CINCINNATI (AdAge.com) -- Gillette Co. has lost another legal round in its razor fight with Energizer Holdings? Schick -? one that will force it to spend an estimated $1.6 million to relabel millions of M3 Power razors on store shelves and in warehouses.
Will Not Change Wording Despite Court Injunction
Schick to Press for Punitive Damages in Trial Against Rival
A U.S. District Court in Connecticut ruled June 20 against Gillette on its motion seeking clarification of a prior May 31 injunction. In the prior ruling, the court ordered the company to stop using claims it said were literally false that the battery-powered vibrating razor raises facial hair, thus making it easier to cut.
Applies to 'stimulating hair'
Gillette said it believed the ruling applied only to animations and graphics that had previously been removed from ads and packages, not to the word claim that ?gentle micropulses stimulate hair up and away from skin.? The court on Monday said its injunction covers the word claim, too.
?We?re disappointed in the court?s decision,? a Gillette spokeswoman said. But she added: ?We?ll comply with the U.S. District Court order. We continue to stand by the claim that M3 Power provides the world?s best shave.?
In court filings, Gillette said there are about 3.2 million M3 Power packages on store shelves, backrooms and warehouses, plus another 1 million in its own warehouses and another 2.3 million partially completed packages that will need to be relabeled. Gillette estimated the cost at $400,000 for putting stickers on packages in its own supply chain and another $1.2 million to send people to stores to put stickers on inventory there.
The spokeswoman said Gillette already has re-stickered M3 Power packages in Germany following a ruling earlier this year in a similar case brought by Energizer but declined to comment on costs in Germany or the U.S. beyond what was in the court documents.
Gillette had stopped using the hair-raising claim in media ads prior to the ruling in May by the court, which said evidence showed the claim that M3 Power?s vibrations raise or change the angle of hair was false. But the court said that while Gillette provided no credible research proving the vibrations make hair extend out of the skin, Schick hadn?t met its burden of proving that claim false. Gillette based its continued use of the word claim on the hair-extension theory.
In its clarification, the court said, ?The use of the term ?up and away? in conjunction with the term ?stimulates? is literally false as it connotes an angle change.?
The $1.6 million in stickering costs could just be a down payment for Gillette in what?s proving a highly unusual false-advertising suit. While most injunctions against ad claims deemed false come within weeks or months of launch, this one came after M3 Power had been on the market more than a year in the U.S.
Energizer seeks damages
Now, Energizer is pushing ahead in its lawsuit, seeking compensatory damages for the estimated $20 million by which its own four-bladed Schick Quattro razor fell short of projected sales, something Energizer blames on M3 Power?s ad claims. Energizer is also seeking punitive damages equal to Gillette?s U.S. profits from M3 Power, which is the top-selling new home- or personal-care product of the past 12 months, according to Information Resources Inc.
But Energizer didn?t file its suit until early this year, after the German ruling had gone its way. In court papers, the company said the delay came because it couldn?t get its hands on an M3 Power razor until it hit store shelves last May, then needed to conduct months of tests to prove Gillette?s claims were false.
Energizer then filed suit in Germany first, it said in court documents, to mitigate the potential costs of litigation compared to filing in the U.S. ?We wanted to see what kind of evidence Gillette had before we went to trial in the U.S.,? an Energizer spokeswoman said, adding that it didn?t want to file suit here if Gillette had been able to prove its claims in Germany.
Other cases abroad
The Energizer spokeswoman said it also chose to file in Germany first because the injunction process is faster there and because it hoped Gillette would drop the claims in the U.S. if it lost in Germany. Schick also has won an injunction against M3 Power ad claims in Australia, though she said Gillette had defeated motions for injunctions in France, Belgium and the Netherlands. But she said Energizer is continuing its lawsuit in those countries, too, since the burden of proof is higher for an injunction than for a full trial.
Such delays can weigh against the ?irreparable harm? plaintiffs must show to get courts to grant injunctions, said Peter Raymond, partner with Reed Smith and head of that firm?s advertising practice. But he said the court found Energizer?s delay justified.
The only similar ruling is in a case where Mr. Raymond represented Millennium Import Co., importer of Belvedere vodka, in a false-advertising suit against Sidney Frank Importing?s Grey Goose. Millennium filed suit and won an injunction after Sidney Frank defied a ruling by the Better Business Bureau?s National Advertising Division. The injunction ultimately came five years after the first ad in question ran.
A litigious history
Damages in false-advertising suits rarely exceed the low millions, Mr. Raymond said. But most are settled shortly after an injunction is issued. That may not be the case this time, he conceded, as Energizer and Gillette have a long history of litigation over razors and batteries.
Even in cases that go to trial, however, he said proving how much impact any particular ad claim has on sales or profits is difficult.