Case 1:99-mc-09999 Document 189 Filed 04/29/11 Page 1 of 14 PageID #: 17184 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE COASTAL SUPPLY COMPANY, INC., v. Plaintiff, Civil Action No. THE SCOTTS MIRACLE-GRO COMPANY and OMS INVESTMENTS, INC., DEMAND FOR JURY TRIAL Defendants. COMPLAINT Plaintiff Coastal Supply Company, Inc., by and through its undersigned counsel, for its complaint against Defendants The Scotts Miracle-Gro Company and OMS Investments, Inc., alleges as follows: Parties 1. Plaintiff Coastal Supply Company, Inc. ( Coastal ) is a corporation in good standing, organized and operating under the laws of the State of Delaware, with its principal offices located at 1977 Bay Road, Milford, Delaware. 2. Defendant The Scotts Miracle-Gro Company ( SMG ) is upon information and belief a corporation organized under the laws of the State of Ohio, with its principal offices located at 14111 Scottslawn Road, Marysville, Ohio. 3. Defendant OMS Investments, Inc. ( OMS ) is upon information and belief a corporation organized under the laws of the State of Delaware, with its principal offices located at 10250 Constellation Boulevard, Suite 2800, Los Angeles, California.
Case 1:99-mc-09999 Document 189 Filed 04/29/11 Page 2 of 14 PageID #: 17185 4. Upon information and belief, OMS is a wholly-owned subsidiary of SMG, and its business and affairs are controlled, directed and managed, directly or indirectly, by SMG. OMS owns of record certain intellectual property, including trademark registrations, used by SMG and its various subsidiaries in their business. SMG and its subsidiaries, including OMS, are hereinafter referred to collectively as Scotts. Jurisdiction and Venue 5. This is an action for trademark infringement and related claims under federal and state law. This Court has jurisdiction over this action under 28 U.S.C. 1331 (federal question); 15 U.S.C. 1121 (action arising under the Lanham Act); 28 U.S.C. 1338(a) (action arising under any act of Congress relating to trademarks); 28 U.S.C. 1338 (b) (action asserting claim of unfair competition joined with a substantial and related claim under trademark laws); and 28 U.S.C. 1367 (supplemental jurisdiction). 6. Venue of this action is proper in this District under 28 U.S.C. 1391(b) because both SMG and OMS are subject to personal jurisdiction in this District, and therefore reside in this District within the meaning of 28 U.S.C. 1391(c). Facts Common To All Claims Coastal s Business and GARDEN PRO Mark 7. Plaintiff Coastal is engaged in the manufacture, processing, distribution and sale of a broad variety of bagged and bulk horticultural products, including but not limited to soils and soil mixes, mulches, fertilizers, growing mixes, compost, and decorative stone. 8. From its beginnings as a small local manufacturer in 1969, Coastal has grown to become one of the largest horticultural suppliers in the eastern United States. With manufacturing facilities located in seven states and its own trucking fleet and dispatch centers, 2
Case 1:99-mc-09999 Document 189 Filed 04/29/11 Page 3 of 14 PageID #: 17186 Coastal provides 24-hour delivery from New York to South Carolina and as far west as Missouri. Coastal sells commercial bulk product as well as product packaged for retail sale to consumers. 9. Beginning at least as early as 1991, Coastal adopted the trademark GARDEN PRO and began using it in interstate commerce for the purpose of identifying certain of its retailpackaged mulches, soils, soil mixes, and fertilizers and distinguishing them from those of others. Coastal has used the GARDEN PRO mark continuously since at least 1991 to the present on and in connection with its packaged horticultural products described above. 10. Coastal s GARDEN PRO products are widely distributed throughout the eastern United States, and are carried by more than 1000 retail outlets in the region, including such retailers as Lowe s, Home Depot, Ace Hardware, Tru-Value Hardware, and many others. 11. From the dates of first use through the present, Coastal has continuously promoted and advertised the horticultural goods offered under its GARDEN PRO mark. Coastal s goods have been well received by the consuming public, and the GARDEN PRO mark has come to be recognized by consumers and members of the trade as symbolizing the high quality and value provided by Coastal s products. 12. The GARDEN PRO mark is a means by which Coastal s products are distinguished by the consuming public from the products and services of others. By virtue of Coastal s long use, extensive sales, advertising and promotional activities, and the quality of its products, Coastal has obtained and now enjoys a valuable reputation, goodwill, and trust, all symbolized by the GARDEN PRO mark. 13. Coastal is the owner of U.S. Trademark Registration No. 1,786,370 for the mark GARDEN PRO for potting soil, composted manure, dehydrated manure, soil conditioner, and organic fertilizer for agricultural and domestic use, (attached hereto as Exhibit A) and U.S. 3
