I think Urine You're Out was a better name

Medallion Products, Inc. v. H.C.T.V., Inc., 2006 WL 3065344 (N.D. Ill.)

Plaintiffs’ allegations: Plaintiffs make consumer products that are initially promoted by infomercials, then expanded if successful to internet, catalog and retail sales. Defendants are marketing companies and a chemical company. In September 2004, defendants contacted plaintiffs about making a cheap pet-stain-removal product. Plaintiffs developed such a product, a solution in a spray bottle to be used with a blacklight to detect cat urine and other organic stains. Eventually, plaintiffs developed an enzyme-containing formula whose cleaning action could be demonstrated visually in a test tube by using ultraviolet light. Defendant agreed to buy the formula from plaintiffs for the life of the product, in return for an exclusive right to market the product. Plaintiffs agreed to purchase the blacklight that consumers would use with the cleaning solution; defendants agreed to package and ship the solution, sprayer, and blacklight.

Defendants, however, were plotting to appropriate plaintiffs’ rights. They registered as co-applicants for trademark protection of “Urine Gone.” Plaintiffs had test marketed the name “Urine You’re Out,” but defendants told them that the “Urine Gone” application was already filed, and plaintiffs agreed to proceed under the exclusive sales agreement using that name.

The infomercial first aired in March 2005 and proved quite successful. Plaintiffs sold over 3 million units in the first 8 months. At some point, defendants stopped using plaintiffs’ blacklight supplier, but failed to verify that the new blacklight had the appropriate radiance and ultraviolet rating to detect the presence of the organic stain. Defendants also filled some orders for Urine Gone with counterfeit solutions supplied by the defendant chemical company. Meanwhile, while defendants were arranging to amp up their independent supply, they were also lulling plaintiffs into a false sense of security with acts such as placing orders of the genuine product for use in sales demonstration. Defendants also expressed concern to plaintiffs that the product’s success would lead plaintiffs to break the exclusivity agreement and market the product itself.

The cleaning solution defendants sold as of Fall 2005 was manufactured by the defendant chemical company, and it didn’t match the label. Tests showed minimal to no enzyme activity. Defendants sold Urine Gone on the retail market, but labeled it “as seen on TV.” At that time, plaintiffs began receiving customer complaints regarding Urine Gone’s performance, because defendants advised dissatisfied customers who’d bought through catalog or internet sales that plaintiffs made the solution.

After plaintiffs learned about the counterfeit product, they sought to enter into an agreement with another infomercial developer, but some of defendants’ principals assaulted one of plaintiffs’ employees at a trade show where she was demonstrating the cleaning solution at the developer’s book. After that, the developer withdrew its support.

Among plaintiffs’ claims are Lanham Act and state-law false advertising counts. Defendants argued that they couldn’t counterfeit their own product – they see this as just a licensing dispute over who owns the trademark. The court pointed out that the allegations also include that the label is false.

Defendants argued that some of the defendants lacked standing. The general standing test requires a “reasonable interest” to be protected under the Lanham Act, and a discernible competitive injury from false advertising. Plaintiffs’ complaint alleged that the plaintiffs were involved in the formulation of the original Urine Gone product and all have a proprietary interest in it. Furthermore, all are attempting to make and launch a directly competing product, which is sufficient for standing. Note here that the prospect of competition is usually not enough to confer standing – but the fact that plaintiffs demonstrably can make and sell the product, if they find a marketer/distributor, and did in fact make and sell 3.3 million units not too long ago, may be enough to justify extending standing to them. Possibly, also, if defendants really did intimidate the competing developer from partnering with plaintiffs, they shouldn’t benefit from suppressing competition with a favorable standing verdict.

Plaintiffs’ defamation claims also survived because the affirmative act of telling dissatisfied customers that Urine Gone was made by plaintiffs could be defamatory.