MERISANT COMPANY, Plaintiff, v. McNEIL NUTRITIONALS, LLC, and McNeil-PPC, Inc., Defendants, 515 F. Supp. 2d 509

Memorandum and Order GENE E.K. PRATTER, District Judge. Merisant Company, Inc. (“Merisant”) alleges that McNeil Nutritionals, LLC and McNeil-PPC, Inc. engaged in false and misleading advertising in violation of

Section 43(

a) of the Lanham Act, 15 U.S.C. § 1125, and in violation of the Pennsylvania common law of unfair competition. The parties have engaged in extensive discovery activities, leading to their submission of various

summary judgment motions as well as dueling Daubert motions. Specifically, the McNeil parties have filed a motion for

summary judgment, and Merisant moves for partial

summary judgment seeking to preclude McNeil from presenting an affirmative defense of “unclean hands.” In addition, Merisant and McNeil have each filed a motion alleging that testimony from one or more of the opposing party’s expert witnesses is inadmissible under Rule 702 of the Federal Rules of Evidence and pursuant to Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), and its progeny. McNeil filed a motion to exclude the testimony of Dr. James Fisher, and Merisant filed a motion to exclude the testimony of Dr. Steven Munger.

For the reasons detailed below, the Merisant motion concerning the unclean hands defense will be granted; the remainder of these specific motions will be denied. Factual and Procedural Background The following factual background appears in the parties’ respective, very thorough Statements of Facts presented in their Motions. Merisant is a privately held company that manufactures premium brands of artificial sweeteners, including Equal, NutraSweet and Canderel. Merisant’s Statement of Facts ¶¶ 1, 5. The sweetening ingredient in Equal is aspartame. Id. ¶¶ 2, 13; McNeil’s Statement of Facts ¶ 3.

The other ingredients in Equal are dextrose and maltodextrin. Merisant’s Statement of Facts ¶ 13. McNeil Nutritionals, LLC is a Delaware limited liability company with its principal place of business in Fort Washington, Pennsylvania. Compl. ¶ 7. McNeil-PPC, Inc. is a New Jersey corporation with a principal place of business in Skillman, New Jersey. Compl. ¶ 8. McNeil Nutri-tionals, LLC and McNeil-PPC, Inc. (collectively, “McNeil”) market and distribute an artificial sweetener under the brand name Splenda. McNeil’s Statement of Facts ¶ 4. The sweetening ingredient in Splenda is sucralose. Id.

Sucralose is an artificial sweetening ingredient that is made through a process that begins with sucrose, i.e., sugar, and then replaces three of eight hydroxyl groupings on the sucrose molecule with three chlorine atoms. Id. ¶ 5. The other ingredients in Splenda are maltodextrin and dextrose. Merisant’s Statement of Facts ¶ 17. Unaltered sugar/sucrose is not an ingredient in Splenda. Id. Conversely, Splenda does not contain unaltered sugar/sucrose. Id. The artificial sweetener industry has long considered concerns from consumers regarding the taste and health safety of artificial sweeteners.

McNeil’s Statement of Facts ¶¶ 12-14; Merisant’s Statement of Facts ¶ 36. In response to these concerns, manufacturers of artificial sweeteners have attempted to avoid using certain language, such as the term “artificial,” that may convey negative taste or health safety concerns. McNeil’s Statement of Facts ¶ 15. Instead, companies in the industry, including Merisant and McNeil, employ the term “no-ealorie sweetener” to describe their various artificial sweetener products.

Some manufacturers seek to position their products as “like” sugar, for example, by using imagery and language evocative of sugar in their advertising and marketing materials. Merisant’s Statement of Facts ¶¶ 36-38; McNeil’s Statement of Facts ¶¶ 16-21. Artificial sweetener companies use the phrase “tastes like sugar” to advertise and market their artificial sweeteners. McNeil’s Statement of Facts ¶21. Indeed, advertisements for artificial sweetener products often associate artificial sweeteners or their ingredients with items that occur in nature such as fruit, meat, grains or vegetables. Id. ¶¶ 22-30.

