appropriate action to protect the patent position of Charles & Colvard, Ltd."

Morion, better known for selling CZ, synthetic diamond, and synthetic forsterite (a tanzanite look-alike), has been selling synthetic moissanite crystals for what it calls "gemological studies."

Morion owner Uriah Pritchard told JCK, "We just prepared a detailed letter with explanations to Charles & Colvard that we have already had discussion with the former head of C3, Mr. Jeff Hunter, about this material we are selling. It cannot be the subject of their patents," notes Pritchard. "First, it's not cuttable material. It's small, thin, tiny crystals. The crystal thickness is only a half a millimeter. We sell [it] only for curiosity. Second, it is made in a completely different process, different from Charles & Colvard. The lab producing the moissanite promised us something cuttable in about two years."

Hunter resigned from C3 early last year, as marketing efforts were beginning to stall. Since then stock prices have fallen dramatically, from a 52-week high of $8.62 in January 2000 to a closing price of approximately $1.10 on Jan. 19, 2001. One publication, the Industry Standard, which covers the Internet, included Charles & Colvard (CTHR) as one of 257 stocks in danger of being delisted from the NASDAQ stock exchange. The list of firms was based on the publication's research and was not confirmed by any outside source. Jessica Blue, a spokeswoman for Charles & Colvard, says the company has not received any information or notice from NASDAQ concerning a possible delisting and noted that the company is performing well enough to avoid such a notice.

Meanwhile, Cree Research, which makes the moissanite crystals for Charles & Colvard, is doing well. Cree produces silicon carbide for LED readouts and other electronic applications. Last year, Cree stock hit a high of $101 per share. In December the company authorized a two-for-one stock split, and the stock traded for $34.50 on Jan. 19.