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AVON PRODS. v. S.C. JOHNSON & SON

November 19, 1997

AVON PRODUCTS, INC., Plaintiff,
v.
S.C. JOHNSON & SON, INC., Defendant.



The opinion of the court was delivered by: SOTOMAYOR

 SONIA SOTOMAYOR, U.S.D.J.

 FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER

 In Frigaliment Importing Co., Ltd. v. B.N.S. Int'l. Sales Corp., 190 F. Supp. 116 (S.D.N.Y. 1960), Judge Friendly posed the question "What is chicken?" This case poses the question "What is insect repellent?"

 Plaintiff and counterclaim defendant Avon Products, Inc. ("Avon") manufactures Skin-So-Soft bath oil "(SSS"), a beauty product that, for reasons not entirely clear, also has some efficacy as an insect repellent, though it is not registered as such with the Environmental Protection Agency ("E.P.A."). Defendant and counterclaim plaintiff S.C. Johnson & Son, Inc. ("S.C.Johnson") manufactures various E.P.A.-registered chemical based repellents, including OFF!. S.C. Johnson alleges that Avon has marketed SSS as an insect repellent in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (1992), and Sections 349 and 350 of the New York General Business Law; and has engaged in unfair competition under the common law.

 S.C. Johnson seeks compensatory damages equivalent to the profits of which Avon has allegedly deprived S.C. Johnson because of Avon's marketing of SSS as an insect repellent. S.C. Johnson also seeks various forms of injunctive relief, including an order requiring Avon to place disclaimers on all SSS promotional materials and bottles for a three year period stating that scientific testing has revealed that SSS does not effectively repel insects. S.C. Johnson also seeks orders requiring Avon to adopt policies that sanction employees and sales representatives who promote SSS as a repellent and requiring Avon to respond to all media inquiries regarding repellency with a statement that it has been demonstrated through scientific testing that Skin-So-Soft bath oil does not effectively repel insects. Finally, S.C. Johnson seeks an award of attorney's fees pursuant to 15 U.S.C. § 1117(a) (1992).

 Avon denies that it has marketed SSS as an insect repellent and contends that SSS is sufficiently effective as a repellent such that marketing it as such does not constitute false advertising. Avon also asserts that S.C. Johnson's claims are barred by the equitable doctrines of laches and unclean hands. Finally, Avon seeks an award of attorneys' fees pursuant to 15 U.S.C. § 1117(a).

 For the reasons to be discussed, I find that Avon has, to a limited extent, marketed SSS as an insect repellent, but that SSS is sufficiently effective as an insect repellent that Avon's actions do not violate the Lanham Act or the New York General Business Law, and do not constitute common law unfair competition. I also find that S.C. Johnson's delay in bringing this suit renders the relief it seeks unwarranted as a matter of equity. Accordingly, S.C. Johnson's claims for monetary damages and injunctive relief are denied. Avon's claim for attorneys' fees is denied because I do not find that S.C. Johnson has brought this case in bad faith.

 A. PROCEDURAL HISTORY

 Avon initiated this case, originally assigned to Judge Allen G. Schwartz, by seeking to enjoin S.C. Johnson from publishing a print advertisement and a television commercial it claimed violated Section 43(a) of the Lanham Act. By Opinion and Order dated June 10, 1994, Judge Schwartz denied Avon's motion as to the television commercial, but enjoined distribution of the print ad. By Order dated February 7, 1997, the Court dismissed Avon's claim based upon the parties' settlement of the issue.

 In response to Avon's motion for a preliminary injunction, S.C. Johnson asserted two counterclaims. The first counterclaim alleged that Avon's marketing of an E.P.A. approved product under the name "Skin-So-Soft Moisturizing Suncare Plus Mosquito, Flea & Deertick Repellent SPF 15 PABA-Free Sunscreen Lotion" ("Skin-So-Soft Three-In-One Product") violated Section 43(a) of the Lanham Act, Sections 349 and 350 of the New York General Business Law and constituted unfair competition under the common law. By Order dated August 22, 1996, Judge Schwartz granted Avon's motion to dismiss Count I of S.C. Johnson's counterclaim, leaving the second counterclaim as the only remaining part of this case.

 The second counterclaim, which is the only claim sub judice, alleged that Avon had violated the Lanham Act and the New York General Business Law ("GBL"), and had engaged in unfair competition by marketing and selling SSS as an insect repellent.

