Monday, September 24, 2007

TerraCycle settles with Scotts

Scotts and TerraCycle have settled. (Previous reports.) TerraCycle will change its packaging color scheme, stop making superiority or establishment claims about TerraCycle versus Miracle Gro, and wind down its website The CEO even said, “We also regret certain statements that were made about Scotts in the heat of litigation.” A pretty satisfactory result for Scotts, especially as it ends TerraCycle’s media defense blitz. As Seattle Trademark Lawyer reports, Scotts even got a statement about the fame of its trade dress into the stipulation.

ETA: the settlement specifies the circumstances under which TerraCycle can make establishment/comparative claims: only when it has "at least one well-conducted scientific study, carried out after the Effective Date by an independent person or organization, using generally accepted scientific techniques, and reaching statistically valid conclusions. The full report of any such research, if relied on by TerraCycle to substantiate new comparative advertising claims, shall be published by TerraCycle on the Internet or otherwise made available to Scotts and the consuming public." This is a reasonably flexible limit; it does require more substantiation than some superiority claims would in the absence of a settlement, so Scotts gets something, but not in a way that prevents competition. One deviation from the baseline false advertising law is the requirement of independent testing; internal testing would ordinarily suffice, though of course lack of independence can always affect a factfinder's assessment of the credibility of a test. The other big deviation is that the burden is on TerraCycle, whereas the baseline would require Scotts to show falsity.

On the other side, apparently TerraCycle will continue to employ the people whose livelihoods were threatened by the lawsuit. If TerraCycle’s PR is as good at selling worm poop as it is at getting out the word about this suit, the company will do very well indeed.

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