Scotts Co. v. United Industries Corp.
| Decision Date | 23 December 2002 |
| Docket Number | No. 02-1775.,No. 02-1739.,No. 02-1738.,02-1738.,02-1739.,02-1775. |
| Citation | 315 F.3d 264 |
| Parties | The SCOTTS COMPANY, Plaintiff-Appellee, v. UNITED INDUSTRIES CORPORATION, Defendant-Appellant, and Pursell Industries, Defendant. The Scotts Company, Plaintiff-Appellee, v. Pursell Industries, Defendant-Appellant, and United Industries Corporation, Defendant. The Scotts Company, Plaintiff-Appellee, v. United Industries Corporation, Defendant-Appellant, and Pursell Industries, Defendant. |
| Court | U.S. Court of Appeals — Fourth Circuit |
ARGUED: Dudley William Von Holt, Thompson Coburn, L.L.P., St. Louis, Missouri, for Appellant. Jeffrey Stuart Sutton, Jones, Day, Reavis & Pogue, Columbus, Ohio, for Appellee. ON BRIEF: Mark Sableman, James W. Erwin, Thompson Coburn, L.L.P., St. Louis, Missouri; Dabney J. Carr, IV, Troutman Sanders, Richmond, Virginia, for Appellant United; Robert M. Tyler, McGuire Woods, L.L.P., Richmond, Virginia, for Appellant Pursell. Michael Y. Scudder, Jr., Jones, Day, Reavis & Pogue, Columbus, Ohio; Robert M. Rolfe, Stephen P. Demm, John Gary Maynard, III, Kimberley A. Isbell, Hunton & Williams, Richmond, Virginia, for Appellee.
Before TRAXLER, KING, and GREGORY, Circuit Judges.
Vacated and remanded by published opinion. Judge TRAXLER wrote the opinion, in which Judge KING and Judge GREGORY joined.
The Scotts Company sued Pursell Industries and United Industries (together, the "defendants"), claiming that the packaging of the defendants' "Vigoro" brand crabgrass-control product conveyed certain false messages to consumers. The district court granted a preliminary injunction in favor of Scotts. This court granted the defendants' motion for a stay of the injunction pending appeal and expedited the appeal. We now vacate the district court's grant of a preliminary injunction and remand for further proceedings on Scotts' request for a permanent injunction.
Generally speaking, chemical crabgrass-control products are most effective when applied to "pre-emergent" crabgrass — crabgrass that has yet to sprout. The products are also effective on early "post-emergent" crabgrass, but are ineffective when applied to mature crabgrass plants. Vigoro, the defendants' product, and Scotts' product ("Halts") offer some level of post-emergence control, if applied no later than about four weeks after germination. Scotts, however, contends that the Vigoro package misleads consumers into believing that Vigoro can kill mature crabgrass.
In 1999, Scotts filed a Lanham Act false advertising claim against Pursell based on the Vigoro package. At that time, the Vigoro package included what the parties refer to as the "crabgrass buster" logo — a cartoon of a crabgrass plant with a sinister face, surrounded by the familiar red circle with a slash through it. This graphic was located directly above a text block that stated (in all capital letters) "pre & post emergence control of crabgrass." The parties settled the 1999 action and entered into a settlement agreement under which Pursell admitted no liability but agreed not to use the crabgrass buster logo or a similar logo in close proximity to any claim that Vigoro controls or suppresses post-emergent crabgrass.
In March 2000, Scotts filed another action against Pursell. In that action, Scotts contended that Pursell breached the 1999 settlement agreement by including the crabgrass buster logo in its promotional materials. Scotts also asserted a new false advertising claim based on a time-line graphic included in those promotional materials which suggested that Vigoro was the only product with any post-emergence effect on crabgrass. The district court concluded that Pursell had breached the 1999 settlement agreement by using the crabgrass buster logo and that the time-line graphic was false because it wrongly suggested that Scotts' product had no post-emergence effect. The court therefore entered a preliminary injunction requiring Pursell to remove the offending logo and time-line from the promotional materials. The parties entered into another settlement agreement under which Pursell again admitted no liability.
In December 2001, United Industries purchased the Vigoro product line from Pursell. Pursuant to their agreement, Pursell continues to manufacture the product, and United distributes it exclusively to Home Depot stores.
