Though
Scotts Miracle-Gro Company did not receive any monetary damages from
TerraCycle, Inc. — which Tom Szaky '05 and Jon Beyer '05
founded in 2001 — the fertilizer giant got everything else it
sought in the complaint. Two news websites reported that Beyer and
Szaky's tiny, Trenton-based company was "forced" to settle in the
face of mounting legal fees.
Beyer
declined to comment on the settlement because, he said, he was "not
100 percent sure" of what the terms of the settlement allowed him to
say publicly.
The settlement,
announced last Friday, stipulates that TerraCycle will stop using
its green-and-yellow color scheme, which Miracle-Gro alleged was
similar enough to its own packaging that it could confuse consumers.
TerraCycle will switch to a green and orange pattern — the
green will be more easily differentiated from Miracle-Gro's
— and remove the images of fruits and vegetables on its labels.
The large circle in the center, reminiscent of Miracle-Gro's logo,
is also being eliminated. "They didn't like that," Beyer
said.
TerraCycle was going to change
its labeling anyway, Beyer added, in order to present a more unified
look in anticipation of this year's new
products.
Additionally, TerraCycle
will stop claiming that its plant food is better than "the leading
synthetic fertilizer" until it can back the claim up with new
testing.
Scotts sued TerraCycle
last March after the company refused to hand over test results to
support its claims that its fertilizer, which is based on worm
droppings, is superior to Miracle-Gro. Miracle-Gro contended that
those claims lacked a scientific
basis.
In an interview with The Daily
Princetonian last April, TerraCycle spokesman Albert Zakes said the
company was simply protecting its trade secrets by refusing to
release the tests. "Who in the world would want to give such
proprietary information to your biggest competitor?" he
said.
During the same interview,
Szaky told the 'Prince' that the lawsuit was unfounded and that he
planned to "battle this out as much as we can with the resources
that we have."
But in a statement
released jointly with Scotts Miracle-Gro last week, Szaky struck a
conciliatory tone. "We recognize that Scotts filed this lawsuit
based on a legitimate need to uphold the accuracy of advertising
claims and protect its trademark rights," he
said.
Szaky and Beyer started
TerraCycle during their freshman year at the University, dropping
out to run the company full time. Their company's products are based
on a new kind of composting meant to replicate the natural
composting that occurs on the forest floor. The company's product
line — packaged in used plastic containers — is now sold
alongside Miracle-Gro at nationwide retailers like Home Depot and
Wal-Mart.
TerraCycle earned $1.5
million in annual sales last year and employs 45. By its own
admission, the company has yet to turn a profit. Miracle-Gro, a
multinational corporation, reported $2.7 billion in worldwide sales
last fiscal year.
When the lawsuit
was filed last spring, Szaky created the blog suedbyscotts.com to
increase publicity and raise legal funds for the lawsuit. The CEO
injected the site with a note of irreverence, posting a list of 120
other garden products with green and yellow label designs and a link
to Scotts' financial statement that documented the $555,000 its CEO
spent on the company's aircraft. The website will be deactivated as
part of the settlement agreement.
Copyright 2007 Daily
Princetonian Publishing Company, Inc. All Rights Reserved. This
material may not be published, broadcast, rewritten or redistributed
in any manner. Please use our Web-based
Feedback Form for comments, questions and
inquiries.
.gif)
.gif)