The Food and Drug Administration first approved sucralose for use as a food additive in 1998; and, in 1999, the approval was expanded to permit the use of sucra-lose as a general purpose sweetener. Id. ¶ 32. McNeil first introduced Splenda products for sale on a limited basis in April 1999, and, in September 2000, McNeil launched Splenda in retail stores throughout the United States. Id. ¶ 33. McNeil has devoted substantial time, money and resources — approximately $235 million in advertising and promotional materials from 2000 to 2006 — in an effort to create and develop a “unique brand identity” for Splenda.

Id. ¶¶ 34-36. McNeil “has worked to establish a brand identity for Splenda that capitalized upon the unique sugar origins and sugar-like taste of the product.” Id. ¶47. The exterior product packaging for all Splenda products sold in the United States since September 2000 have included a logo stating that Splenda is: “MADE FROM SUGAR, TASTES LIKE SUGAR.” Id. ¶ 49. Similarly, all Splenda No Calorie Sweetener individual serving packets in the United States include the phrase that Splenda is “MADE FROM SUGAR SO IT TASTES LIKE SUGAR.” Id. ¶ 50.

Since September 2000, all television commercials and print advertisements for Splenda has included the tagline “made from sugar so it tastes like sugar” or “Splenda tastes like sugar because it’s made from sugar.” Id. ¶¶ 51-52. Splenda is now the leading no-calorie sweetener, based on dollar sales, in the United States. Id. ¶ 44. Merisant was aware of Splenda’s “made from sugar, tastes like sugar” tagline on or around the September 2000 launch of Splenda. Id. ¶ 62. Merisant admits to being aware of Splenda’s tagline in 2000. Merisant’s Response ¶¶ 62-64.

Merisant contends that as of that time, it had not conducted any research to determine whether Splenda’s “made from sugar, tastes like sugar” tagline was misleading to consumers. Id. Instead, Merisant concluded that the “reasonable course was to raise the concerns with McNeil informally and attempt to resolve them outside the courtroom.” Merisant’s Statement of Facts ¶ 151. In April 2002, Arnold Donald, Merisant’s then-Chairman and Chief Executive Officer, sent a letter to Colin Watts, McNeil’s then-President, expressing Merisant’s concerns regarding Splenda’s marketing campaign.

McNeil’s Statement of Facts ¶¶ 64; Merisant’s Response ¶¶ 62-64. Mr. Donald wrote that in his view the Splenda tagline is “inherently false” because there was not a “causal relationship between the original sugar molecule and the resulting sugar-like taste of the sucralose molecule.” McNeil’s Statement of Facts ¶ 65. Mr. Donald wrote further that “stating that Splenda is made from sugar implied to consumers that Splenda is more natural and less artificial than competitive sugar substitutes.” Id. ¶ 66. Merisant claims that, at the time of the letter, Mr.

Donald did not have any data to support his personal beliefs about Splenda’s claims. Mer-isant’s Response ¶¶ 62-64. In May 2002, Mr. Watts responded to Mr. Donald to express his disagreement with Merisant’s suggestion that McNeil was promoting Splenda in a false or misleading manner. McNeil’s Statement of Facts ¶ 70. In his letter to Mr. Donald, Mr. Watts wrote that the claim “SPLEN-DA no calorie sweetener is made from sugar so it tastes like sugar” does not “falsely imply that SPLENDA is more natural than competitive sugar substitutes.”- 2d K. Clark Decl. Ex 105 at 1-2. In particular, Mr.

Watts wrote: SPLENDA never has been promoted as “natural.” It is identified as a “no calorie sweetener” in all advertising and promotional' materials that mention its sugar origin. This generic discriptor clearly indicates to the consumer that the product is in the category of artificial sweeteners. Moreover, the claim is not comparative, so there is no reason to believe that consumers will perceive an implied' claim that SPLENDA is more natural than other sugar substitutes. Id. at 2.