For the 2002 spring selling season, the defendants introduced new packaging for the Vigoro products. A picture of lush green lawn occupies approximately a third of the bag, and the product name appears in the middle of that picture as follows (with some effort being made to approximate the relative font sizes):
VIGORO
Centered on a bright blue background below this text and the lush-lawn picture is the following (again, with some attempt to show the relative font size):
Greens in 72 HOURS
Promotes Thick, Green Growth and Stops Crabgrass and Many Other Grassy & Broadleaf Weeds Before They Start.
To the left of this text block is the graphic at issue in this case: a realistic rendering of a mature crabgrass plant positioned directly above the following text:
Prevents Crabgrass up to 4 WEEKS After Germination
A small white cross by the crabgrass illustration leads to a disclaimer on the bottom of the front of the package, printed in dark blue or black ink and in very small type, which states, "Crabgrass image for illustration only as this product is for pre- and early post emergent control and does not control mature plants."
The crabgrass illustration on the Vigoro package is not unlike that used by Scotts on its Halts packages, and the Halts packages likewise claim some post-emergent effect. Scotts' post-emergent claim ("Delivers pre- and early post-emergent crabgrass control") is the first of three "bullet points" in a vertical column on the lower left side of the package front; the crabgrass illustration is placed just beside this column, in the middle of the lower part of the package. A disclaimer on the back of the Scotts' product states that
Not satisfied by the revisions to the Vigoro packaging, Scotts filed this action in the Eastern District of Virginia, where both the 1999 and the 2000 actions had been filed. Scotts asserted false advertising claims under the Lanham Act, see 15 U.S.C.A. § 1125(a)(1)(B) (West 1998), claiming that the revamped packaging, by using the illustration of a mature crabgrass plant, falsely suggested that Vigoro could kill mature crabgrass.1
Scotts moved for a preliminary injunction and supported its motion with evidence of consumer confusion derived from two focus group discussions and face-to-face interviews with 40 shoppers selected from a shopping mall in Richmond. Although the district court questioned the persuasiveness of some of Scotts' evidence the court concluded that Scotts had shown some evidence of consumer confusion, that Scotts had presented at least a triable issue on its false advertising claim, and that the balance of the harms favored Scotts. On July 2, 2002, the district court granted Scotts' request for a preliminary injunction and ordered the defendants to change the Vigoro packaging and remove existing product from store shelves or place a sticker covering the offending crabgrass graphic. The defendants thereafter sought a stay of the injunction from the district court. At the hearing on that motion, the district court stated that the question of whether to issue the injunction had been a very close one and that the question of staying the injunction was even closer. On July 15, 2002, however, the district court denied the motion to stay the injunction, although the court did modify the injunction so that it would take effect on August 30, 2002. The defendants appealed, and, as previously noted, we granted the defendants' motion to stay the injunction pending resolution of this expedited appeal.
In this circuit, the entry of a preliminary injunction is governed by the four-part test set forth in Blackwelder Furniture Co. of Statesville, Inc. v. Seilig Mfg. Co., Inc., 550 F.2d 189 (4th Cir.1977), which requires a court to consider "(1) the likelihood of irreparable harm to the plaintiff if the preliminary injunction is denied, (2) the likelihood of harm to the defendant if the requested relief is granted, (3) the likelihood that the plaintiff will succeed on the merits, and (4) the public interest." Direx Israel, Ltd. v. Breakthrough Med. Corp., 952 F.2d 802, 812 (4th Cir.1991) (internal quotation marks omitted); see Blackwelder, 550 F.2d at 193-95.
When deciding whether to grant a preliminary injunction, the court must first determine whether the plaintiff has made a strong showing of irreparable harm if the injunction is denied; if such a showing is made, the court must then balance the likelihood of harm to the plaintiff against the likelihood of harm to the defendant. See Safety-Kleen, Inc. (Pinewood) v. Wyche, 274 F.3d 846, 859 (4th Cir.2001); Direx, 952 F.2d at 812. If the balance of the hardships "tips decidedly in favor of the plaintiff," Rum Creek Coal Sales, Inc. v. Caperton, 926 F.2d 353, 359 (4th Cir.1991) (internal quotation marks omitted), then typically it will "be enough that the plaintiff has raised questions going to the merits so serious, substantial, difficult and doubtful, as to make them fair ground for litigation and thus for more deliberate investigation," Blackwelder, 550 F.2d at 195 (internal quotation marks omitted). But if the balance of hardships is substantially equal as between the plaintiff and defendant, then "the probability of success begins to assume real significance, and interim relief is more likely to require a...
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