TOP OF THE NEWS

JCK’s Trendz™: A new kind of jewelry publication

Retail jewelers with a zest to explore trend-setting directions in design have a new resource. Twice a year, JCK will be published as a two-part issue incorporating JCK’s Trendz, an oversized, high-quality, new-product magazine.

Appearing each fall and spring, Trendz will help retailers identify the best jewelry to complement the clothes that fashion-forward consumers are likely to buy in the upcoming season. Printed on high-quality paper stock with full-color photographs, Trendz will be about 25% larger than typical magazines. Manufacturers and designers can purchase full-page or half-page photo layouts.

The photo-heavy format will let the jewelry and watches speak for themselves: Brief product descriptions will be provided, along with keystone suggested retail prices and the manufacturer or designer’s name and contact information.

Products featured in Trendz will be segmented according to consumer lifestyle:

  • Affordable Indulgences, highlighting stylish “bottom-line basics” that appeal to the Main Street consumer.

  • Everyday Elegance, focusing on high-fashion designs priced for the consumer with exquisite taste but a limited budget.

  • Spectacular Style, showcasing high-end products on everyone’s wish list. Just Say I Do, a special bridal section.

  • Designer, spotlighting the latest creations from noted jewelry artists.

Retailers will be able to contact featured manufacturers online through a special, tradelocked hyperlink set up on www.jckgroup.com. Trendz will be advertised in fashion magazines in the fall of 2000 as part of a special consumer supplement produced under the JCK Consumer Partnership Program.

Says JCK publisher Shawn Mery: “Trendz will differentiate itself from all other publications in the market today. It’s designed for manufacturers to showcase new product in a large, quality format available nowhere else.” Mery adds that in the coming months, JCK will roll out a comprehensive marketing program for both manufacturers and retailers.

JCK’s redesigned Web site

We’ve updated, expanded, and improved our Web site at www.jckgroup.com. You’ll find a host of exciting new features and functions:

Job Fair. Classified employment ads in the magazine are now available electronically.

Jewelers’ Directory. The latest edition is already online, and it’s more comprehensive than ever, with a new, faster, and easier-to-use search function.

Jewelry Laws and Regulations. Both state and federal, with plain-English interpretations. No other jewelry Web site offers such a valuable resource.

JCK Article Archive. Faster, easier to search, and free! It includes every article in JCK magazine since January 1995.

On the Road. JCK staffers provide real-time news feeds from important jewelry and watch shows in America and Europe.

News Archive. Now all our Lexis-Nexis global news—up to 50 items a day—will be archived for easy reference.

Contact JCK. A listing of every staffer and his or her e-mail address, for direct, instant communication.

Guest Book. Sign in and contact us with comments, suggestions, or problems, and get a fast response.

Of course, our site still offers a Trade Fair Guide, directories of jewelry schools and associations, the ability to subscribe, and e-commerce (JCK books). All in all, you’ll find www.jckgroup.com one of the most useful Web sites in the industry!

Litigation

Yurman Wins $1 Million In Copyright-Infringement Case

A New York federal jury has ordered Dallas-based Prime Art & Jewel to pay more than $1 million to David Yurman for copying his cable cord jewelry. The company denies imitating Yurman’s designs and says it will appeal.

The judgment is one of the highest ever made in any case involving “trade dress” (i.e., the distinctive overall look or image of a product). It also provides a precedent for other U.S jewelry designers, says Mac Waldbaum, Yurman’s attorney.

“This is the first case in the jewelry/fashion accessory market where an American jewelry designer has been accorded protection of his creations,” says Waldbaum. All jewelry designers can cite it in pursuing firms that copy their work. Yurman himself believes the ruling is important because “it protects the rights of original designs and enhances the established principle that America’s most precious commodity is creativity.”

The judgment against Prime Art & Jewel for violating New York’s unfair-competition laws followed an eight-day trial last fall. The Dallas firm must pay $275,000 in statutory damages plus $800,000 in punitive damages.

