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Press release from Business Wire

Charles & Colvard Announces Australian Patent Office Upholds Patent after Re-Examination Request

Tuesday, May 22, 2012

Charles & Colvard Announces Australian Patent Office Upholds Patent after Re-Examination Request08:30 EDT Tuesday, May 22, 2012 MORRISVILLE, N.C. (Business Wire) -- Charles & Colvard, Ltd. (NASDAQ Global Select Market: CTHR), the sole manufacturer of created moissanite gemstones, The Most Brilliant Jewel in the World®, today announced that the Australian Patent Office recently determined that the Company's Australian patent is both novel and inventive. This favorable determination stems from a request for re-examination of the Company's Australian patent submitted by BetterThanDiamond.com. “We are pleased but not surprised by the Australian Patent Office's determination to uphold our Australian patent. This patent has never been challenged since its issue and the Australian patent system is designed to promote and protect innovation, which is the backbone of our company,” commented Randy N. McCullough, Chief Executive Officer of Charles & Colvard, Ltd. "This re-exam request, we believe, was the result of a threat by BetterThanDiamond.com's owner against Charles & Colvard to attack our patents if we did not agree to supply moissanite directly to him. We chose not to partner with BetterThanDiamond.com because we believe the process it uses to alter the color of our gemstones in the long term would lessen the durability and value of moissanite in the marketplace. Charles & Colvard is committed to providing quality moissanite that lasts for generations to discriminating customers and is launching in June our newest brand of whiter and brighter moissanite, Forever Brilliant®, which is certified, laser inscribed, and guaranteed from the source.” Charles & Colvard is confident in the strength of its entire intellectual property portfolio and is committed to vigorously defending, maintaining, and strengthening the patents that protect its moissanite gemstones and technology. In addition, Charles & Colvard has an exclusive supply agreement with Cree, Inc. well into 2015 for the supply of gem-quality silicon carbide that is required to fashion moissanite gemstones. About Charles & Colvard, Ltd. Charles & Colvard, Ltd., based in the Research Triangle Park area of North Carolina, is the global sole source of moissanite, a unique, near-colorless created gemstone that is distinct from other gemstones and jewels based on its exceptional fire, brilliance, luster, durability, and rarity. Charles & Colvard Created Moissanite® is currently incorporated into fine jewelry sold through domestic and international retailers and other sales channels. Charles & Colvard, Ltd. is headquartered in Morrisville, North Carolina, and its common stock is listed on the NASDAQ Global Select Market under the symbol “CTHR.” For more information, please visit www.charlesandcolvard.com. This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements expressing expectations regarding our future and projections relating to products, sales, revenues, and earnings are typical of such statements and are made under the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about our plans, objectives, representations, and contentions and are not historical facts and typically are identified by use of terms such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “continue,” and similar words, although some forward-looking statements are expressed differently.All forward-looking statements are subject to the risks and uncertainties inherent in predicting the future. You should be aware that although the forward-looking statements included herein represent management's current judgment and expectations, our actual results may differ materially from those projected, stated, or implied in these forward-looking statements as a result of many factors including, but not limited to, our dependence on consumer acceptance and growth of sales of our products resulting from our strategic initiatives; dependence on a limited number of customers; our current wholesale customers' potential perception of us as a competitor in the finished jewelry business; general economic and market conditions, including the current economic environment; dependence on Cree, Inc. as the current supplier of the raw material; intense competition in the worldwide jewelry industry; the financial condition of our major customers; risks of conducting business in foreign countries; the pricing of precious metals, which is beyond our control; the potential impact of seasonality on our business; our ability to protect our intellectual property; the risk of a failure of our information technology infrastructure to protect confidential information and prevent security breaches; and possible adverse effects of governmental regulation and oversight, in addition to the other risks and uncertainties described in our filings with the Securities and Exchange Commission, or the SEC, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and subsequent reports filed with the SEC. Forward-looking statements speak only as of the date they are made. We undertake no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur except as required by the federal securities laws, and you are urged to review and consider disclosures that we make in the reports that we file with the SEC that discuss other factors relevant to our business.Company Contact:Charles & Colvard, Ltd.Timothy Krist, 919-468-0399, ext. 295Chief Financial Officertkrist@charlesandcolvard.comorInvestor Relations:Taglich Brothers, Inc.Christopher Schreiber, 800-383-8464Investor Relations Counselcs@taglichbrothers.com