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SQP, INC. v. SIRROM SALES

February 14, 2001

SQP, INC., PLAINTIFF,
V.
SIRROM SALES, INC. AND MORCON, INC., DEFENDANTS.



The opinion of the court was delivered by: Hurd, District Judge.

MEMORANDUM-DECISION and ORDER

I. INTRODUCTION

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 plaintiff.

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 replied.

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.

II. FACTS

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 advertised count.

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).

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. (Ans.Ex. B.)

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 advertised. ...


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