“We think the jury erred,” says Vicky Teherani, chief operating officer of Prime Art & Jewel. “Mr. Yurman doesn’t own the whole cable section of the jewelry industry.” A statement by the firm claims Yurman’s use of cable is neither unique nor original and that both ancient Greeks and modern companies have made cable jewelry. Teherani notes that only 20 pieces out of 10,000 made by her company are at issue. “We are appealing as a matter of principle,” she said.

The case began in December 1998, when Yurman’s attorney contacted the Dallas firm and asked it to stop producing jewelry in its catalog that looked like Yurman’s. Prime Art & Jewel in turn sued Yurman in Texas court, contending it was entitled to produce the jewelry. Yurman countersued in New York. The two cases were consolidated in New York.

The jury said Yurman’s cable look is original and distinctive enough to warrant protection under the trade dress sections of trademark law. The decision also extends protection to Yurman’s designs beyond those he has protected by copyright and enables him to claim market ownership of his overall cable look.

In related news, Chaindom Enterprises and Shieler Trading Corp., both of New York, have been ordered to recall all their bracelets that imitate a design by David Yurman. In a preliminary injunction handed down in late November, a New York federal judge denied the two firms’ claim that Yurman’s design copyright wasn’t valid. The judge ordered a hearing in early December to set a date for a trial, but Waldbaum believes the firms will negotiate a settlement rather than go to trial. —William George Shuster

LVMH Adds Zenith Movements To Its Watch Collection

LVMH, the French luxury goods group, has added another top watch brand to its rapidly growing collection. Its acquisition of Zenith International S.A., one of the last Swiss watch firms to manufacture its own watch movements, was announced in November. LVMH also said it has created a new watch and jewelry division.

LVMH paid about $11.9 million (75 million French francs) for the 134-year-old watch firm, according to French newspaper Le Figaro.

Zenith, located in Le Locle, Switzerland, produces about 42,000 watches a year. It’s renowned for its mechanical movements. Its El Primero chronograph movement (1969) and its ultra-thin automatic Elite movement are among the world’s best. Acquisition of Zenith makes LVMH a watchmaker in its own right.

LVMH became a major player in the upscale watch market in just three months. In September it purchased TAG Heuer and co-ownership of Fendi, a leading fashion house that also has a popular licensed watch brand. In October, it acquired Swiss luxury watchmaker Ebel and Parisian jeweler-watchmaker Chaumet from the Anglo-Bahraini investment firm InvestCorp. LVHM already owned Christian Dior and luxury watch brand Fred Joaillier.

Christian Viros, former chief of TAG Heuer International, heads the new LVMH division, which incorporates all its watch and jewelry brands.

Rapid consolidation in the Swiss watch industry in recent months (Swatch bought Breguet in September) has led Swiss newspapers to speculate that other respected luxury brands, such as Girard Perregaux, Audemars-Piguet, or even Patek Philippe, might be takeover targets.—William George Shuster

Wounded Jeweler Runs for State House

A Philadelphia jewelry-store owner whose career ended after a 1996 armed robbery left him a paraplegic has a new job description: political candidate.

Mark Chilutti, 31, the former owner of M and M Jewelers in Northeast Philadelphia, announced his candidacy for the Pennsylvania House of Representatives on Nov. 30, just before the third anniversary of the day he was shot. He made the announcement in front of the former site of his store, now a car-rental office. “For almost three years I used to walk around this corner with the goal of making my business grow,” he said. “But three years ago this very week that all changed. . . . That goal lost its importance and was suddenly replaced with the goal of being able to tie my shoes.”

Chilutti, a Democrat, faces a formidable opponent in the state’s 172nd District: Republican State Rep. John Perzel, the state House majority leader. Perzel, who has represented the district since 1979, has a sizable war chest. But Chilutti tells JCK that the ordeal of the shooting has prepared him for an arduous campaign. “I tell people that I have a tough time just getting out of bed in the morning, and if I can handle that, I can handle this challenge.”

The activist stance he’s adopted since the robbery has put him in the public eye. He’s spoken out on behalf of the national Center to Prevent Handgun Violence (JCK, June 1999, p. 130) and as a member of the Pennsylvania House of Representatives’ Common Sense Gun Safety Caucus. Last spring, he appeared in TV commercials endorsing the campaign of State Rep. Dwight Evans, who ran for mayor of Philadelphia but lost in the Democratic primary to John Street. Evans made gun control a major focus of his campaign.