Case 1:99-mc-09999 Document 189 Filed 04/29/11 Page 4 of 14 PageID #: 17187 Trademark Registration No. 2,994,856 for the mark GARDEN PRO for top soil, peat moss, pine bark mulch, pine bark nuggets, pine bark chips, hardwood mulch, (attached hereto as Exhibit B) both with a date of first use in 1991. Both registrations are valid, subsisting and uncancelled, and constitute prima facie evidence of Coastal s exclusive right to use the GARDEN PRO mark on and in connection with the goods claimed. Registration No. 1,786,370 has become incontestable, thus conclusively establishing the distinctiveness of the GARDEN PRO mark. Scotts Business 14. Scotts holds itself out as the world s largest marketer of branded consumer lawn and garden products. Scotts owns and uses throughout the United States many well-known trademarks for various lawn and garden products, including SCOTTS, MIRACLE-GRO, TURF BUILDER, OSMOCOTE, ORTHO, WHITNEY FARMS, and others. 15. Among many other products and services, Scotts markets, distributes and sells packaged mulches, soils, soil mixes, and fertilizers in direct competition with Coastal throughout Coastal s market area. Scotts products compete head-to-head with Coastal s GARDEN PRO products, often appearing in the same retail outlets. 16. Scotts is immensely successful, having annual sales of more than $3.1 billion and annual earnings before taxes of more than $440 million in its most recently completed fiscal year, and corporate assets in excess of $2.1 billion. Scotts Infringement of the GARDEN PRO Mark 17. Scotts has recently adopted and begun to use the designation GardenPro on and in connection with various of its packaged horticultural products in direct competition with Coastal. For example, packaging for Scotts OSMOCOTE Planting Soil products has recently 4
Case 1:99-mc-09999 Document 189 Filed 04/29/11 Page 5 of 14 PageID #: 17188 begun to display prominently, on the upper left of the front face of the package, the phrase DESIGNED FOR GardenPro RETAILERS. The entire phrase appears in a stylized font with a contrasting white color to make it stand out from the green background. The term GardenPro is more than twice the size of the remaining words in the phrase, and is given further emphasis by use of a bold, shadowed font. An example of this packaging is depicted in the attached Exhibit C. 18. Scotts has made similar use of the GardenPro designation on packaging for its MIRACLE-GRO Plant Food products, as depicted in the attached Exhibit D. 19. Scotts has made similar use of the GardenPro designation on box packages for its WHITNEY FARMS Plant Food and Potting Soil products, except that the infringing phrase appears by itself on the top of the box, and appears in a dark green color to contrast with the light yellow background, as depicted in the attached Exhibit E. 20. Scotts has caused Order Forms to be distributed to retailer customers, including retailers who purchase Coastal s GARDEN PRO products, which offer the following Scotts products for purchase: Garden Pro Osmocote Potting Soil 8 QT Garden Pro Osmocote Potting Soil 1.5 CF Garden Pro Osmocote Flower & Vegetable Planting Soil 1 CF Garden Pro Whitney Farms Organic Potting Soil 8 QT Garden Pro Whitney Farms Organic Potting Soil 1.5 CF Garden Pro Whitney Farms Organic Potting Soil 1 CF These items are the first six items offered for sale on the Scotts Order Form. An example of this document is attached as Exhibit F. 5
Case 1:99-mc-09999 Document 189 Filed 04/29/11 Page 6 of 14 PageID #: 17189 21. Upon information and belief, Scotts has launched a program under the designation GARDENPRO Exclusively Independent, pursuant to which it offers lawn and garden products as well as training and other incentives exclusively to independent lawn and garden retailers who are at least potential purchasers of, and many of whom are actual purchasers of, Coastal s GARDEN PRO products. 22. Scotts various uses of the GardenPro designation as above described are on and in connection with products that compete directly with products offered by Coastal bearing its GARDEN PRO mark, as well as products that are closely related to Coastal s GARDEN PRO products. Scotts sells its products through the same or similar channels of trade as those used by Coastal, and directs its advertising, marketing and promotion to the same or similar classes of customers or individuals as Coastal. Scotts Intent 23. Scotts has been well aware of Coastal s GARDEN PRO mark and products since long prior to the onset of Scotts infringing uses as described above. In 2006 Scotts entered into an agreement with Coastal in which Scotts explicitly acknowledged Coastal s ongoing use of the GARDEN PRO mark on and in connection with lawn and garden products since 1992. 