Scotts, the Goliath of plant products, sued organic plant-food maker startup Terracycle late last month, accusing TerraCycle of copying its look and falsely claiming that its organic products are better than synthetic ones like Miracle-Gro.
TRENTON, N.J. -- The makers of garden products Miracle-Gro and TerraCycle are as different as mature plants and seedlings.
The Scotts Miracle-Gro Co. is a $7 billion global business with broad brand recognition, a 59 percent market share, and Roman columns framing the entry to its corporate headquarters. TerraCycle Inc. is a fledging startup with $1.5 million in annual sales, an infinitesimal share of the market, and a graffiti-covered warehouse with used tires on the lawn where the rose bushes were before someone stole them out of the ground.
But Scotts sees similarities between the two plant-food makers. So, the Goliath of plant products sued late last month, accusing TerraCycle of copying its look and falsely claiming that its organic products are better than synthetic ones like Miracle-Gro.
"I don't think their claims are valid," said TerraCycle CEO Tom Szaky, a 25-year-old Hungarian-born entrepreneur who dropped out of Princeton in 2003 to launch an eco-friendly company. TerraCycle's products are made from worm waste and packaged in used plastic bottles and jugs.
"They're claiming that (the colors) yellow and green are theirs," he said, referring to Scotts.
He added, "Miracle-Gro has sued us over advertising. I've never bought an ad."
TerraCycle's only lawyer, Richard Ober, calls the action by Miracle-Gro a bullying tactic and has vowed to fight.
The suit in U.S. District Court here could doom the little green plant-product maker.
Miracle-Gro, based in Marysville, Ohio, is seeking unspecified monetary damages, changes in TerraCycle's packaging and an order to stop allegedly deceptive advertising claims.
Trenton-based TerraCycle, which has yet to turn a profit, has created the TerraCycle Defense Fund through its Web site to help defray legal costs.
Scotts spokeswoman Su Lok said the company's size doesn't matter. Miracle-Gro aggressively protects its brand, she said.
"It doesn't really matter who the company is, large or small, we take our brand and the products behind it very seriously," Lok said.
A marketing truism states that shoppers often decide which consumer items to buy while standing in the store aisle, which makes the look of a package an important factor.
Alan Cooper, a Washington lawyer specializing in trademark law and unfair competition, said companies protect their brand identity so consumers don't get confused about which product they're buying.
"It's important because the packaging and brand identity are how a consumer identifies these products," Cooper said. "If they're pleased with a product, it enables them to make repeat purchases. Or if they're not pleased, it allows them to avoid the product in the future."
TerraCycle's answer to Miracle-Gro's 177-page complaint is due May 2.
In its complaint, Scotts claims TerraCycle willfully infringed on Miracle-Gro's "distinctive and famous" look, mimicking its yellow and green packaging and including a picture of flowers and vegetables on its label. Miracle-Gro claims that the packaging similarities could lead to consumer confusion between the two companies' products.
"TerraCycle has passed off its goods as those of Scotts," the suit alleges.
The plant-food giant also accuses TerraCycle of making false and misleading advertising claims on its Web site and at point-of-purchase displays.
For example, Miracle-Gro claims there is no scientific basis for TerraCycle's claim that it "outgrows synthetic fertilizers," or that it makes "the most effective, convenient, affordable plant you can buy."
Ober said TerraCycle's products were tested against industry leaders at Rutgers University's environmental research center. When Miracle-Gro lawyers asked to see the details of the tests, TerraCycle declined. Miracle-Gro also refused to turn over results of its product tests to TerraCycle, Ober said.
Szaky thinks TerraCycle became a threat to the plant-product powerhouse when it secured coveted shelf space alongside Miracle-Gro in Home Depot and Wal-Mart stores last year.
"I guess in a way it's an honor to be sued," Szaky said. "I'd rather not, but I guess it means 'you've arrived.'"
On the Net:
TerraCycle Inc.: http://www.terracycle.net
TerraCycle Defense Fund: http://www.suedbyscotts.com
The Scotts Miracle-Gro Co.: http://www.scotts.com
Source: Associated Press