Chilutti—who had a gun in his store but was unable to reach for it during the robbery—says he’s not opposed to citizens owning guns but favors a variety of measures aimed at increasing gun safety and curbing illegal use. In his address, he noted that his assailant—apprehended with the aid of the jeweler’s surveillance tape—had 17 prior convictions and undoubtedly didn’t obtain his weapon legally.

While his presence serves as a symbol of the gun issue, Chilutti, a lifelong resident of his legislative district, indicated in his announcement that he’ll also stress constituent service. He says his years of providing customer service as a jeweler prepared him for the task. “My No. 1 priority will be to represent the residents of this district every day and pay you back for helping me to get my life together,” he told his supporters.—Barbara Spector

New Bill Would Mandate Diamond Source Disclosure

Most jewelers are used to disclosing a diamond’s quality and whether it’s treated. But if a U.S. congressman gets his way, they will also have to disclose a diamond’s origin.

Rep. Tony Hall (D-Ohio) recently introduced a bill mandating that all diamonds sold have “a clear and conspicuous statement indicating the country in which the diamond was mined.” The certificate would have to be “legible and reasonably conspicuous on the outermost container in which the diamonds or diamond products ordinarily are sold to the ultimate purchaser.”

The bill comes after a series of media reports that diamond trading has been funding vicious civil wars in Angola, Liberia, Sierra Leone, and the Democratic Republic of Congo. (The last three countries currently have cease-fires.) In addition, British human rights group Global Witness has launched an inflammatory media campaign claiming that “20% of diamond jewelry on sale has been through the hands of combatants”—a number De Beers disputes. The campaign urges the diamond trade not to put “profit before people.”

In a floor statement, Hall went out of his way not to indict the trade. “I want to make it clear that war—and not diamonds—is the root of these evils,” he said. “Through their greed and brutality, rebels and dealers in dirty diamonds risk diminishing the appeal of diamonds to consumers and their promise to impoverished African nations. [This bill] will help protect these democracies from the shame that these outlaws are bringing to diamonds.”

Hall spokeswoman Deborah DeYoung argues that the bill is in the trade’s best interest. “I can easily see a human rights group in America putting an ad with a picture of an injured girl in Sierra Leone that reads, ‘Are diamonds a girl’s best friend?’ Diamonds could become tainted, as fur was,” she says. “This bill reassures consumers that the diamonds they’re buying don’t have blood on them.”

Most industry leaders called the proposed legislation onerous and impractical. They say it’s impossible to tell where diamonds come from—an argument the industry successfully made in the 1980s, when Congress considered banning stones from South Africa. But DeYoung countered, “It’s a principle of American trade law that you have to know where products are from. You know where your clothes and cars were made. Why not diamonds?”

De Beers spokesman Andrew Lamont says, “The logistics of the bill are going to be tricky. There are 900 million diamonds polished in India. Presumably, Congressman Hall will be looking at what is possible and what isn’t.” But he adds, “We’re fully committed to what the U.N. is trying to achieve in Angola, and we welcome any initiative that may help bring that dreadful situation to a speedy conclusion.”

At a meeting with industry leaders, Hall said the legislation was “not written in stone.”

“He’s committed to the goals, but not necessarily the details, of the legislation,” says Jeff Fischer of the Diamond Manufacturers and Importers Association. At press time, Hall also had a meeting planned with De Beers.

Increased publicity over the situation—including a story in the New York Post about “dirty diamonds”—has spurred the industry to begin formulating a response. A recent statement for the International Diamond Manufacturers and Importers Association said the group would have “no tolerance” for any violation of the U.N. embargo on Angolan diamonds that are not accompanied by a government certificate. Earlier this year, De Beers put an embargo on the purchase of all diamonds from Angola, after claims that diamonds are fueling the civil war there.

The people at De Beers’ U.S. ad agency expect more stories on the subject and recently mailed a fact sheet to 10,000 jewelers to help them respond to the charges.

