Antitrust Law Daily Wrap Up, FALSE ADVERTISING—NDOhio: Injunction Against Allegedly Misleading Diamond Advertising Denied, (Jan 29, 2013)

By Tobias J. Gillett, J.D., LLM.

The federal district court in Akron, Ohio has declined to issue a preliminary injunction sought by Sterling Jewelers Inc. that would prevent competitor Zale Corporation from advertising that its diamonds were “more brilliant” than any other diamonds (Sterling Jewelers, Inc. v. Zale Corp., January 24, 2013, Adams, J.). Sterling failed to demonstrate that it would suffer an “irreparable injury” that could not be remedied through money damages, the court found.

Sterling and Zale compete as nationwide retailers of jewelry products. Sterling sought an order that would enjoin Zale from advertising “that its Celebration Fire diamonds are the most brilliant diamonds in the world, are more brilliant that all other diamonds in the world, or are proven by competent and reliable evidence to be the most brilliant diamonds in the world or more brilliant that all other diamonds in the world.” Sterling also sought removal and correction of the advertising.

The court declined to issue the injunction. The court explained that determining whether to issue a preliminary injunction required consideration of four factors, including the movant’s likelihood of success on the merits, whether the movant would otherwise suffer irreparable injury, whether the issuance of the injunction could cause harm to others, and whether the injunction would serve the public interest.

However, the court noted that a movant’s failure to demonstrate irreparable injury alone could justify denial of the injunction and that economic injury in itself did not constitute irreparable harm. In this instance, the only harm Sterling had identified was that the marketing had permitted Zale to take “an unfair portion” of Sterling’s market share and had caused Sterling to lose customers and sales. The court concluded that this harm could be calculated, and thus that no injunction was necessary.

Even if Sterling had standing to argue that consumers could be misled into purchasing Zale’s diamonds, while incorrectly believing them to be “scientifically better” than other diamonds, those consumers could also “be made whole through monetary damages.” Therefore, the court denied Sterling’s motion for a preliminary injunction.

The case is No. 5:12CV2823.

Attorneys: August T. Horvath (Kelley, Drye & Warren) for Sterling Jewelers Inc. Christopher J. Glancy (White & Case) for Zale Corp.

Companies: Sterling Jewelers Inc.; Zale Corp.

Cases: Advertising OhioNews