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Court Victory – Merit Diamond® Corporation Protects Pendant Copyright

Pendant from the Sirena Brand Collection

New York, New York, (July 21, 2005) – In a significant victory for Merit Diamond®
Corporation, the United States District Court for the Southern District of New York awarded
Merit a preliminary injunction prohibiting Frederick Goldman, Inc. and retailers BJ’s Wholesale
Club, Inc. and Kohl’s Corporation from manufacturing and selling a “knock-off” of Merit’s
copyrighted Three Stones Pendant. The Three Stones Pendant is a signature piece to Merit’s
Sirena® Collection. The Court also ordered BJ’s and Kohl’s to recall existing stocks of the
“knock-off” pendant and ordered Goldman to recall all pendants which are in the possession of
its other retail and wholesale customers. The law firm of Brown Rudnick Berlack Israels LLP
represents Merit Diamond Corporation in the infringement lawsuit. (more)
The Court based this decision upon its finding that Merit was able to demonstrate a “likelihood
of success on the merits” of its copyright infringement claim against the defendants. In
rendering this finding, the Court looked to Merit’s certificate of copyright registration for the
Three Stones Pendant and the obvious similarity of the “knock-off” to the Three Stones Pendant,
which demonstrated copying.

In granting Merit the relief requested, the Court noted that Merit would suffer irreparable harm if
defendants did not cease manufacturing and selling the “knock-off” pendants immediately. In
this regard, the Court relied upon the statements of Merit’s President, Gagi Kaplan, that “the
appearance in the market of ‘knockoff’ [pendants] . . . produced and sold by Merit are ‘causing
reduction of sales and lost profits, damage to the recognition of the Merit Sirena® brand . . ., and
loss of artistic reputation.’” (Decision, at 17-18).

The Court rejected defendants’ argument that imposing a recall of the pendants sold through
hundreds of retail outlets would be expensive and harmful to stores such as Kohl’s and BJ’s and
found that while the cost of administering a recall “may be significant” and that requiring
Frederick Goldman to contact its customers may be “harmful to its accumulated goodwill,” the
recall was “necessary to prevent the [pendants] from making their way onto store shelves” and to
support the “beneficial effect of the preliminary injunction.” (Decision, 21-22).

This decision not only helps protect Merit’s rights, but also demonstrates to Merit’s customers
that Merit is willing to go to great lengths to protect their interests and assure that the sale of
Merit’s original jewelry designs will not suffer as a result of “knock-offs.” Brown Rudnick has
been retained by Merit to police its copyrighted and trademarked designs.

About Merit Diamond® Corporation

Merit Diamond® Corporation is a privately held diamond jewelry manufacturing corporation
and a subsidiary of Merit Group®, a prime source manufacturer of polished diamonds and
precious metal jewelry. Using the most advanced technology, Merit Diamond® Corporation
designs, manufactures and markets popularly priced merchandise. Geared to various parallel
trends in the “ready to wear” fashion industry, the main product categories are rings, bracelets,
necklaces, earrings and pendants. There are in excess of 20,000 styles and designs. For more
information, please visit www.meritdiamond.com.

About Brown Rudnick Berlack Israels LLP

Brown Rudnick is a full-service, international law firm with offices in the United States and
Europe. The firm’s attorneys provide representation across key areas of the law: Corporate &
Securities, Intellectual Property, Complex Litigation, Structured & Commercial Finance,
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Bankruptcy & Corporate Restructuring, Energy, Real Estate, Government Law & Strategies, and
Health Care. Combining a dedication to excellence with a commitment to superior client
service, Brown Rudnick provides its clients with a breadth and depth of expertise uniquely suited
to their legal needs. For more information, please visit www.brownrudnick.com.

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