24. Scotts is not an unsophisticated company with respect to the power and value of brands. It owns of record more than 500 trademark registrations or pending applications in the U.S. alone. It has publicly stated that it regards its trademarks as key competitive advantages, and for that reason it pursues a vigorous trademark protection strategy. 25. Despite its size and financial resources, Scotts recognizes that it is vulnerable to competition from smaller, more efficient, lower-priced competitors such as Coastal. Scotts does not have long-term sales agreements or other contractual assurances with the retailers to whom it 6
Case 1:99-mc-09999 Document 189 Filed 04/29/11 Page 7 of 14 PageID #: 17190 sells its branded consumer lawn and garden products that would prevent those customers from quickly transferring their purchases to other suppliers. 26. Within the last year, Scotts has publicly acknowledged that [m]any of our competitors sell their products at prices lower than ours, and that price sensitive customers may be more likely to trade down to lower price point products in a more challenging economic environment, such as that prevailing today. Scotts further stated that loss of, or reduction in orders from any significant retailer customers could have a material adverse effect on our business 27. Scotts has responded to the competitive threat from more efficient competitors such as Coastal by adopting a strategic plan which it says is focused on leveraging our key competitive advantages to extend category and share growth and reduce costs, further distancing us from the competition By key competitive advantages, Scotts said it was referring to service marks, trademarks, trade names and other intellectual property rights, and said that [o]ur ability to compete effectively depends in part on such rights. 28. Scotts conduct in now adopting and using the GardenPro designation as above described is part of a calculated effort to undercut or destroy the value of the GARDEN PRO mark to Coastal and to appropriate that value for itself, by causing confusion in the minds of actual and prospective purchasers as to the source of products upon which Coastal s GARDEN PRO mark appears. If allowed to succeed, this scheme will cripple the ability of Coastal s GARDEN PRO mark to communicate effectively with actual and potential purchasers, thus enhancing the ability of Scotts to rely on the key competitive advantages of its own powerful brands to insulate itself from effective competition from Coastal. 7
Case 1:99-mc-09999 Document 189 Filed 04/29/11 Page 8 of 14 PageID #: 17191 Effects of Scotts Scheme 29. The use by Scotts of the GardenPro designation as described above is likely to cause confusion and mistake and to deceive purchasers and customers as to the source, origin or sponsorship of the products of Scotts upon which the GardenPro designation appears. The trade and consuming public are likely to believe that said products of Scotts originate from the same source as products bearing Coastal s GARDEN PRO mark, or that there is some connection, affiliation, sponsorship or other relationship between Scotts as the maker of products bearing the GardenPro designation on the one hand, and Coastal as the maker of its GARDEN PRO products on the other hand. 30. The use by Scotts of the GardenPro designation as described above is also likely to cause reverse confusion, in that prospective purchasers who are exposed to Scotts use prior to being exposed to Coastal s GARDEN PRO products will, upon later encountering Coastal s products, be likely to believe that Coastal s GARDEN PRO products emanate from Scotts, or are sponsored or authorized by Scotts or otherwise affiliated with it. 31. Scotts infringing conduct has caused and is continuing to cause actual confusion in the marketplace. Many retailers who purchase and resell Scotts products advertise Scotts Garden Pro products, Garden Pro Osmocote products, Garden Pro Miracle-Gro products, Miracle-Gro Garden Pro products, and Scotts Garden Pro Super Turf Builder products, among other variations. Representative examples of internet advertisements by third-party retailers identifying Scotts products by use of the GardenPro designation are attached hereto as Exhibit G. 32. Coastal has received and continues to receive communications from actual and potential purchasers of its products evidencing actual confusion engendered by Scotts use of the 8
