Clorox stung with breach of contract suit

Bleach maker Clorox is facing claims that it breached a co-existence agreement with Mexican company Industrias AlEn by attacking its Cloralex brand.

The cleaning companies have co-existed in the US since 1995, with AlEn agreeing not to use any trademarks likely to cause confusion with the Clorox brand and Clorox vowing not to challenge any Cloralex trademarks.

But this year Clorox has sued AlEn for trademark infringement, filed a complaint with the International Trade Commission (ITC) and opposed two of its trademarks at the US Patent and Trademark Office (USPTO).

Under the co-existence agreement Clorox promised not to attack Cloralex unless AlEn failed to honour its contractual obligations, one of which is not using certain blue and red colours, as they are striking features of the Clorox brand.

In the actions filed this year, Clorox has claimed that the Cloralex Color bleach product, introduced in 2005, included shades of red and blue banned by the contract.

While the US company withdrew the federal lawsuit (filed in April) after AlEn changed its packaging, the ITC litigation (filed in July) and the USPTO oppositions (filed in April and July), against the Cloralex and Cloralex Home Professional trademarks, are pending.

In response AlEn, which filed suit on November 4, said the attacks at the ITC and USPTO constitute a breach of contract. It has demanded that the US District Court for the Northern District of California award it damages.

AlEn has also asked for a notice preventing Clorox from pursuing the ITC injunction, as well as clarification that Cloralex’s trademarks do not infringe or dilute Clorox’s.

In the suit, AlEn argues that Clorox’s claims at the ITC fail to acknowledge that the disputed packaging was changed.

The Cloralex name derives from the Spanish word “cloro”, meaning chlorine – a primary ingredient in Cloralex bleach – and the “ex” suffix, representing Mexico. It is popular among the Hispanic community in the US.

Until the last two years, relations between AlEn and Clorox have been harmonious, said David Bernstein, partner at Debevoise & Plimpton LLP, who is representing AlEn.

“In the past, Clorox has even made overtures to AlEn about possible collaborations,” he said.

But since 2011, when Clorox tried to cancel AlEn’s US trademark registrations for Pinol, and later sued for infringement of its Pine-Sol brand, the relationship has soured, Bernstein said.

“I don’t want to speculate, but maybe there is new management and it doesn’t like the 1995 coexistence agreement. Clorox’s CEO has talked about the importance of the Hispanic market ... maybe Clorox is trying to interfere with AlEn’s 50-year old brands so it can capture AlEn’s customers.”

But he added: “We are certainly happy to put the relationship on a more harmonious path and hope to resolve this in an amicable way. If we can resolve it out of court, there is no reason these brands cannot continue to coexist without confusion. If not, AlEn is prepared to see these cases all the way through to trial.”

There is a strong incentive for the parties to settle the case and avoid the uncertainties of litigation, said Chris Larus, partner at Robins, Kaplan, Miller & Ciresi LLP.

“But I imagine Clorox is concerned about the enforceability of a settlement agreement because this present dispute arose from a prior settlement agreement,” he added.

Anderson Duff, associate at law firm Wolf Greenfield, said he was surprised that Clorox had filed suit at the ITC, especially as the companies are involved in the pending Pine Sol dispute.

“I wonder whether there isn’t something going on in the back ground ... The parties have been communicating, so if Clorox thought AlEn was violating the agreement you would think they would have contacted them first.”

The Pine Sol dispute is continuing.

In-house counsel for Clorox could not be reached for comment.