The parties exchanged further correspondence in late 2003 relating to Merisant’s concerns over Splenda’s marketing and brand positioning. McNeil’s Statement of Facts ¶¶ 72-73. Slightly more than four years after Splenda’s launch in the United States, Merisant concluded in the fall of 2004 that there was a likelihood of consumer confusion regarding Splenda’s advertising. Merisant’s Statement' of Facts ¶ 189. On October 22, 2004, Merisant sent a letter to the National Advertising Division of the Council of Better Business Bureaus (the “NAD”) challenging McNeil’s advertising for Splenda.

McNeil’s Statement of Facts ¶ 75; Merisant’s Statement of Facts ¶¶ 189. McNeil did not respond directly to Merisant’s NAD challenge. Rather, on November 18, 2004, McNeil filed a complaint against Merisant in the District Court for the District of Puerto Rico, seeking a declaratory judgment that McNeil’s advertising and marketing for Splenda was not false or misleading. McNeil’s Statement of Facts ¶ 76. One week later, Merisant filed its Complaint in this action. McNeil subsequently consented to the dismissal of its complaint in the Puerto Rico action. Id. ¶ 77.

Merisant’s Complaint includes five counts, four of which allege violations of

Section 43(a)(1)(

B) of the Lanham Act, 15 U.S.C. § 1125. Under the Lanham Act, Merisant argues that

(1) McNeil’s claim that Splenda is “Made From Sugar” is both literally and impliedly false, and is misleading, Compl. ¶¶ 47-50, (2) the claim that Splenda is “Made from Sugar So It Tastes Like Sugar” is literally false and misleading, id. ¶¶ 51-54,

(3) McNeil’s implied claim that Splenda is natural is false and misleading, id. ¶¶ 55-58, and (4) the implied claim that Splenda contains sugar is false and misleading, id. ¶¶ 59-62. Lastly,

(5) Merisant argues that McNeil’s advertising campaign and packaging, including the use of the Splenda logo and tagline, are misleading to consumers, and have caused actual consumer confusion and damage to Merisant in violation of the Pennsylvania common law of unfair competition. Id. ¶¶ 63-66.

In terms of remedies, Merisant seeks: • A permanent injunction against McNeil to forbid its use of a logo, tagline or statement on its Splenda product that is false and misleading, including but not limited to enjoining the use of the logo and tagline currently used by McNeil; • An order directing McNeil to institute a corrective advertising campaign of comparable size and scope to its existing advertising campaign, clarifying that Splenda is not sugar or natural, but is an artificial sweetener utilizing a synthetic chemical whose taste does not come from sugar; • An award of compensatory damages, including but not limited to damages for diverted sales and loss of goodwill and reputation; • An award of treble and other available exemplary damages, pursuant to 15 U.S.C. § 1117; • An award of all costs and expenses incurred by Merisant in connection with this action, including reasonable attorneys’ fees and disbursements; and • Any further relief that the Court deems just and proper.

Id. at 18-19. As indicated above, McNeil has filed a Motion for

Summary Judgment (Docket No. 107) in which it argues that (1) the equitable doctrine of laches should serve to bar Merisant’s claims in their entirety,

(2) McNeil is entitled to

summary judgment on Merisant’s “implied falsity” claim, and

(3) Merisant is not entitled to damages in the form of disgorgement of McNeil’s profits. Merisant has filed a Motion for Partial

Summary Judgment (Docket No. 108) seeking to preclude McNeil from presenting an affirmative defense of “unclean hands.” In addition, Merisant and McNeil have each filed a motion alleging that testimony from one or more of the opposing party’s expert witnesses is inadmissible under Rule 702 of the Federal Rules of Evidence and pursuant to Daubert and its progeny. McNeil filed a motion to exclude the testimony of Dr. James Fisher (Docket No. 106), and Merisant filed a motion to exclude the testimony of Dr. Steven Munger (Docket No. 109). The Court presided over oral arguments on all of these motions on January 30, 2007. The Court will address each of these motions in turn. I. Motions for

Summary Judgment A. Standard for

Summary Judgment

Summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). An issue is “genuine” if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A factual dispute is “material” if it might affect the outcome of the case under governing law. Id. The party seeking

summary judgment always bears the initial responsibility for informing the court of the basis for the motion and for identifying those portions of the record that it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where the non-moving party bears the burden of proof on a particular issue at trial, the moving party’s initial burden can be met simply by “pointing out to the district court that there is an absence of evidence to support the non-moving party’s case.” Id. at 325, 106 S.Ct. 2548.

