The U.S. District Court for the Southern District of New York ruled in August that Pacific Technology Corporation (PTC) of New York had infringed on Lazare Kaplan International’s diamond laser inscription patent. This judgment effectively slapped a permanent injunction on PTC, halting all diamond inscription services and equipment sales that violate LKI’s patent. PTC had until Oct. 1, 2001, to conform to the court’s rulings, after which LKI planned to search out companies that had purchased laser equipment from PTC.
William Moryto, vice president and chief financial officer for Lazare Kaplan International in New York, says the ruling should put other diamond inscription companies on notice that LKI’s intellectual property rights will be protected. “We put a lot of money and effort into these machines,” Moryto says. “With the whole branding emphasis today, the need for inscriptions is obvious. And we intend to capitalize on it.”
The Gemological Institute of America’s Gem Trade Laboratory has been inscribing diamonds since the early 1980s. This inscription technology is owned by Lazare Kaplan and is licensed to GIA/GTL. GIA/GTL and LKI have a long-standing agreement that allows GIA to inscribe anything but limits LKI to inscribing only its LKI logo and inventory number. This latest patent infringement case does not affect GIA’s inscription services or its relationship with LKI.
However, that will not preclude LKI from searching out those who have infringed on its patent. “The next step is to see to what extent there are machines now in the market that should not be in there and to take action to remove [them],” Moryto says. He notes that, as far as LKI has been able to determine, PTC performed inscription services only for the laboratories and the local diamond trade and had not sold any laser inscription machines.
If any other PTC laser inscription machines are being used, they will be considered illegal, Moryto says. “The existing laser inscription machines infringe on our patent,” he says. “There is no provision to continue their use. It is not the objective of this action to collect license fees at this time on those machines.”
Diamond inscription services have been advertised heavily over the past few years. “We’ve probably been looking at this for two years, looking at the marketplace to see what laser inscription technologies are out there,” says Moryto. “In order to bring a case like this, you need to do all due diligence prior to initiating patent infringement litigation.
“There are a number of other parties in the market that have laser inscription machines that may well infringe on our patent,” Moryto adds. “We’ve already begun direct contact with these firms and have very informally asserted that they have infringed. It still has to be documented that the process is an infringement of the LKI patent before a case can be presented to the courts.” Moryto says there likely will be additional litigation.