Case 1:99-mc-09999 Document 189 Filed 04/29/11 Page 9 of 14 PageID #: 17192 GardenPro designation as described herein. Scotts Refusal To Halt Its Infringing Conduct 33. Coastal, through counsel, has notified Scotts in writing that Scotts use of the GardenPro designation as described above is likely to cause confusion, and that Scotts conduct has in fact caused instances of actual customer confusion in the marketplace which is continuing. Coastal requested that Scotts halt its infringing use and take steps to prevent such confusion in the future. 34. Scotts, through counsel, responded to this request with a letter stating that it needed more time to formulate its response, but that it was interested in resolving this matter amicably, and that we expect to be able to resolve this matter in an agreeable and reasonable manner soon. Subsequently, however, Scotts has flatly refused to make any changes in its conduct whatsoever, and its infringing conduct continues unabated. reference. FIRST CLAIM FOR RELIEF (Trademark Infringement Lanham Act 32, 15 U.S.C. 1114) 35. The allegations of paragraphs 1 through 34, above, are incorporated by this 36. The use by Scotts of the GardenPro designation as described above constitutes trademark infringement of Coastal s registered GARDEN PRO mark in violation of 32 of the Lanham Act, Title 15 U.S.C. 1114. 37. As a direct and proximate result of Scotts conduct as alleged above, Coastal has suffered harm and damage, in that it has lost sales and profits that it otherwise would have earned, and its reputation with consumers and the trade has been impaired and damaged. The amount of Coastal s damages is not reasonably capable of accurate assessment at present, but will be proved with specificity at trial. 9
Case 1:99-mc-09999 Document 189 Filed 04/29/11 Page 10 of 14 PageID #: 17193 38. Scotts conduct as above alleged is ongoing, and will cause continuing, escalating and irreparable damage to Coastal s business and reputation unless and until Scotts is enjoined by this Court. reference. SECOND CLAIM FOR RELIEF (False Designation of Origin Lanham Act 43(a), 15 U.S.C. 1125(a)) 39. The allegations of paragraphs 1 through 38, above, are incorporated by this 40. Scotts conduct as above alleged constitutes false designation of origin in violation of Lanham Act 43(a), 15 U.S.C. 1125(a), in that purchasers and consumers are likely to believe that Scotts products and services originate from Coastal or from the same source as the products offered by Coastal, or that there is some connection, affiliation, sponsorship or other relationship between them. 41. As a direct and proximate result of Scotts conduct as alleged above, Coastal has suffered harm and damage, in that it has lost sales and profits that it otherwise would have earned, and its reputation with consumers and the trade has been impaired and damaged. The amount of Coastal damages is not reasonably capable of accurate assessment at present, but will be proved with specificity at trial. 42. Scotts conduct as above alleged is ongoing, and will cause continuing, escalating and irreparable damage to Coastal s business and reputation unless and until Scotts is enjoined by this Court. reference. THIRD CLAIM FOR RELIEF (Common Law Trademark Infringement and Unfair Competition) 43. The allegations of paragraphs 1 through 42, above, are incorporated by this 10
Case 1:99-mc-09999 Document 189 Filed 04/29/11 Page 11 of 14 PageID #: 17194 44. The aforesaid conduct of Scotts constitutes trademark infringement and unfair competition in violation of the common law. 45. As a direct and proximate result of Scotts conduct as alleged above, Coastal has suffered harm and damage, in that it has lost sales and profits that it otherwise would have earned, and its reputation with consumers and the trade has been impaired and damaged. The amount of Coastal s damages is not reasonably capable of accurate assessment at present, but will be proved with specificity at trial. 46. Scotts conduct as above alleged is ongoing, and will cause continuing, escalating and irreparable damage to Coastal s business and reputation unless and until Scotts is enjoined by this Court. 47. Scotts knew or should have known that its conduct was reasonably likely to result in injury, damage, or other harm, thus warranting the award of punitive damages. reference. FOURTH CLAIM FOR RELIEF (Delaware Uniform Deceptive Trade Practices Act 6 Del. C. 2531 et seq.) 48. The allegations of paragraphs 1 through 47, above, are incorporated by this 49. The aforesaid conduct of Scotts constitutes deceptive trade practices in violation of the provisions of 6 Del. C. 2532. 50. As a direct and proximate result of Scotts conduct as alleged above, Coastal has suffered harm and damage, in that it has lost sales and profits that it otherwise would have earned, and its reputation with consumers and the trade has been impaired and damaged. The amount of Coastal s damages is not reasonably capable of accurate assessment at present, but will be proved with specificity at trial. 51. Scotts conduct as above alleged is ongoing, and will cause continuing, escalating 11
