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Image: ALTR

In the market for a diamond? There is a category of sparklers so completely colorless that in the eyes of the Gemological Institute of America, they are among just 2 percent of the diamonds in the world. They are almost or entirely devoid of impurities, meaning that they boast a measure of clarity that borders on flawless, and they are of a level of brilliance that is unmatched by virtually all other diamonds in the market. These diamonds are more-or-less perfect, and that is because they were created – in laboratories – to be that be just that.

Far from being the dominating stones in the $80 billion diamond market, the rise of consumer interest in and increased production of lab-grown diamonds is, nonetheless, among the key developments in the industry, one that, for nearly than a century, laid almost exclusively in the mighty hands of giants like De Beers, the 132-year old mining-and-trading company that maintained a monopoly over the supply of the world’s mined diamonds until the late 1990s.

In recent years, the proliferation of lab-grown diamonds and the prospects of these relatively new gems becoming a thriving industry all of their own has been significant. In fact, sales of lab grown diamonds are expected to reach $27.6 billion by 2023, according to research consultancy Kenneth Research, up from $16.2 billion in 2015. Meanwhile, Morgan Stanley expects that by the end of 2020, lab-grown diamonds could account for 15 percent of the gem-quality diamond purchases, up from less than 1 percent in 2016.

With such striking potential at play, it should come as little surprise that the technology that goes into the making – err … growing – of this category of diamonds is both wildly valuable and carefully controlled. A handful of new lawsuits filed by the Carnegie Institution of Washington show just how high the stakes are in this burgeoning industry.

In three lawsuits initiated in New York federal court this month, Carnegie Institution claims that at least six different defendants – who are among the top names in lab diamonds – are infringing its groundbreaking and patent-protected technologies, including a “chemical vapor deposition” (“CVD”) process it created for growing diamonds, including very large ones, at rapid growth rates, as well as a separate method for improving the color of already-grown diamonds.

Together with M7D Corporation, which licenses the diamond-creating technologies from Carnegie and created the “largest known CVD diamond, as well as the largest known round CVD diamond” back in 2017, as a result, the Washington, DC-based science research organization asserts that it is a “pioneer in the laboratory synthesis of high-clarity diamonds,” and its “patents are well known in the lab-grown diamond industry, and in particular are well known by lab-grown diamond manufacturers, importers, and sellers,” such as the defendants.

Carnegie claims that lab diamonds – and thus, its diamond-making and perfecting processes for making them – are particularly valuable, as “unlike diamond substitutes, such as cubic zirconia, ‘grown’ or ‘synthetic’ diamonds are crystalline forms of carbon” that have the exact “same physical, chemical and optical qualities as diamonds mined from the earth.” The similarities between mined and lab grown are so striking, Carnegie asserts that “the Federal Trade Commission has recently changed the definition of the term ‘diamond’ to remove the term ‘natural,’” a testament to the nature of mined diamonds’ lab-grown counterparts.

Having devoted years and an unspecified amount of money to fund lab grown diamond research, Carnegie established its technologies and received patent protection (and exclusive rights in those processes for a limited – but currently enduring – duration). However, despite the recognized nature of its prized technologies, including the CVD process that is used to “control diamond growth from a diamond seed, atom by atom, to the highest purity and quality,” Carnegie argues that they have been infringed by Pure Grown Diamonds Inc., IIa Technologies PTE Ltd., ALTR Inc. and its parent company, R.A. Riam Group Inc. and Mahendra Brothers Exports Pvt. Ltd. and its parent company, Fenix Diamonds LLC.

According to Carnegie, all of the defendants have used – and thus, “directly infringed” – its diamond growing and/or color-improving tech without licensing it by “making, using, offering to sell, and/or selling within the U.S., or importing into the U.S., products that satisfy each and every limitation of one or more claims” set forth in its utility patents. This is particularly problematic and willful, Carnegie asserts, as “the existence of [its] patents are well known in the lab-grown diamond industry, and in particular are well known by lab-grown diamond manufacturers, importers, and sellers,” such as the defendants.

“Notwithstanding their knowledge of (or willful blindness to) [its rights],” Carnegie asserts that each of the defendants has “continued to make, have made, import, use, offer for sale, and sell their infringing CVD diamonds and/or annealed diamonds in the U.S.,” and in some cases, induced or contributed to patent infringement by others selling their allegedly infringing diamonds to third- party retailers in New York state and elsewhere throughout the U.S., thereby, giving rise to “tortious injury” to itself and fellow plaintiff M7D Corporation.

As a result, Carnegie sets forth claims of patent infringement and is seeking injunctive relief to immediately and permanently stop the defendants allegedly fringing actions, and damages of a sum that is “no less than a reasonable royalty, including enhanced damages.

*The cases are Carnegie Institution of Washington v. Pure Grown Diamonds Inc., 1:20-cv-00189 (SDNY); Carnegie Institution of Washington v. ALTR Inc., 1:20-cv-00198 (SDNY); and Carnegie Institution of Washington v. Mahendra Brothers Exports Pvt. Ltd., 1:20-cv-00200 (SDNY).