After the moving party has met its initial burden, “the adverse party’s response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial.” Fed.R.Civ.P. 56(e).

Summary judgment is appropriate if the non-moving party fails to rebut by making a factual showing “sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322, 106 S.Ct. 2548. Under Rule 56, the Court must view the evidence presented in the motion in the light most favorable to the non-moving party. Anderson, 477 U.S. at 255, 106 S.Ct. 2505. B. Claims Pursuant to

Section 43(

a) of the Lanham Act

Section 43(

a) of the Lanham Act prohibits, inter alia, any false or misleading representation of fact that: in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or another person’s goods, services or commercial activities ... 15 U.S.C. § 1125(a)(1)(B).

To establish a Lanham Act claim, a plaintiff must show: (1) the defendant made false or misleading statements about its product; (2) there is actual deception or a tendency to deceive a substantial portion of the intended audience; (3) the deception is material in that it is likely to influence purchasing decisions; (4) the advertised goods traveled in interstate commerce; and (5) there is a likelihood of injury to the plaintiff, e.g., declining sales and loss of good will. Highmark, Inc. v. UPMC Health Plan, 276 F.3d 160, 171 (3d Cir.2001).

As our Court of Appeals has noted, a plaintiff may prove a Lanham Act violation in one of two ways: “[ejither the advertisement must be literally false, or it must be literally true but misleading to the consumer.” Id. (citing Castrol Inc. v. Pennzoil Co., 987 F.2d 939, 943 (3d Cir.1993)); see also Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharms. Co., 290 F.3d 578, 586 (3d Cir.2002) (“Liability arises if the commercial message or statement is either (1) literally false or (2) literally true or ambiguous, but has the tendency to deceive consumers.”).

The court stated: If an advertisement is literally false, the plaintiff does not have to prove actual consumer deception. If, on the other hand, an advertisement is literally true but misleading, the plaintiff must prove actual deception by a preponderance of the evidence. If a claim is literally true, a plaintiff “cannot obtain relief by arguing how consumers could react; it must show how consumers actually do react.” Highmark, 276 F.3d at 171 (citations omitted); see also Castrol, 987 F.2d at 943 (noting that a plaintiff must prove either literal falsity or consumer confusion, but not both).

As noted above, Merisant alleges that McNeil has made both literally and impliedly false claims in its advertising and marketing campaign for Splenda. C. McNeil’s Motion for

Summary Judgment McNeil’s Motion for

Summary Judgment contains three arguments. First, McNeil argues that all of Merisant’s claims are barred by the equitable doctrine of laches. Next, McNeil argues that it is entitled to

summary judgment on Meri-sant’s “implied falsity” claims. Finally, McNeil argues that Merisant is not entitled to disgorgement of McNeil’s profits, i.e., an “accounting of profits.” Merisant presents arguments addressing the merits of all three of McNeil’s claims. However, as a general matter, Merisant also argues that McNeil’s motion ignores “hotly disputed” facts in the record presented to the Court. Because of these disputes of material fact, Merisant argues that

summary judgment is inappropriate with respect to all of McNeil’s arguments. 1. Whether Merisant’s Claims are Barred by Laches McNeil argues that Merisant’s claims are barred in their entirety by the equitable doctrine of laches. Specifically, McNeil asserts that Merisant’s investors and executives were aware of McNeil’s “made from sugar” product positioning prior to the launch of Splenda in September 2000, yet Merisant waited until November 2004 before challenging McNeil in court.

