The opinion of the court was delivered by: Hurd, District Judge.
MEMORANDUM-DECISION and ORDER
Plaintiff SQP, Inc. ("SQP" or "plaintiff") filed the instant
suit alleging trademark infringement by defendants Sirrom Sales,
Inc. and Morcon, Inc. (collectively "Morcon" or "defendants")
and seeking redress for such infringement pursuant to the Lanham
Act, 15 U.S.C. § 1125, common law, and New York General Business
Law §§ 349-350. In essence, SQP alleges that Morcon has falsely
advertised that its brand of toilet tissue is equivalent to
SQP's brand of toilet tissue, when the sheet counts of Morcon's
toilet tissue are lower. Morcon answered and asserted similar
Lanham Act, common law, and state law counterclaims against
On November 22, 2000, an Order to Show Cause issued
temporarily restraining defendants from directly or indirectly
advertising that their toilet tissue product known alternatively
as "Morsoft®," "Millennium® Bath Tissue" or "Morsoft/Millennium®
Bath Tissue" (collectively "Millennium") is the equivalent of
plaintiffs Valay® bath tissue ("Valay"). No bond or other
security was required for the issuance of the temporary
restraining order. The Order to Show Cause further directed
defendants to show cause why a preliminary injunction should not
issue enjoining defendants from advertising equivalence;
requiring defendants to alter their advertising to report an
accurate sheet count for their toilet tissue products; requiring
defendants to notify any person or entity who previously
received an advertisement or solicitation claiming equivalence
between Millennium and Valay, of the actual sheet count of
Millennium and the fact of non-equivalence to Valay with respect
to sheet count; and directing defendants to pay plaintiffs costs
and attorneys fees associated with obtaining the aforementioned
relief. Defendants filed responsive papers, to which plaintiff
Oral argument was heard on January 29, 2001, in Utica, New
York, with the attorneys for the parties participating by video
conference from Albany, New York. Decision was reserved and the
temporary restraining order was left in effect pending further
order of the court. Moreover, the plaintiff, upon its consent,
was directed to refrain from mentioning to customers in any
manner the temporary restraining order.
SQP is a manufacturer of toilet tissue for industrial,
commercial and institutional use nationwide. SQP manufactures
Valay in 1-ply, 2500 sheet rolls and 2-ply, 1250 sheet rolls.
SQP contends that sheet count is arguably the single-most
important characteristic to purchasers of commercial toilet
tissue. Consequently, SQP asserts that it maintains an extensive
quality monitoring program to assure that the average sheet
count of each roll produced and sold is within 1.5% of the
In approximately July 2000, Morcon began production of 1-ply,
2500 sheet rolls and 2-ply, 1250 sheet rolls of toilet tissue.
Morcon's Millennium was in direct market competition to SQP's
Valay. During the initial introduction of Millennium into the
marketplace, Morcon admittedly gave away as samples some rolls
that contained fewer sheets than advertised (that is, fewer than
2500 and 1250 sheets, respectively).
Soon after Morcon entered the commercial toilet tissue market,
SQP became aware of this new competition. SQP came into
possession of a letter dated September 12, 2000, that stated in
relevant part that Morcon was in production "of the equivalent
to the Valay bath tissue." (See Compl. Ex. B.) The September
letter referenced availability of Millennium 1-ply, 2500 count
and 2-ply, 1250 count rolls and their prices, and offered
samples if needed. According to Laura L. Morris, the Treasurer
of both defendants, the September 12, 2000, letter was sent to
one and only one of its customers, one Barry Goldman. (Morris
Aff. ¶ 11-12.) Morcon sent one additional letter to one
distributor in which Millennium was touted as "equivalent" to
Valay, and did not make equivalence claims in any other manner.
Id. ¶ 15. However, Morcon offered to sell Millennium in
response to invitations for bids for "Valay-equivalent" toilet
Morcon asserts that it marketed Millennium as comparable or
similar to Valay, but did not intend the use of the word
equivalent to mean "exactly the same." Essentially Morcon posits
that it was and is selling Millennium as a substitute for or
alternative to Valay to be used in Valay dispensers.
On December 6, 2000, SQP sent a letter to its customers noting
that a Temporary Restraining Order had been granted against
Morcon, listing sheet counts from its tests of Millennium, and
indicating that it would protect its products from false and
misleading advertising and non-equivalent knock-off products.
SQP obtained some rolls of Millennium and undertook testing of
those rolls. SQP retained an independent testing laboratory and
a statistician to evaluate the sheet counts of Millennium.
According to SQP's experts, whose testimony was proffered via
affidavit, Millennium rolls consistently fall below 2500 and
1250 sheet counts, while Valay consistently meets the optimum
2500 and 1250 sheets per roll. The SQP results are described in
more detail below.
Morcon also tested both its Millennium and SQP's Valay.
Contrary to the findings set forth by SQP, Morcon sets forth,
via its expert's affidavit, testing results showing that
Millennium consistently meets its advertised sheet counts,
whereas Valay rolls consistently contain fewer sheets than