One company’s trash is another’s lawsuit

Marketplace Staff Jul 31, 2007

One company’s trash is another’s lawsuit

Marketplace Staff Jul 31, 2007


Kai Ryssdal: There’s fancy science like nanotechnology that Bill Hammack was just telling us about, and then are the simpler things in the world. Like whiling away a summer Saturday working in your garden. Odds are that means you use some kind of fertilizer, and odds are that fertilizer’s from Miracle-Gro.

Scotts, which owns Miracle-Gro, is a $3 billion behemoth with more than half the market. Which leaves little room for an organic plant food maker with what you might call a creative new product. Alex Goldmark has that story.

Alex Goldmark: Old soda bottles, left over beer and worm poop. That may sound like the aftermath of a weird agricultural college party to you and me, but to 25-year-old CEO Tom Szaky, it’s a business plan.

In 2001, he dropped out of Princeton to start Terracycle, an organic plant food company. It turns organic garbage into a consumer product.

Szaky: Yeah, the type of garbage we take is, for example, like the brewery waste from Anheuser-Busch, or different kinds of manures or coffee grounds, egg shells — anything that is organic that isn’t usable.

Shovel that into giant, worm-filled dirt boxes connected to conveyor belts and sifters in what they call a “worm gin,” and “let the worms do their thing.”

Szaky: We then take the solid worm poop and liquefy it into a liquid worm poop, which is very similar to a liquid organic fertilizer. Then, that is packaged in, literally, used soda bottles, like old Coke and Pepsi bottles. A trigger sprayer is put on it, and that becomes Terracycle plant food.

But Szaky’s business isn’t all about eco-thrift. It’s also about making a quality product. Terracycle claims its organic plant food is “as good or better than the leading chemical fertilizer.” Tough talk for a little guy when it’s obvious the company means it’s better than Miracle Gro.

Long story short, Terracycle got sued.

Jim King: We’re not saying let’s see the secret formula, let’s see the secret formulation of extracting worm poop. We’re saying let’s see the proof.

That’s Jim King. He’s Vice President of Corporate Communications at Scotts Miracle-Gro. He’s suing to see Terracycle’s plant food performance study. But Terracycle’s refusing for now.

Scotts isn’t leaving it at that. It’s also claiming consumers might confuse Terracycle with Miracle-Gro because of the way it’s packaged.

King: Over the years, we have found ourselves in a situation similar to this many times. We’ve had to go to our competitors and say, “Your trade-dress is far too close to ours — we want you to make changes to your packaging or we’ll have to find another solution.”

Both products are packaged in green and yellow. Miracle-Gro has trademarked those colors in certain proportions.

But Columbia University Law Professor Scott Hemphill says the confusion claim is weak. He says Terracycle’s motley mix of used soda bottles distinguishes it from Miracle-Gro — and even the color argument could be difficult to defend.

Scott Hemphill: The problem here is that green and yellow are pretty common. And moreover that green and yellow, the colors they have in mind, invoke — naturally enough — grass and sun. That’s bad news for Scotts, since it’s tantamount to claiming a monopoly on the use of red and green in Christmas packaging.

Hemphill says big companies often use this kind of lawsuit to protect their brands and market share. That’s not just bad news for the up-and-comers, its bad news for consumers too, as it can stifle competition, he says.

CEO Tom Szaky says he had to spend 30 percent of his earnings in legal fees this month — and if he’s slapped with another lawsuit, it could drive him out of business.

So he might not want to hear this comment from Professor Hemphill:

Hemphill: The most famous example of trade-dress in the country is probably Coca-Cola’s curvy bottle. These curvy bottles are being reused and refilled with fertilizer. So one wonders whether even if Miracle-Gro doesn’t have a claim, Coca-Cola might.

And Terracycle hasn’t even turned a profit yet.

In New York, I’m Alex Goldmark for Marketplace.

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