McNeil argues that Merisant’s four-year delay, after becoming aware of Splenda’s product positioning in 2000 and then waiting to file suit in federal court in 2004 challenging that same positioning, should bar Merisant’s claims in their entirety on the grounds of laches. Laches is an equitable doctrine addressed to the sound discretion of the district judge. Univ. of Pittsburgh v. Champion Prods., Inc., 686 F.2d 1040, 1045 (3d Cir.1982) (citing Gruca v. United States Steel Corp., 495 F.2d at 1258).

Laches consists of two elements: (1) inexcusable delay in bringing suit, and (2) prejudice to the defendant as a result of the delay. Santana Prods. v. Bobrick Washroom Equip., Inc., 401 F.3d 123, 138 (3d Cir.2005). In this Circuit, laches will serve to bar both monetary and injunctive relief. Joint Stock Soc’y v. UDV N. Am., Inc., 53 F.Supp.2d 692, 712 (D.Del.1999), aff’d, 266 F.3d 164, 185 n. 12 (3d Cir.2001) (affirming holding that plaintiffs lacked standing to sue; appellate court did not reach the district court’s ruling on laches).

Laches “usually requires the kind of record only created by full trial on the merits” because “the correct disposition of the equitable defense of laches can only be made ‘by a close scrutiny of the particular facts and a balancing of the respective interests and equities of the parties, as well as of the general public.’ ” Country Floors, Inc. v. Gepner, 930 F.2d 1056, 1066 (3d Cir.1991) (quoting 2 J.

McCarthy Trademarks and Unfair Competition 573 (2d ed.1984)). “Laches may be properly applied so long as its application is equitable in light of the public’s interest in being free from confusion and deception.” Conopco, Inc. v. Campbell Soup Co., 95 F.3d 187, 193 (2d Cir.1996); see also Country Floors, 930 F.2d at 1066; Sara Lee Corp. v. Kayser-Roth Corp., 81 F.3d 455, 461-462 (4th Cir.1996) (setting aside the district court’s finding that laches barred the plaintiffs suit in part because the district court failed to consider the public interest in avoiding confusion between two similar trademarks). a.

Inexcusable Delay The first step in analyzing a laches claim is to determine which statute of limitations governs the plaintiffs claims. Whether the statute of limitations has run determines which party bears the burden of proof. See Gruca v. United States Steel Corp., 495 F.2d 1252, 1259 (3d Cir.1974) (“The length of delay, while not mandating the outcome, does control burdens of proof.”). Once the statute of limitations for a cause of action expires, the defendant “enjoys the benefit of a presumption of inexcusable delay and prejudice.” Santana Prods., 401 F.3d at 138.

Under this presumption, the plaintiff has the burden of proving both that delay was excusable and that it did not prejudice the defendant. Id. at 139. If the statute of limitations has not run, there is no presumption, and the defendant has the burden of proving both inexcusable delay and prejudice as a result of the delay. Merisant seeks to invoke

Section 43(

a) of the Lanham Act. The Lanham Act does not contain a statute of limitations. “Instead, the Act subjects all claims to ‘the principles of equity.’ ” Santana Prods., 401 F.3d at 135 (quoting 15 U.S.C. § 1117(a)). A district court must look to the most closely analogous statute of limitations under the law of state where the district court sits. Under Pennsylvania law, the six-year “catch all” statute of limitations under the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), 73 Pa. Stat. Ann. § 201-1 et seq., applies to claims under

Section 43(

a) of the Lanham Act. See Santana Prods., 401 F.3d at 137 (“The UTPCPL is the most analogous state cause of action that would encompass all claims brought under § 43(

a) of the Lanham Act.”). Therefore, and the parties essentially agree, the UTPCPL’s six-year statute of limitations applies to Merisant’s

Section 43(

a) claims. McNeil argues that Merisant waited four years before bringing its claims and concedes that this four-year period does not exceed the UTPCPL’s six-year “catchall” limitations period. Therefore, McNeil will not benefit from a presumption of inexcusable delay and prejudice, but bears the burden of establishing both elements. As noted above, McNeil launched the Splenda product in 2000.

