Canadian diamond company Worldwide Diamond Trademarks (WDT) has filed a lawsuit against both the United States-based online retailer as well as its supplier, Atit Diamond Corporation, claiming Blue Nile’s “signature hearts and arrows cushion-cut diamonds” exploit its patented design pattern.
In its complaint, WDT alleged that, “prior to the invention by [WDT] of a square diamond generating the hearts and arrows pattern, no diamonds in the US, other than perfect round diamonds, generated or displayed the hearts and arrows pattern”.
The complaint stated WDT and its retailers had sold more than 7,600 square and cushion-cut diamonds bearing the patented hearts and arrows design since 2008, generating more than US$21 million (AU$22.4 m) in gross sales.
Blue Nile was accused of purposely copying WDT’s patent design after “recognising [its] financial value”, and causing “deception and confusion” for consumers who identified the design solely with WDT.
It should be noted, however, that other media reports have stated there was a minor difference between the two designs in that the table facet on Blue Nile’s diamonds “consist of eight sides of equal length while the table facet on [WDT’s] products consists of eight sides, four of which are one length and four of which are shorter”.
Despite this, WDT claims that Blue Nile is using “the exact same combination of facets and angles in its pavilion portion as those used in [WDT’s] product”.
“[Blue Nile]…has removed control over the quality of products attributable to [WDT] and has placed [WDT’s] reputation in the hands of the [Blue Nile], who are competitors,” the complaint stated.
WDT further alleged that Blue Nile was causing it to lose profits as the company had sold the hearts and arrows diamonds directly to consumers for the same price that WDT was selling its diamonds to retailers before mark-up, in addition to the fact that it was targeting WDT’s core market.
Blue Nile’s response
Blue Nile has denied the allegations, stating in a counterclaim that WDT was not the originator of the hearts and arrows optical pattern for square or princess-cut diamonds, nor was it the only supplier.
The online retailer added in its counterclaim that the hearts and arrows feature was “exclusively or primarily a functional feature of a diamond in which no trade dress protection is or can be available”, and as such, demanded that WDT’s patent be declared invalid.
It also stated that it was “selling its diamonds in a different channel of trade” and that Blue Nile “does not compete with [WDT] in the same market for the same customers”.
The counterclaim alleged that WDT’s actions constituted “vexatious and bad faith litigation” and that the company had “committed an act of unfair competition” by taking Blue Nile to court without a “reasonable basis”.
Due to this fact, Blue Nile requested a judgement that would require that WDT compensate it for “damages, attorneys’ fees and costs” in addition to nullifying its hearts and diamonds patent.
Blue Nile denied to comment when approached by Jeweller due to the fact that the litigation was ongoing.
Blue Nile was founded in 1999 and claims to be the largest online retailer of certified diamonds and jewellery.
Diamond jewellers in legal battles
The diamond jewellery industry has had a number of high profile legal disputes in recent times.
Tiffany & Co is suing supermarket Costco in a bid to stop the largest US warehouse club chain from selling what it described as counterfeit diamond engagement rings bearing the luxury retailer's name.
Tiffany’s lawyers claimed that hundreds, if not thousands, of Costco members were misled and bought engagement rings they believed were authentic Tiffany products.
They claimed Costco falsely labelled its diamond rings as Tiffany rings, deceiving customers and damaging the Tiffany brand.
Costco has sought to have the case dismissed on the grounds that the “Tiffany setting” should be a generic term and therefore unenforceable as a trademark.
The Tiffany-Costco case is ongoing.
More information
Worldwide Diamond Trademark complaint against Blue Nile
Blue Nile counterclaim
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