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Sterling Says Consumer Expectations Exceed Zale's Brilliance Claim

Lack of Definitive Terms, Measurement Create Confusion

Dec 20, 2012 10:58 AM   By Jeff Miller
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RAPAPORT... Zale defended its Celebration Fire diamond as ''the most brilliant diamond in the world''  during a preliminary injunction hearing at U.S. District Court in Northern Ohio  on December 17 and 18. However,  according to a brief filed by the plaintiff, Sterling Jewelers,   Zale could not ''even prove what the concept of 'brilliance' of a diamond means.''  Sterling argued that Zale's inability to define the term,  or industry standards for brilliance, coupled with an inadequate sample-test of Celebration Diamonds, only supported its civil case against Zale for fraud and false advertising, and argued for an immediate injunction.  Zale has yet to file its response with the court.

Attorneys for Sterling argued that Zale's test for brilliance was invalid and ''no witness could claim first-hand knowledge of the test, let alone defend its methodology and results.''  Sterling said that without an injunction,  ''consumers will continue to be deceived by Zale's false advertising and Sterling will continue to be harmed.''

Sterling maintained that Zale's advertising for the Celebration Fire diamonds are false, deceptive and substantiated only by Zale’s personal conviction since there ''is no industry standard for measuring brilliance, although each entity that claims to measure brilliance is able to measure what it defines as brilliance within a range of repeatability,'' according to the court brief. sterling lawsuit zale

Randall Wagner, testifying on behalf of Sterling, and Dr. Jose Sasian, on behalf of Zale, agreed that no governing body exists to set a standard for defining or measuring brilliance and Lalit Aggarwal, the president of ImaGem, concurred,  according to the plaintiff's brief.

''Sasian concluded his hearing testimony by stating that neither the GemEx system, despite being the industry’s most widely used, nor the ImaGem system met his criteria for being generally accepted across the entire diamond industry,'' Sterling stated.  Measurements of brilliance, as defined by GemEx, ImaGem/PGGL and others, were incompatible and embodied differing definitions of brilliance, so results of tests at different laboratories are apples and oranges, according to Sterling.

''Not only do [system] inventors insist that they do not measure the same concept, but there is no way to translate a brilliance score from one of these laboratories to the other. Zales’ expert witness, Dr. Sasian, wrote and testified that the measurements of these and all other laboratories in the industry 'do not necessarily correlate,''' the court brief noted.

However, given the absence of an industry standard, Sterling's attorneys argued that this does not mean a claim centered on that term need not be proven, ''especially when it is deceptively advertised as if it were provable and proven under an industry standard or generally accepted definition.''

Citing one of several cases of advertising liability, Sterling wrote that in W.L Gore & Associates Inc. versus Totes Inc., the court determined the defendant’s use of the term ''waterproof'' in advertising of a protective golf suit was “false on its face” even though there was no industry standard definition of waterproof. ''There is not a commonly accepted industry definition of ‘waterproofness’ from which to judge whether its claims are true or false,'' Sterling cited from the case, which resulted in   a preliminary injunction, and added that ''technical industry standards are often irrelevant to consumer expectations and, at the very least, golfing consumers will expect that they will not get wet. The lack of an ‘industry standard’ makes the claim no less false.'' Sterling also cited cases where a lack of industry standards didn't prevent injunctions for products whose advertising included the terms  ''flame resistant'' and  ''hand-made'' in regard to guitar strings.

Sterling also argued that Section 43(a) of the Lanham Act does apply equally to statements that are literally false as well as those that might be true or ambiguous, but still convey a false impression or are misleading in context, as demonstrated by actual consumer confusion.  This was why Sterling  produced evidence that, as its court brief states, ''regardless of what Zale now asserts it intended its claim to mean, a 'huge' segment of consumers – 25 percent – believes the claim to mean that the Celebration Fire diamonds are more brilliant than any other diamond in the world. Consumer perception expert Dr. Michael Rappeport found that a substantial number of consumers understand Zale's claim to mean that their Celebration Fire diamonds are 'more brilliant than all other diamonds that are available,' not that they are just among the more brilliant diamonds.'''
 
In addition, Rappeport's testimony indicated that Zale had not provided evidence reflecting  consumer perception evidence to support an alternative interpretation,  such as that the claim refers to the most brilliant “cut” diamond in the world or that it is based upon ''the average brilliance'' of Celebration Fire diamonds.  Given what Zale claimed as the ''most brilliant diamond in the world,'' the plaintiff alleged that the term communicates to consumers that the brilliance is a substantive, objectively measurable property of diamonds and that Zale has a basis for claiming each individual Celebration Fire diamond to be more brilliant than any diamond from a competitor.

''Moreover, Zale’s claim is accompanied by an assertion that it is proven by 'independent laboratory testing.' This converts the most-brilliant claim into what courts call an 'establishment claim,' which alters the burdens of proof among the parties,'' Sterling wrote.

However, even on that point,  Zale cannot substantiate its claim, Sterling concluded, stating that its competitor must ''test each individual Celebration Fire diamond'' against  the strongest brilliant available, rather than an average brilliance, which has not been established either.

''The consumer who buys each Celebration Fire diamond gets an individual brilliance score for that stone, not an average score for the Celebration Fire line. To substantiate the most brilliant claim, Zale would have to test every individual Celebration Fire against every competing diamond in the market. Because each diamond is unique, brilliance cannot be generalized – there is no such thing as one brilliance for a line of diamonds, a cut of diamonds, or any other group of diamonds – and Zale’s assertion that its most-brilliant claim applies to every Celebration Fire is false,'' the plaintiff argued.

Zale's defense presented a research study of 51 diamonds it had conducted along with Shrenuj,  the Celebration Fire diamond’s manufacturer. But Sterling argued that numerous deficiencies existed in the research, as only two to three diamonds from each competing line was tested to compare average ratings, when what was necessary to substantiate Zale's claim was to prove each Celebration Fire diamond was the most brilliant.  ''Thus, even had it been reliable, the Shrenuj/Zales diamond comparison tested the wrong hypothesis,'' Sterling concluded.

Second, Sterling said the small sample size tested was  inadequate even to estimate an average for each line. Sasian testified that the study could not support any generalization beyond one regarding the 51 individual stones.

Third, Sterling argued that the Celebration Fire test compared only a few competing lines and that it is ''not legitimate under advertising law to test only some of the competitors that one claims superiority against.'' Lastly,  there were irregularities in the sampling, blinding, chain-of-custody and data integrity that no witness could defend or explain, according to the plaintiff.

''Even the conclusion that three Celebration Fire diamonds were brighter than 40-something other diamonds, thus, was not established by the Zales/Shrenuj comparison,'' Sterling concluded.


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