McNeil contends that several months before the launch, Merisant’s institutional investors were aware that McNeil would likely promote Splenda using the phrase “tastes like sugar because it’s made from sugar,” and that they acknowledged that this tagline might be damaging to Equal. Def. Mem. Supp. 28. McNeil asserts that following Splen-da’s entry into the market, Merisant’s market share and profits fell steadily from 2000 to 2003, yet Merisant “did nothing whatsoever to try and stop McNeil’s supposed misconduct for more than four years after the product’s nationwide launch.” Def. Mem. Supp. 28-29.

Merisant denies that it “delayed” in bringing suit. Its main contentions in this regard appear to be as follows. First, when Splenda was first launched in 2000, Merisant recognized an inherent problem in McNeil’s advertising, but at that time saw no evidence illustrating “likely deception of a substantial portion of consumers.” PL Mem. Opp’n 14. Next, Merisant contends that McNeil’s advertising for Splenda changed, i.e., “evolved,” and considered that a lawsuit would not have been appropriate while the advertising for Splenda was in flux.

Merisant also argues that it faced a “David and Goliath” problem, but, it seems, without sufficient faith in its aim or, at least, in its financial wherewithal, in that a decision to sue McNeil would have essentially been a decision to also sue McNeil’s parent company, Johnson & Johnson, one of the largest and most well-capitalized companies in the world. Therefore, Merisant opted to contact McNeil informally. Merisant Statement of Facts ¶ 151. As described above, Merisant’s CEO sent a letter to Mr.

Watts at McNeil in April 2002, asking McNeil to determine the appropriateness of continuing to use advertising claims that imply that Splenda is more natural or less artificial than other sugar substitutes. Merisant Statement of Facts ¶ 153. At this point, Merisant argues that because it lacked “any actionable evidence of consumer confusion,” filing a Lanham Act lawsuit would have been premature. PI. Mem. Opp’n 15. At that time, other than to write the above-mentioned letter, Merisant “concluded that the reasonable course was to continue to observe the market and McNeil’s actions.” Id.

Merisant did not seek to conduct its own survey of consumers’ potential confusion over Splenda’s packaging or advertising. Instead, Merisant waited to see if McNeil would “take proactive steps to ensure that its Splenda advertising was not confusing.” PI. Mem. Opp’n 15-16. Merisant also cites McNeil’s “evolving advertising campaign.” PI. Mem. Opp’n 17. McNeil utilized a “Moon” advertising campaign that ran from January to February/March 2001 and from December 2001 to December 2002. Merisant apparently did not object to the “Moon” campaign, which it characterizes as a “classic” low calorie sweetener advertisement.

Id. In addition, McNeil’s “Moon” commercials contained the phrase “but its not sugar.” Id. Merisant argues that McNeil’s “Moon” campaign was not successful — possibly because consumers still (accurately) viewed Splenda as an “artificial sweetener” — so, as characterized by Merisant, McNeil switched gears in order to align Splenda more closely with sugar. In this regard, Merisant notes that McNeil launched new advertising in 2003 that included the phrase “made from sugar, tastes like sugar,” but excluded the phrase “but its not sugar,” which had been included the previous “Moon” ads.

Further, McNeil’s 2003 advertisements included the phrase “Think Sugar, Say Splenda.” PI. Mem. Opp’n 18. In response, McNeil notes that even though it may have changed its advertising campaign, the phrases “made from sugar, tastes like sugar” or “made from sugar so it tastes like sugar” have appeared on Splenda packaging since its inception in 2000. After these new commercials appeared, even though it was “concerned,” Merisant continued its forebearance and attempted to address the situation through a public relations campaign clarifying that Splenda is not natural.

Not surprisingly, McNeil was not pleased and contacted Merisant to deny that consumers were confused and to maintain that McNeil did not market Splenda as a natural sweetener. PL Mem. Opp’n 20. This denial allegedly led to Merisant’s decision to challenge McNeil’s advertising in the NAD in October 2004, which, in turn, led to the filing of this Complaint the following month. b. Prejudice McNeil claims that Merisant’s “delayed” suit would cause severe prejudice because McNeil has invested hundreds of millions of dollars in the development and expansion of the Splenda brand market positioning.

