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LEGAL ISSUES

After a Good Fight, David Forced to Settle with Goliath
 

TerraCycle, a small fertilizer company that was sued by Scotts Miracle Gro, will change its packaging and advertising claims.
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TerraCycle, the small inner-city fertilizer start-up that tried to fend off a multimillion-dollar federal lawsuit with humor and an irreverent blog, has reached a settlement with garden products giant Scotts Miracle Gro.

In a settlement announced last week, Scotts said it was dropping the case after Trenton, N.J.-based TerraCycle, which sells fertilizer made from worm waste in recycled plastic bottles, agreed to alter its packaging and stop claiming its products were superior to Miracle Gro.

Scotts, which is based in Marysville, Ohio, and has more than $2 billion in assets, sued TerraCycle in March, claiming its green and yellow packaging could "lead consumers to believe, mistakenly, that there is a connection with or association between TerraCycle and Scotts," according to court documents.

It also accused TerraCycle, which had sales of $1.5 million last year, of making false advertising claims by saying research studies showed its organic eco-friendly plant food was "more effective than synthetic chemical fertilizers."

"Scotts is pleased to resolve this case and believes that the settlement serves the public's interest," Jim King, a Scotts spokesman, said in a statement on Friday.

Tom Szaky, TerraCycle's 25-year-old CEO, initially launched a media campaign in response to the lawsuit, including a blog named SuedByScotts.com. He said he's satisfied with the outcome and happy to put the experience behind him.

"I'm really glad it's over," Szaky said. "It was costly and a massive distraction to running the business."

Still, he said the media attention brought on by the lawsuit was a "tremendous plus" for the company.

He added that the company, whose products are sold at Wal-Mart and Home Depot, was poised to launch a series of new products under a redesigned label. "We needed to create a new look for all these diversified products, so that isn't a problem for us," he said.

Last year, Szaky ranked No. 1 in Inc.com's list of the nation's coolest entrepreneurs under the age of 30.

Last updated: Sep 24, 2007




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