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CLOROX CO. v. STERLING WINTHROP

July 26, 1996

THE CLOROX COMPANY, Plaintiff,
v.
STERLING WINTHROP, INC., and RECKITT & COLMAN, INC., Defendants.



The opinion of the court was delivered by: REAL

 Defendants STERLING WINTHROP, INC. (STERLING) and RECKITT & COLMAN, INC. (RECKITT), the owners of the LYSOL trademark, move for summary judgment of this 4 year old dispute with THE CLOROX COMPANY (CLOROX), the owner of the PINE-SOL mark, in which CLOROX claims an agreement with RECKITT over the use of the PINE-SOL mark is a violation of the antitrust laws (Section 1 & 2 Sherman Act) as a restraint on competition in the household cleaning product market.

 After litigation resulting in three settlement agreements negotiated by competent counsel and parties of comparable economic strength, a detailed agreement of permitted use of the PINE-SOL mark was reached.

 This case, when stripped of all the antitrust rhetoric by counsel for CLOROX, is simply an attempt to undo the permission granted by RECKITT'S predecessor in interest evolving to CLOROX to use the PINE-SOL mark in the household cleaning product market.

 To accomplish an undoing of the agreement of 1987 CLOROX strains to engage the help of the antitrust laws. For the reasons set forth herein the motion for summary judgment is GRANTED.

 FACTS

 The dispute has its genesis in the United States Patent & Trademark Office (PTO) in 1952 when MAGNOLIA CHEMICAL CO. (MAGNOLIA) applied for trademark registration of the PINE-SOL mark for a liquid general household cleaner, disinfectant and deodorant. That matter was contested by LEHN & FINK PRODUCTS CORP. (L&F), the owner of the then validly registered LYSOL trademark being used by L&F in the distribution and sale of its LYSOL disinfectant products. The PTO determined that the PINE-SOL mark as presented could be confused with the senior LYSOL trademark and denied registration of the PINE-SOL mark. Armed with the determination of the PTO L&F brought suit against MAGNOLIA, the owner of PINE-SOL, to enjoin use of the PINE-SOL mark in the household cleaner market. That litigation resulted in a settlement agreement giving MAGNOLIA permission to use the infringing PINE-SOL mark in certain defined applications in the household cleaner market. That agreement puts no limitation on the owner of the PINE-SOL mark to compete with the owner of the LYSOL trademark or generally in any area of household cleaning products, including disinfectants, so long as the PINE-SOL mark was not used except as permitted by the agreement. The agreement was addressed only to the use of the PINE-SOL mark on household cleaning products.

 The 1952 agreement was superseded by agreements in 1967 and 1987 each resulting from settlement of litigation involving the permitted uses of the PINE-SOL mark. In each of the 1967 or 1987 agreement there was and is no prohibition on the owner of the PINE-SOL mark to compete in the household cleaning products with LYSOL, including disinfectant products, with any mark other than PINE-SOL as limited by the agreements.

 The 1987 agreement provides that CLOROX may use the PINE-SOL mark without limitation on any product so long as it is not advertised as a disinfectant and may market any product as a disinfectant with the endorsement "From PINE-SOL" or "From the Makers of PINE-SOL." Up to the time of this litigation CLOROX has not chosen to utilize that option.

 Moreover, CLOROX is free to market any other product under any other trademark without limitation. CLOROX has in fact marketed Formula 409, Tilex, Soft Scrub, Clorox Clean Up and Clorox Toilet Bowl Cleaner in direct competition with LYSOL products. All of these CLOROX products have enjoyed remarkable success. See California Packing Corp. v. Sun-maid Raisin Growers, 165 F. Supp. 245 (S.D. Cal. 1958), aff'd, 273 F.2d 282 (9th Cir. 1959).

 For a complete background of this litigation see Clorox Co. v. Sterling Winthrop, 836 F. Supp. 983, 985 (E.D.N.Y. 1993).

 DISCUSSION

 CLOROX has totally misconstrued the nature of this case in attempting to squeeze the square trademark peg into the round antitrust hole. From the beginning of the first litigation between L&F (Reckitt predecessor) and MAGNOLIA (a CLOROX predecessor) the matter has been one of use of a trademark. There has been no competitive limitation on the owner of the PINE-SOL market; no price fixing; no division of markets territorial or product; no group boycott; or concerted refusals to deal with a competitor. The agreements uniformly express a desire of the parties to protect the use of the LYSOL trademark and PINE-SOL mark. CLOROX attempts to confuse the matter by largely ignoring who the competitors are in the market place. The competitors in the household cleaning product market are CLOROX and RECKITT, not PINE-SOL and LYSOL. Trademarks are only an exclusive right to use a trademark as identification of the product using the trademark to the exclusion of all others of the same or confusing trademarks. The PTO effectively granted that exclusionary power in this matter to RECKITT when the Patent Office Examiner in Chief affirmed the decision of the Examiner of Trade Mark Interferences. 96 PSPQ 57 (1953). At that time L&F was empowered to lay to eternal rest the PINE-SOL mark without the luxury of a eulogy. After litigation commenced by L&F to execute the ruling of the PTO, the parties, L&F and MAGNOLIA [succeeded by MILNER PRODUCTS CO. (MILNER)], chose to use the alternative to a judgment by settlement agreement. L&F gave MILNER the ability to use the PINE-SOL mark in marketing a dilutable liquid cleaner with certain restrictions on the products formula and labeling. At that time MILNER, CLOROX'S predecessor, chose to consider the ruling of the PTO valid without the necessity of review, by a court, of the validity of the PTO'S findings in the 1952 interference proceedings. Although CLOROX eschews the term license for what the 1956 agreement created, it is hardly without dispute that what L&F granted to MILNER was a limited license. With this limited license the PINE-SOL product has flourished competitively in the household cleaner market. The result of the 1956 agreement and its progeny is pro-competitive simply because there has been no dilution of competition by CLOROX in any manner and PINE-SOL has been permitted an opportunity in the market place. The agreement is neither violative of Section 2 of the antitrust laws nor an unreasonable protection of the LYSOL trademark under the trademark laws.

 The 1967 agreement was the result of a settlement in litigation where STERLING now the owners of the LYSOL trademark and AMERICAN CYANAMID (CYANAMID) locked horns in a dispute over the marketing of a PINE-SOL disinfectant spray. The parties in this litigation - no midgets in the market place - again agreed that the ...


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