Meanwhile, former South Africa President Nelson Mandela warned that a boycott of diamonds could ravage the economies of Namibia, Botswana, and South Africa. “Rather than boycotts being instituted,” he said, “it’s preferable that through our own initiatives the industry takes a progressive stance on human rights.”—Rob Bates

Friedman’s Must Ask Customers About Credit Insurance

Friedman’s Inc. can’t charge West Virginia customers for credit insurance unless they ask for it, according to a temporary order issued by a West Virginia judge. A decision on whether the company is entitled to sell insurance in the state for its private-label credit card was expected before the end of 1999.

West Virginia sued Friedman’s in October for selling credit insurance to customers using its credit card, without their knowledge (JCK, December 1999, p. 15). Friedman’s, headquartered in Savannah, Ga., is the country’s third largest jewelry chain, operating some 530 stores, six in West Virginia.

At its recent hearing, Friedman’s contended that the insurance is mentioned in fine print on purchase agreements, and a customer’s signature on the agreement provided tacit acceptance. The state argued consumers must be told about the insurance orally and given the option of rejecting it. A state’s witness testified that she was charged for the coverage even though she said she didn’t want it. The temporary order accepted by both sides says Friedman’s employees must ask consumers if they want insurance and, if they do, have them initial and sign the appropriate sections of the purchase agreement.

Still to be settled are the state’s allegations that Friedman’s sold credit insurance to consumers without their knowledge or consent for the past three years. If it proves the allegations, the state wants Friedman’s to pay $5,000 in civil penalties for each violation going back to 1995 and to reimburse each customer allegedly charged for insurance.—William George Shuster

Washington Outlook for 2000: How Congress May Act On Issues Affecting Jewelers

Taxes, health insurance, and Internet crime are some of the major issues affecting jewelers that Congress will address this year. Here’s what’s likely to happen.

  • Taxes. They’re always with us, and so are efforts to reduce them by Jewelers of America, the National Federation of Independent Businesses, the National Retail Federation, and other business groups. Expect bills aimed at reducing estate gift taxes (“death taxes”), which inheritors of family businesses often can’t afford. As the election campaign heats up, you can also expect more congressional discussion of tax reform. Debate will focus on scrapping the IRS and finding alternative ways to fund the federal government, flat tax proposals, and variations of a national sales tax.

  • E-commerce. Retailing on the Internet, a growing issue and opportunity for jewelers, is the focus of the Advisory Commission on Electronic Commerce, appointed by Congress. It will release its recommendations in April. One issue it will address: Should there be a federal sales tax on goods sold on the Internet?

  • Health insurance. Medical care for employers and their workers is a top concern of small-business owners, according to NFIB, JA, and other trade groups. They favor allowing owners to deduct up to 100% of their medical insurance and letting them join with other small businesses in “association health plans” to buy insurance at lower group rates. Both proposals are in the Quality Care for the Uninsured Act (HR 2990), which passed the House last fall. Action on a compromise bill is expected this year.

  • Crime. In February, members of the jewelry anti-crime coalition led by the Jewelers’ Security Alliance will travel to Washington to urge Congress and the Justice Department to give a higher priority in the 2001 federal budget to fighting on-the-road jewelry crime. One possibility: budgeting $1 million to add a half-dozen full-time FBI agents to jewelry crime investigations. Almost $74 million in jewelry was stolen from traveling salespeople and trunk shows in 1999, says JSA.

  • Tampering. A House bill (HR 2100) would make it illegal to tamper with product-identification codes. Watches, for example, are marked with batch codes and series numbers crucial for recovery of stolen goods as well as insurance purposes. Removing or tampering with them also affects warranty coverage, servicing, watch accuracy, and estate or auction sales. A Senate version of the bill also is expected this year. The measure is supported by a 22-member industry coalition that includes the American Watch Association.

  • Bankruptcy. Congress is again addressing consumer bankruptcy reform, after failing to pass it last session. Legislation limiting what individuals can write off and forcing those who declare bankruptcy to pay down some debt was pending in the Senate (S 6215). A similar bill passed the House in 1999. A number of business groups, including JA, NFIB, and NRF, support the measure.—William George Shuster