The Yet-To-Be Told Story of Blue Nile v. Yehuda Diamonds
I ask because of the David v. Goliath epic playing out in courtrooms in Washington State and New York. In this modern version, comparatively tiny Yehuda Diamond, which specializes in so-called clarity-enhanced gems, is defending one lawsuit and prosecuting another against the 800-pound Goliath of online jewelers, Blue Nile.
In one respect, this is an age-old story of two squabbling competitors who are thrusting and volleying accusations and counter-charges that would best be resolved in the marketplace, not the courtroom.
Yet, if anyone bothers to look beyond the obvious, as I have, what they will find at stake here is the right of a business, in this case Yehuda Diamond, to freely compare its products and its prices to that of a competitor.
Additionally, Yehuda Diamond is fighting to force Blue Nile to make full disclosure to Blue Nile customers when its gemstones have been filled to improve their appearance. Such treatments are a common industry practice, but nonetheless one that needs to be noted before a sale.
Whereas Yehuda Diamonds has always been upfront and forthright about its proprietary clarity-enhancement process, such disclosures on Blue Niles’ web site have been off again, on again, at least in part in response to Yehuda Diamonds’ legal parrying.
I profess little objectivity in this matter, as my loyalties lie squarely with David ….er, I mean Yehuda Diamond, and I currently am advising one of its owners, Dror Yehuda, on how best to tell the world his side of the Blue Nile hostilities.
Dror and his family have been in the diamond business for three generations. They are good stock. Honorable. And hard-working.
Dror’s dad, Zvi, a brilliant inventor, perfected a method of injecting a microscopic amount of material into a natural diamond such that light is not reflected off so-called feathers, as it otherwise would be. The result: two lovely natural diamonds, one without such feathers and one whose feathers have been treated by Yehuda Diamond so effectively that only a trained gemologist can tell.
The chief difference? Yehuda Diamond's stones sell for about 30% less than the feather-free diamonds offered by Blue Nile.
Keep in mind we’re not talking about comparing natural diamonds to cubic zirconia. We’re talking apples to apples comparisons of natural diamonds to natural diamonds. Only the treated diamonds sold by Yehuda Diamond sell for a lot less to the public than the equivalent weight and color gems offered by Blue Nile. With Yehuda Diamond, consumers get more bling for the buck.
And lest you think that somehow ‘treated’ gems are unusual, think again. For some gems, such as emeralds, treating them with wax, oil or resin fillers is really the norm – even at Blue Nile.
Still, Blue Nile seems to detest the fact that Yehuda Diamond, on the popular Yehuda Diamond web site, compares its prices to those of comparable diamonds offered at Blue Nile. In December 2007, Blue Nile filed a federal lawsuit in Seattle, its hometown, seeking to silence such Yehuda Diamond comparisons.
In terms of sheer size, market presence, and legal firepower, publicly traded Blue Nile dwarfs Yehuda Diamond. So, its not exactly clear to me what it is Blue Nile is so hot and bothered about that it doesn’t just leave it to a jury of consumers in the open marketplace to render their verdict.
But Blue Nile decided to take the matter to court and now Yehuda Diamond is presenting its own persuasive legal response.
To my way of thinking, the consumers’ interests are best served if Yehuda Diamond, not Blue Nile, prevails.
Consumers should be able to freely compare prices between Yehuda Diamond and Blue Nile diamonds so long as Yehuda Diamond makes no secret of its clarity-enhancement process, which it doesn’t. Visit the Yehuda Diamond web site, which is where all Yehuda Diamond sales must begin, and you’ll see its disclosures about the clarity-enhancement process are ubiquitous. (Unlike Blue Nile, which sells its gems sight-unseen, Yehuda Diamond customers select their diamonds online but inspect them in person at a quality local jeweler before deciding to buy.)
Likewise, consumers should also be clearly notified, in advance, before they purchase gems from Blue Nile, if any of those gems have been filled. Blue Nile’s record in this regard has been spotty.
Biblical stories aside, the good guys don’t always win; not on the battlefield, not in court and not in the marketplace. But over time, the companies that do right by consumers are rewarded for their character, quality and service. Those companies that use muscle and bullying tactics to keep consumers in the dark also eventually get what is coming to them – i.e. a stone between the eyes, or in this case, an unstoppable clarity-enhanced diamond.