Case 1:99-mc-09999 Document 189 Filed 04/29/11 Page 12 of 14 PageID #: 17195 and irreparable damage to Coastal s business and reputation unless and until Scotts is enjoined by this Court. 52. Scotts has willfully engaged in the aforesaid deceptive trade practices, and has persisted in its conduct despite notice and demand from Coastal. PRAYER FOR RELIEF WHEREFORE, Coastal prays that the Court enter judgment in its favor as follows: 1. That this Court enjoin Scotts, its directors, officers, employees, representatives or agents, and any persons or entities in active concert or participation with them, from any use of the designation GardenPro or any other designation, symbol or device which is confusingly similar to Coastal s GARDEN PRO mark; 2. That all of Scotts inventory, equipment, signage, advertising, promotional materials, and other materials exposed to the consuming public or the trade in any form using the designation GardenPro or any other designation, symbol or device which is confusingly similar to Coastal s GARDEN PRO mark be destroyed or delivered up to the Court for destruction; 3. That Scotts be ordered to undertake, or to compensate Coastal for the cost of, corrective advertising and other corrective measures reasonably calculated to attempt to mitigate the confusion engendered by Scotts infringing conduct; 4. That Scotts be ordered to account for all revenues, and other economic benefits and advantages, derived from the sale of goods bearing the designation GardenPro or any other designation, symbol or device which is confusingly similar to Coastal s GARDEN PRO mark; 5. That Scotts be ordered to file with the Court and serve upon Coastal s counsel a written report under oath within thirty (30) days after service of notice of entry of judgment or 12
Case 1:99-mc-09999 Document 189 Filed 04/29/11 Page 13 of 14 PageID #: 17196 issuance of an injunction pursuant thereto, setting forth details of the manner in which Scotts has complied with the Court s order pursuant to paragraphs 1 through 4 above. 6. That Coastal have and recover of Scotts its actual damages sustained by reason of Scotts acts of trademark infringement and false designation of origin in violation of the Lanham Act, pursuant to Lanham Act 32, 15 U.S.C. 1114; 7. That Coastal have and recover of Scotts its damages sustained by reason of Scotts acts of common law trademark infringement and unfair competition, together with punitive damages in such amount as a jury may determine to be adequate to punish Scotts willful conduct and to deter such conduct on the part of others; 8. That all damages awarded by reason of Scotts trademark infringement and unfair competition in violation of the common law be trebled pursuant to 6 Del. C. 2533(c); 9. That Coastal have and recover of Scotts its damages sustained by reason of Scotts deceptive trade practices in violation of the provisions of 6 Del. C. 2532; 10. That the Court deem this to be an exceptional case, and award to Coastal its reasonable attorney fees incurred in prosecuting its claims under the Lanham Act, pursuant to the provisions of Lanham Act 35, 15 U.S.C. 1117; 11. That the Court deem this to be an exceptional case and find that Scotts has willfully engaged in a deceptive trade practice, and award to Coastal its reasonable attorney fees incurred in prosecuting its claims under the Delaware Uniform Deceptive Trade Practices Act, pursuant to 6 Del. C. 2533(b); 8. That all costs of this action be assessed against Scotts; 9. That Coastal have a trial by jury of all issues properly so triable; and 10. That Coastal have such other and further relief as the Court may deem just and 13
Case 1:99-mc-09999 Document 189 Filed 04/29/11 Page 14 of 14 PageID #: 17197 proper. OF COUNSEL: Rodrick J. Enns ENNS & ARCHER LLP 939 Burke Street Winston-Salem, NC 27101 Telephone: (336) 723-5180 Facsimile: (336) 723-5181 renns@ennsandarcher.com Dated: April 29, 2011 YOUNG CONAWAY STARGATT & TAYLOR, LLP /s/ Adam W. Poff Adam W. Poff (No. 3990) Monté T. Squire (No. 4764) The Brandywine Building 1000 West Street, 17th Floor Wilmington, Delaware 19801 (302) 571-6600 apoff@ycst.com msquire@ycst.com Attorneys for Plaintiff Coastal Supply Company, Inc. 14