De Beers Battles Dual Litigation

By Rob Bates, Senior Editor -- JCK Online, 7/1/2001 2:00:00 AM

Two new lawsuits threaten De Beers' "Supplier of Choice" initiative and its ability to sell diamonds in America. According to the Bloomberg news service, New York consumer Sean Tietjen recently filed suit in federal court alleging that De Beers drives up the price of diamonds by restricting their shipment into the United States. It also charges that De Beers' advertising campaign misleads consumers by calling diamonds "rare" and notes that "De Beers has simultaneously spent large sums to systematically buy up diamonds and otherwise restrict, restrain, and reduce the supplies of diamonds that come into the United States."

The suit even dredges up the conflict diamond issue: "De Beers' and others' systematic purchases and sales of 'blood diamonds' rendered false and misleading another of De Beers' repeated representations in its systematic advertisements: Diamonds inherently reflect love, beauty, and our most tender emotions."

Tietjen is described in the suit as "a resident of New York City who purchased diamond jewelry ... from a De Beers sightholder 'partner' who is a party to the agreements in unreasonable restraint of trade that were made 'collusively' by De Beers and its U.S. sightholders." The plaintiff is said to suffer damages because he "paid the artificially higher price for diamond jewelry that De Beers' unlawful conduct manipulated and intentionally caused to exist."

The suit, which incorporates information from the recent 60 Minutes program on the diamond industry, seeks monetary damages and an injunction barring the behavior. It names De Beers chairman Nicholas Oppenheimer and managing director Gary Ralfe as co-defendants. "We are still evaluating the lawsuit," says De Beers spokesman Andrew Lamont.

Tietjen, who works in radio, declined comment, referring JCK to his lawyer, Lewis Burke, who was traveling and did not return a call from the magazine.

In the second suit, a self-described "small jewelry company," New York's Diarama Trading Company, is suing De Beers, ad agency J. Walter Thompson, and four sightholders for their use of the letters "DTC."

"DTC" is De Beers' abbreviation for its new trade name, Diamond Trading Company. All De Beers sightholders now call themselves "DTC sightholders."

The suit says that Diarama Trading Company first trademarked "DTC" in November 1999. It claims that De Beers and the Diamond Promotion Service (DPS) approached Diarama about selling the rights to "DTC" in March 2000. Negotiations followed but eventually broke down.

"The defendants knew about my client's federally registered trademark and decided to proceed in the face of that trademark," says Amy Goldsmith, an attorney for New York law firm Gottlieb, Rackman, and Reisman.

The case seeks an injunction against the continued use of "DTC" by De Beers, the Diamond Promotion Service, and the sightholders. It also appeals for damages, attorney fees, and the rights to the www.dtc.comdomain name, currently claimed by the Diamond Promotion Service. "The client's reputation as DTC will be submerged if this campaign goes forward," says Goldsmith.

The four sightholders—Hasenfeld Stein, Kwiat, Julius Klein Diamonds, and Lili Diamond Siman-Tov Brothers—were cited for using the "DTC designation" in advertisements.

The DPS declined comment.