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The Paraiba Predicament

Miner Dave Sherman has sued AGTA and GIA for $120 million for blessing the conversion of the term "Paraiba tourmaline" from a specific origin name to a generic name for all copper-bearing blue and green elbaite.

By David Federman, Editor-in-Chief
All photos courtesy of Dave Sherman and Paraiba.com.

Maybe gem and jewelry giant Stuller Inc. should have delayed publication of its April issue of the Stuller Standard. There on page 11, the company openly offers "Mozambique Blue Paraiba Tourmaline" at prices ranging from $575 to $2,025 per carat. Maybe lapidary Paul Wild should have had second thoughts about running an ad in the March/April 2008 issue of JQ with the headline: "Paraiba ... New Found Mozambique."

Everywhere you look theses days -- at shows, in magazines, on TV -- you find the public is being offered marvelous aqua and teal blue tourmaline from Mozambique as "Paraiba tourmaline." There's just one technical problem.

It's not genuine Paraiba tourmaline. Paraiba is a Brazilian state in whose Batalha mining area the finest blue, green, and blue-green tourmalines ever seen were discovered in 1987. The find was a culmination of a five-year quest by miner Heitor Barbosa. By 1990, the best of these ferociously intense neon-shimmering stones fetched $2,000 per carat. A year later, documented selling prices had crossed the $10,000 per carat mark, and the place-name Paraiba had become as much a pinnacle for superlative tourmaline as "Kashmir" for quintessential blue sapphire and "Mogok, Burma" for peerless ruby.

"It is not every day that a gem locality becomes so celebrated for superb quality that stones proven to have been mined there command a premium based on origin," says fine gems dealer Ralph Esmerian, who in 2006 bought the famous Fred Leighton store in New York City. "'Paraiba' is one of the few modern mining areas to have attained the stature of provenance."

Batalha Paraiba tourmaline mine.

When supplies of bona fide Batalha Paraiba tourmaline began to taper off sharply in the early 1990s, the market made due with closely reminiscent stones from two mines -- the Mulungu and the Alto dos Quintos -- in the joining state of Rio Grande del Norde. Although not technically from Paraiba, the stones shared a common geographical and geological land mass. Hence some dealers felt entitled to offer them as genuine "Paraiba" goods. But purists balked, arguing that these newcomers were cousins at best, imposters at worst.

Imagine how these geographical and gemological absolutists greeted the influx of similar-color but far less saturated tourmalines from Nigeria in 2001 sold as "Paraiba." They condemned sellers for what they felt was a clear-cut fraud involving misuse of a specific origin-name. "If you took chromium-colored ruby from Nepal or Sri Lanka and sold it as 'Burmese,' you would be called a con man," says one New York dealer, "So tell me why it was permissible to sell copper-bearing tourmaline from Africa as Paraiba?" When a second wave of African "Paraiba," this time from Mozambique, began to deluge the market in 2005, dealers opposed to this semantic waiver lost all patience with it.

Workers sort through rough at the Batalha Paraiba tourmaline mine.

To mollify them and buffer themselves from the growing possibility of lawsuits, some dealers started calling Mozambique stones "African Paraiba." Others thought that by spelling Paraiba with a small "p" this somehow limited liability. Still others took refuge in suffixes such as "-like" or "-type," believing that the phrases "Paraiba-type" or "Paraiba-like" clearly separated African from Brazilian material.

Wrong on all counts, says California attorney John Hannon II. He is the lawyer hired by gem dealer Dave Sherman of Paraiba.com, to sue the American Gem Trade Association, GIA, plus numerous individuals, for the deceptive, misleading use of the term "Paraiba" in conjunction with African tourmaline. Under California law, he has the right to sue for damages to his client from loss of sales, as well as punitive damages. In a copy of the suit leaked to Colored Stone, he is asking for a total of $120 million. By colored stone trade standards, those are significant dollars.

Nevertheless, does the suit have merit? To answer this question, one has to look at the broader issue of origin-selling in the gem trade.

Brilliant blue paraiba specimen.

Allowing a specific place-name to serve as a broad generic varietal name has long been considered a breach of ethics and custom. After all, selling stones on the basis of hallowed origins such as Kashmir and Mogok, Burma, are pivotal value factors when pricing sapphires and rubies that can make as much as a 40 percent difference in their value.

It may seem crazy to pay a 40 percent premium for a gem on the basis of its birthplace but this is a long-established tradition -- comparable, Esmerian says, to the premiums paid for a Rembrandt painting as opposed to a student or contemporary of the master. "Just as certain artists represent a yardstick of exemplary work, certain mining localities represent a yardstick of exemplary gemstones," he explains. Paraiba is the latest locality to be added to this somewhat short list of prestigious origins.

Until recently, the gem trade was strict in its insistence on a one-to-one relationship between origin and place. Then this tradition of parity came under heavy attack.

Back in the 1980s, there was precursor controversy involving use of the term "padparadscha," a name given to a delicate saffron-colored pinkish-orange sapphire from Sri Lanka. Although "padparadscha" referred to color rather than place, it was always assumed that this corundum had one origin only: Sri Lanka. So use of the term "padparadscha" implied a single source.

Paraiba tourmaline in matrix.

But after brownish-pinkish-orange sapphires were discovered in the Umba Valley region of Tanzania, some dealers who specialized in East African gems started selling these stones as "African padparadscha." To prevent trade acceptance of this new expanded definition for padparadscha, eminent gemologist Robert Crowningshield published a major article in Gems & Gemology on the etymology of this term and convincingly concluded that it applied only to a narrow range of sapphires with certain hues, tones and saturations found in Sri Lanka. He explicitly ruled out Tanzanian stones with their darker tones and strong tinges of brown from inclusion in the padparadscha category. Case closed.

