Judge to Determine if Zales Diamonds Are ‘Brightest’

by Christopher Freeburn | December 19, 2012 10:49 am

Judge to Determine if Zales Diamonds Are ‘Brightest’

Diamonds 300x227 Judge to Determine if Zales Diamonds Are Brightest [1]Advertising claims by Zale Corp.’s¬†(NYSE:ZLC[2]) Zales jewelry chain are about the face a courtroom showdown[3].

Zale has been sued by Signet Jewelers’ (NYSE:SIG[4]) subsidiary Sterling Jewelers over the way it markets its “Celebration Fire” stones. Sterling is accusing Zale of false advertising for claiming that the stones are the “most brilliant diamonds in the world” and is asking for an injunction to force Zale to halt its marketing campaign for the diamonds, the Wall Street Journal notes.

Sterling claims that the brightness of diamonds can be scientifically measured and thus is not a subjective claim, which would be permissible under commercial law. Zale says its claims are backed by independent laboratory testing and dismissed the suit as groundless.

Industry experts said that there was no universally accepted standard for measuring the amount of light a diamond reflects and expressed skepticism over Sterling’s legal action.

The issue will be put before a federal judge in Ohio starting next week. In addition to its demand that Zale abandon its advertising claims, Sterling is also demanding millions of dollars in damages from Zale.

Shares of Zale fell more than 1% in Wednesday morning trading, while Signet shares rose fractionally.

Endnotes:
  1. [Image]: http://investorplace.com/wp-content/uploads/2012/02/Diamonds.jpg
  2. ZLC: http://studio-5.financialcontent.com/investplace/quote?Symbol=ZLC
  3. about the face a courtroom showdown: http://online.wsj.com/article/SB10001424127887324296604578179973518140146.html?mod=WSJ_hps_MIDDLE_Video_Top
  4. SIG: http://studio-5.financialcontent.com/investplace/quote?Symbol=SIG

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