Scotts Miracle-Gro Company is suing TerraCycle, Inc. — a local fertilizer company founded by two former Princeton students — claiming that its product designs and advertising statements are too similar to those of Scotts Miracle-Gro.
TerraCycle founders Tom Szaky '05 and Jon Beyer '05 deny the allegations from the fertilizer giant and plan to fight it necessary. "Scotts is really the market dominator," Szaky said. "Our strategy is to battle this out as much as we can with the resources that we have."
TerraCycle, which was founded in 2001, may be a small startup company, but it is currently competing with the Scotts product at major retailers such as Home Depot, Target and Wal-mart.
To publicize the lawsuit and raise money for legal fees, TerraCycle has created a website, suedbyscotts.com. According to the site, "Scotts claims that the two companies' products look similar and will confuse customers because some TerraCycle plant foods have a green and yellow label with a circle and a picture of flowers and vegetables on it."
Scotts, a $2.7 billion company, also objects to TerraCycle's claim that its plant food is as good as or better than "a leading synthetic plant food," which it says refers to Scotts.
Szaky said that the lawsuit is unfounded. "The idea of trade dress laws is to protect against knockoffs like fake Prada bags that could confuse consumers," he said.
He added that the fertilizer bottles and labels used by TerraCycle are nothing like those used by Scotts, so the trade laws are irrelevant. Unlike those used by Scotts, all of the fertilizer containers used by TerraCycle are recycled soda bottles.
Albert Zakes, who manages media relations at TerraCycle, added that Scotts also sued TerraCycle because it would not provide Scotts with copies of scientific product tests of the two companies' products, which were conducted at the Rutgers University EcoComplex.
"They sued us because we refused to give up testing that we have done comparing our product to others," Zakes said. "Who in the world would want to give such proprietary information to your biggest competitor?"
He said that, though Scotts makes similar claims about its product's superiority, it refused to provide TerraCycle with its tests.
Szaky, who took a leave of absence from the University in 2003, said he did not understand why Scotts would sue over false advertising when TerraCycle has done virtually no advertising. "I don't think we have advertised this year at all," he said. "We have only had one printed advertisement in our history."
This is not the first time that Scotts Company has gone after smaller competitors in the industry, Richard Ober '65, the only lawyer at TerraCycle, said. He pointed out that OMS Investments, a subsidiary of Scotts, has also recently sued Regenerated Resources LLC — a fertilizer company — and other firms.
Before the lawsuit was presented this month, TerraCycle had been making changes because of complaints received from Scotts since July 2006. "We tried to appease them," Zakes said. "For example, we hired a marketing company to redesign our labels." The new labels will go on the fertilizer bottles within the next year, he said.
Zakes added that the suit is, in his view, "another instance where big business is trying to crush the little guy, which is happening far too frequently in American business."
Though not a lawyer himself, Zakes predicted the legal process would be very expensive, noting that several small companies have already gone out of business after being sued by Scotts.
Ober declined to speculate about possible legal costs.
The media representative at the Scotts Company did not respond to requests for comment.
TerraCycle has until May 2 to submit its legal response to the lawsuit, and a court date has not yet been set.
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