Publication of this article was widely interpreted and praised as both a market intervention and a pre-emptive move by GIA to defend the integrity of key historic gemological terms. Until the flood of beryllium-treated pinkish-orange "padparadscha" sapphires from Madagascar a few years ago, this term was safely restricted to pastel pinkish-orange sapphires from Sri Lanka. It is on such precedents of gemological vigilance that the tradition of origin-selling has depended and thrived.

Now this increasingly important institution of gem value and provenance is under severe, multi-pronged attack and the gemological vigilance exercised by GIA in 1983 to defend "padparadscha" seems to be rapidly disappearing. Let's take a look at the Paraiba scandal from a standpoint of weakened gemological vigilance.

Ironically, a decade before the Paraiba nomenclature scandal, the industry became embroiled in name-game crisis involving unqualified use of the term "Burma." In the early 1990s, miners at Mong Hsu in Burma made what is probably the biggest discovery of ruby in history. Unlike material from Burma's long-celebrated Mogok region, however, Mong Hsu stones were usually so poor in quality they required chemical reclamation using heat and glass to make them salvageable. Suddenly, it became important for labs and dealers to distinguish legendary Mogok-origin stones from their lackluster Mong Hsu counterparts. But few did. Instead, most labs charged with determining origin for these stones simply designated them as "Burma" in origin and ignored deflationary trade contempt for Mong Hsu stones. Even today, few labs make the critical distinction between Mogok and Mong Hsu.

Multicolored paraiba tourmaline.

Once the trade accepted the expansion of Burma origin to cover rubies from the clearly inferior Mong Hsu deposit, the stage was set for even wilder distortions of language. Worse, the stage was set for official collusion in these word-ploys.

Look, it is one thing for a bunch of renegade dealers to unilaterally adopt a place-specific term like "Paraiba" and expand its meaning to include tourmalines from Nigeria and Mozambique. It is another thing entirely for the trade groups to which they belong and the gemological educational and research establishment on which they depend for prevention of such nomenclature excess to endorse such practices.

Let's face it, endorsement of the use of "Paraiba" as a varietal name by both AGTA and GIA is the chief provocation for the $120 million law suit being threatened against them. If you talk to either Sherman or his lawyer, you will quickly understand that they believe these organizations felt it better to condone rather than condemn widespread misuse of the term "Paraiba." "It's like they decided to give a retroactive pardon and justification for what was clearly a wrongful, misleading act," Sherman accuses.

So it would seem. In 2006, a consortium of American, European and Asian gem labs known as the Laboratory Manual Harmonization Committee (LMHC) classified all Paraiba-reminiscent tourmalines containing the colorizing trace elements of copper and manganese as "cuprian elbaite." This was a legitimate action based on scientific analysis.

But when the LMHC authorized member labs (among them, GIA, AGTA GTC, SSEF, and Gubelin) to make blanket use of the term "Paraiba tourmaline" for all copper-bearing blue, green and blue-green elbaite -- regardless of origin -- it overstepped its bounds. Suddenly, it was kosher to sell Brazilian, Nigerian, and Mozambique stones as "Paraiba." This generous rule also left open the door to further expand use of the term for any and all future discoveries of cuprian elbaite.

In a mailing to members dated May 18, 2006, the AGTA GTC wrote as follows:
"Beginning May 15th, the AGTCA GTC will adopt a new policy involving identification reports for Paraiba tourmaline. Previously, our reports identified this type of material as "cuprian elbaite tourmaline" and if requested, an origin report could be issued.

After extended discussions with clients, members of our industry and other laboratories we are instituting a new policy whereby all cuprian elbaite will be identified on our reports as 'paraiba tourmaline.' This policy is consistent with widespread industry practice and has also been adopted into the guidelines of LMHC."

In short, AGTA was giving official approval to a practice many of its own members protested and condemned. One of them, Simon Watt of Mayer & Watt, Maysville, Kentucky, immediately advised his customers to stop buying Paraiba goods. "Imagine an opal dealing having to tell his clients to stop buying Lightning Ridge material," he says. "This was a momentous recommendation. But I had no choice."

And here we reach the heart of the matter. "The suit revolves around one uncontestable fact: a major trade group has accommodated the deceptive practice of marketing African stones as Paraiba," says Brian Cook, of Nature's Geometry, who was in Brazil when the first fabled Paraiba tourmalines were dug from the earth. "There are enough laws, regulations and trade practice rules -- not to mention trade group codes of ethics -- to have prevented this abuse."

For Cook and Watt, the issue is to see that justice is done but, at the same time, protect the good will of the buying public. That's one high-placed tightrope with no safety net. "We have to preserve consumer confidence," Cook continues. "But right now we have consumer confusion. The word Paraiba should never have been attached to African cuprian tourmalines. Mozambique tourmalines are marvelous in their own right. But to this day, no other location in the world has matched Batalha's top-quality saturation."

One thing for sure, Sherman's suit has served noticed on the industry for adopting self-serving nomenclature rules that clearly disregard long-standing deceptive advertising laws such as the Lanham Act. Now it will have to scrutinize other practices that could bring more law suits.

Better yet, AGTA and others should make a true contract with the public. As AGTA member Bob Van Wagoner of Maui Gems puts it: "It has always been our kuleana [a Hawaiian word for duty to the land and people] as gem dealers and gemologists to protect our clients from charlatans. When we enable, rather than disable, the cheaters, we become just like them. The trade must do everything in its power to restore consumer confidence."

This was also sent out to our Colored Stone E-News mailing list members as an e-mail news blast. Want to receive the latest up-to-date information on the gemstone industry? Sign up for our Colored Stone E-News mailing list here.

March/April 2008 • Paraiba Predicament • Oregon Sunstone: The Furor over Feldspar • March/April 2008 Index