PL HBC LAWSUITS FLYING IN 2006

LIZA CASABONA

CINCINNATI (FNS) - A spate of intellectual property lawsuits against private-label companies and their health and beauty care products have been filed across the country in the last six months - including four by Procter & Gamble here.

The lawsuits may demonstrate a desire by big manufacturers to warn private labelers off infringing on trademarks, trade dress and patents associated with their brands, sources said. It is not unusual for manufacturers of branded consumer goods to periodically file lawsuits against private-label manufacturers, to make a point about their proprietary intellectual property, although few cases make it to trial, sources said.

"Sometimes what they're doing is serving notice on their branded competitors that we are Company X, we are important, we're going to enforce our trademark and trade dress. The gorilla has to get up and pound its chest. Sometimes that's what it's all about," said Brian Sharoff, president, Private Label Manufacturers Association, New York.

These lawsuits are filed for a few different reasons, but primarily to protect the validity of their trademark, said Jim Wisner, president, Wisner Marketing Group, Libertyville, Ill.

"If you're going to go to the trouble to sue someone, you're saying you genuinely believe it's not something you can brush off lightly. It certainly underscores the growth and importance of private label," Wisner said.

While P&G is identified by industry sources as the most aggressive defender of its intellectual property, most point out that the company is careful not to sue the retailers who are associated with the private-label brands in question. P&G and other national-brand owners have to walk a fine line because private-label lines are associated with retailers, who are their customers.

Calls to major retailers who have private-label lines either were not returned or elicited a "no comment" response.

Since December, P&G has filed lawsuits in a variety of HBC categories. In December, the company filed a trade dress lawsuit against McLane Co., Temple, Texas, and its Salado Sales' Consumer Value Products for allegedly infringing on its Bounty, Charmin and NyQuil brands. In February, the company filed a complaint against Vi-Jon Laboratories, St. Louis, for allegedly infringing on the trade dress of its Crest Pro-Health Rinse. (It was settled last week.) A lawsuit filed in March against First Quality Hygienic, McElhattan, Pa., alleged trademark and trade dress infringement of P&G's Tampax Pearl tampons. The most recently filed case against Ranir, West Orange, N.J., for patent infringements of Oral-B Power Toothbrushes, was filed in April.

It doesn't end with P&G. In late March, Johnson & Johnson, New Brunswick, N.J., and its McNeil-PPC subsidiary sued Qualis, Des Moines, Iowa, for violating trademark and patent laws for a personal lubricant sold to CVS, Eckerd and Rite Aid. On the grocery front, O Olive Oil, San Rafael, Calif., filed a lawsuit in April against Safeway, Pleasanton, Calif., over its new O Organics label.

There was no concerted effort behind the recent run of lawsuits, said Doug Shelton, spokesman, P&G, but the company does anticipate other cases will be filed. The company sees innovation and design as competitive advantages and copying package design as confusing to customers, Shelton said.

"The company is willing to take legal action when necessary to protect its business and intellectual property," he said.

A trade dress infringement lawsuit hinges on that confusion in customers, and is the point of contention in this kind of litigation.

"The issue in the consumer world is very different than the issue posed by Procter & Gamble or a national brand. They allege that 'look-alike' almost by definition constitutes trade dress infringement - that's not the law, the law is confusion. If you can't prove that consumers are confused, you can't win a case on trade dress infringement," Sharoff said.

The courts have ruled on that issue in past proceedings, notably a lawsuit filed by Conopco against May Department Stores Co.'s Venture Stores banner in regard to its Vaseline Intensive Care brand in the mid-1990s. In that case the court found that the prominent display of the Venture Stores logo on its product label made confusion unlikely. The court assumed that consumers read labels.

Industry sources agree, however, that regardless of current interpretations of intellectual property laws, lawsuits of this nature could decrease eventually as retailers realize the power of a distinctive private-label line.

"Now that retail has realized there's a very viable consumer market for it, they're approaching private label differently. They can elevate that if they want to, which will let them put out their own store brand in a way that integrates across the store or unifies their message," said Diane Garber, president, In Sight Communications, Buffalo Grove, Ill.

"In some ways, you may be seeing less of [this kind of lawsuit] than you did in the past because more retailers have moved towards setting off more distinctive looks for their products. As a result, they have upgraded the packaging and design of their products, and there is significantly less risk than there used to be," Wisner said.

That message is not necessarily at odds with how P&G views store brands. "Private labelers are good competitors and we look at them the same way as we look at branded competition. We want to be able to compete with them fairly and equitably under the law," Shelton said.