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Judge dismisses lawsuit over Paraiba name


By Teresa Novellino
October 28, 2008

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San Jose, Calif.--A judge has dismissed a $120 million lawsuit filed by Paraiba.com that accused two U.S. gemological laboratories and a California gemstone company of unfairly using the name "Paraiba tourmaline" for gemstones that did not come from the Brazilian state where the vibrant blue-green stones were first mined.

Court papers show that the dismissal came after the plaintiff, Paraiba.com, and its owner David Sherman, missed a hearing and also failed to meet the court's order to file "show cause" documentation to support the lawsuit.

"It is hereby ordered that this case is dismissed with prejudice for failure to respond to the court's order to show cause and for failure to diligently prosecute," U.S. District Judge Ronald Whyte wrote in a dismissal order filed electronically on Monday in the Northern District of California federal court in San Jose, Calif.

Because the case, initially filed in April, is dismissed "with prejudice," it cannot be brought to court again.

Sherman, who developed a Paraiba tourmaline mine in the Batalha area of Brazil in the Paraiba province back in 1987, had alleged in the lawsuit that the extension of the name "Paraiba" to tourmalines not mined in Brazil cost him millions of dollars in business.

The Paraiba controversy began about two years ago, when Windex-blue stones that resembled Paraiba tourmaline began emerging from mines a continent away, in the African countries of Nigeria and Mozambique. Since these rare Paraiba tourmalines can command as much as $20,000 per carat and up, the discovery of stones that looked similar to the Brazilian gemstones sent ripples of excitement through the colored-gemstone industry, but also created some confusion over what to call the stones and how much they should fetch compared with the Brazilian material.

In 2007, the Laboratory Manual Harmonisation Committee (LMHC), a global gem-lab coalition, agreed that the African stones could be called "Paraiba type" on gemological reports, if the stones were copper-bearing and if the color, saturation and composition matched that of the original stones found in Brazil, which are known for their brilliant violet-blue, blue and green hues.

The LMHC ruling angered Brazilian gemstone dealers and miners, who felt that their homegrown gemstone's name was being hijacked by dealers selling stones from Nigeria and Mozambique that were inferior in color and saturation.

The American Gem Trade Association (AGTA) and the Gemological Institute of America, both members of the LMHC, were named in the lawsuit, as was Brazil Imports, a Fallbrook, Calif., company that had been selling African tourmaline.

Reacting to the dismissal of the lawsuit, the head of the AGTA said that the case should never have gone to court.

"It was a very unfortunate thing," AGTA Chief Executive Officer Douglas Hucker told National Jeweler on Monday. "Anytime you have these sort of [issues] in our industry, they should be settled within the industry, and the judge agreed."
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