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Fertilizer Giant Scotts Sues Tiny Start-Up

An organic lawn and garden fertilizer manufactured by a New Jersey-based start-up company is popping up on store shelves across the country. TerraCycle fertilizer is made from liquefied earthworm excrement. The company now faces stiff competition -- in federal court. Scotts Miracle-Gro is suing TerraCycle for what it says are false claims and brand infringement.

Tom Szaky dropped out of Princeton a few years ago and went to work full-time manufacturing and marketing an all-natural fertilizer. From headquarters in Trenton, he's put several dozen people and millions of red worms to work.

"We really try to create a worm Utopia which is really humid dark and warm," Szaky. "They are the happiest worms out there. We try to keep it as ideal for them as possible."

Those worms produce the key component of TerraCycle fertilizer. It's liquefied, then packaged in rinsed-out, re-used plastic soft drink bottles, often gathered up by school children. Then the bottles are covered with a colorful plastic label, proudly emblazoned with the phrase Worm Poop across the front. More and more retailers are selling TerraCycle products and that, according to Szaky, is the reason Scotts is suing.

"I guess my opinion on why they're doing it is that we're taking major shelf space and becoming a threat," he says.

Not true, says Su Lok, spokeswoman at Scotts, a multi-billion-dollar global manufacturer with more than 5,000 employees. She says TerraCycle's claims about its organic products are false or misleading.

"Well for example TerraCycle has made some very broad claims that its products are more effective than synthetic chemical fertilizers such as Miracle-Gro," Lok says.

Lok also says TerraCycle's packaging is so similar to Miracle-Gro's that customers might be easily confused.

"It really doesn't matter the size of the company," Lok says. "Scotts has a long, established brand and we want to protect our brands and we take seriously the claims that are made about our products."

CEO Tom Szaky says TerraCycle, which has yet to earn a profit, is being bullied. As for the company's packaging, he says he does not understand how consumers could confuse one brand for the other.

"Quite frankly we're the anti-Miracle-Gro," Szaky says. "We're not chemicals. We're in a used soda bottle. It's worm poop. I don't know how you could be confused."

TerraCycle does not have an army of lawyers to defend the company says Szaky. But the Scotts lawsuit which was filed about a month ago has generated a lot of publicity for the start-up company which according to Szaky has spent less than a $1,000 on advertising this year.