 On January 13, 1997, this case was reassigned to Judge Leonard B. Sand, who by Order dated January 23, 1997, denied Avon's motion for summary judgment on S.C. Johnson's second counterclaim. On January 27, 1997, this case was reassigned to the undersigned.

 Trial of S.C. Johnson's second counterclaim commenced on July 14, 1997. The parties presented direct testimony in the form of testimonial declarations submitted to the Court prior to trial. The court heard cross-examination on July 14, 15, 16, 17, 18, 22, 23 and 24, 1997. Summations were presented on August 18, 1997.

 B. STIPULATED FACTS

 The parties stipulated to the following facts in their Joint Consolidated Pretrial Order of May 1997, which the Court adopts as findings of fact:

 I. THE PARTIES

 1. S.C. Johnson & Son, Inc. is a Wisconsin corporation having its principal place of business in Racine, Wisconsin.

 2. Avon Products, Inc. is a New York corporation with its principal place of business in New York, New York.

 II. S.C. JOHNSON'S OFF! REPELLENTS

 3. S.C. Johnson markets a wide variety of chemical specialty products, including products used for insect control.

 5. OFF! insect repellent is currently sold by S.C. Johnson in a variety of forms including aerosol, pump spray, lotion, stick, and towelettes.

 6. Each year a seasonal increase in sales of S.C. Johnson's OFF! repellents occurs in the late spring and summer months.

 7. The active ingredient in S.C. Johnson's OFF! line of insect repellents is N.N. dimethyl-meta-toluamide ("DEET"). Different concentrations of DEET are used in the various OFF! repellents. DEET is proven to be an effective insect repellent.

 8. S.C. Johnson's OFF! repellents are registered with the E.P.A..

 9. In 1988, S.C. Johnson initiated Project Vulture, which resulted in the development of OFF! Skintastic.

 10. In 1991, S.C. Johnson began to market a DEET-based insect repellent in a moisturizing lotion under the mark "OFF! Skintastic." That product is registered with the E.P.A..

 III. S.C. JOHNSON KNOWLEDGE OF THE USE AND SALE OF SKIN-SO-SOFT BATH OIL TO REPEL INSECTS

 11. In the mid-1970s, the President of S.C. Johnson asked Arthur Hageman of S.C. Johnson to conduct insect repellency tests of Skin-So-Soft Bath Oil. In the 1970s, Mr. Hageman tested Skin-So-Soft Bath Oil for repellency against black flies and mosquitoes and found no repellency.

 IV. AVON'S SALES STRUCTURE

 A. Sales Representatives

 12. Avon primarily sells its products to the public through sales representatives, not retail stores.

 13. The majority of sales representatives are women who sell Avon products in their "spare" time, either to supplement their earnings from a full-time job, or to provide some income while being full-time care providers to their families.

 14. At any given time, there are approximately 450,000 to 500,000 active sales representatives selling Avon's products.

 B. District Managers

 15. At any given time, there are between approximately 1,800 and 2,000 District Managers.

 16. Avon's District Managers are employees of Avon.

 C. Division Managers

 17. At any given time, there are between approximately 80 and 100 Division Managers.

 18. Avon's Division Managers are employees of Avon.

 19. Each Division Manager trains, supervises and coordinates the activities of all of the District Managers who are assigned to his or her Division.

 20. From time to time, Avon Division Managers may attend the District Manager's monthly sales meetings with representatives for observation purposes.

 D. Regional Vice Presidents

 21. Regional Vice Presidents are responsible for supervising and coordinating the District Managers within each of Avon's four "operating business units" or "OBUs." There are four Regional Vice Presidents, one for each of the following regions: North; Northeast; Southeast; and West.

 V. SKIN-SO-SOFT BATH OIL

 22. Since approximately the early 1960s, Avon has sold a bath oil under the name Skin-So-Soft bath oil.

 23. Avon has been aware at least since 1978 that many consumers use Skin-So-Soft bath oil to repel insects.

 24. Skin-So-Soft bath oil has never been registered with the E.P.A. as an insect repellent.

 25. Avon considered registering Skin-So-Soft bath oil as an insect repellent with the E.P.A., but decided not to do so.

 26. Avon tested Skin-So-Soft bath oil for insect repellency as early as 1987.

 27. In 1988, Avon advertised Skin-So-Soft bath oil in a print advertisement which stated:

 
"Millions of people know the secret of Skin-So-Soft. Do you? It used to be America's best kept secret. Now, more and more people simply won't face the summer without Avon Skin So Soft. Here's a perfect way to discover the soothing benefits of America's number one selling bath ...

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