As explained on Philips.com:
Because of its sensitive surface, it was necessary to package the CD
in such a way that it would be fully protected against damage. The
package also had to provide space for a booklet, and of course
automatic assembly was another important requirement.
Product development teams at PolyGram in Germany and the Netherlands
worked intensively to find a solution. Glass, wood, plastic and many
other materials were tried, but none of them met all the demands. The
designers themselves had decided that the ideal packaging should not
be much thicker than the CD itself, and it also had to present the
consumer with the image of a state-of-the-art product. Price was
another important factor, because the packaging had to be affordable.
Peter Doodson, working for the Philips Design in Eindhoven was
therefore asked to come up with some new ideas. This led to a
three-piece package made of plastic (polystyrene). Samples were made
and everyone involved in the project reacted with enthusiasm. [...]
The moment of truth arrived when the first samples were taken out of
the injection-molding machine. But the product proved to be virtually
perfect, which gave rise to the name 'Jewel Case'!