McNeil claims to have spent nearly $235 million through 2006 to promote Splenda, including its tagline “made from sugar, tastes like sugar,” which has become an integral part of Splenda’s brand identity. McNeil’s Statement of Facts ¶ 36. However, McNeil incurred only $125 million of this expenditure prior to the end of 2004, which means that McNeil spent another $110 million on its Splenda advertising campaign after Merisant commenced this suit. Id. ¶¶ 35-36. McNeil relies primarily on two cases from outside this Circuit to support its laches argument. In Conopco, Inc. v.

Campbell Soup Co., 95 F.3d 187, 190 (2d Cir.1996), Campbell launched an advertising campaign in 1988 touting the thickness of its Prego’s pasta sauces. Id. at 190. Campbell’s commercials showed a direct comparison between Prego and Conopco’s Ragu sauces, and portrayed Prego as thicker than Ragú. Conopeo knew about the advertising within weeks of its first airing but waited five years — until 1993— before filing suit. Id. However, Conopeo lodged a complaint with three major television networks in March 1989 and also filed a complaint with the NAD in 1991 before bringing suit. Id.

Even though Campbell made some modifications to its advertising following Conopco’s complaints, Conopeo still believed Campbell’s advertisements were misleading and filed its lawsuit in June 1993. Id. Campbell moved for

summary judgment on the basis of laches, but the district court denied Campbell’s motion, finding that issues of material fact remained in dispute. Id. Trial commenced to determine the appropriateness of injunctive relief, and at the close of Conopco’s case, Campbell moved for judgment on partial findings pursuant to Rule 52(

c) of the Federal Rules of Civil Procedure, again on laches grounds. Id. The district court granted Campbell’s motion and dismissed Conopco’s case. Id. The Second Circuit Court of Appeals affirmed. Id. at 195. With respect to the prejudice, the Second Circuit noted that Campbell had “committed massive resources to best exploit a marketing strategy which it chose a half dozen years ago.” Id. at 192.

Campbell sought a market position as the “thick” sauce by using “comparative advertisements.” The court noted that when Campbell launched its “thickness” campaign, other product positions were available to it, including marketing its products as the “healthy” or “economical” sauces. By waiting five years before bringing suit, Conopeo had precluded the possibility that Campbell could adopt an alternative marketing strategy. Id. The court concluded that this prejudice warranted invoking laches to dismiss Conopco’s claims. McNeil also relies on Hot Wax, Inc. v.

Turtle Wax, Inc., 191 F.3d 813 (7th Cir.1999), in which the parties were competitors in the automated carwash/car wax industry. Hot Wax suspected in the late-1970s that Turtle Wax had misrepresented the character and quality of its products, yet it waited until 1997 — over 20 years — before filing suit. Id. at 822. Hot Wax asserted that its delay should be excused because Turtle Wax’s “evolutionary advertising scheme” became misleading over the course of time and because Hot Wax needed time to conduct a chemical analysis of Turtle Wax’s products to prove that Turtle Wax was not actually a “wax.” Id. at 823.

In light of the record before it, including Hot Wax’s admissions during discovery, the court affirmed

summary judgment in favor of Turtle Wax. The court dismissed Hot Wax’s “excusable delay” arguments as post hoc, litigation-strategy rationalizations, stating that it would be inequitable for a company to idly sit by and see how successful its competitor would be before filing a lawsuit. Id. Like Conopeo, where the plaintiff also attempted to justify its delay by noting that it had lodged complaints with the media instead of immediately filing suit, the court in Hot Wax rejected a similar argument from Hot Wax that its delay was excusable due to its attempts to resolve its claims without litigation. Id.

Noting that Hot Wax sent a total of five letters to various recipients, including Hot Wax, concerning the marketing of Turtle Wax’s products, the court rejected this “sparse letter writing campaign,” finding that it was not a serious attempt at resolving its concerns. Id. at 824. As to prejudice, the Hot Wax court noted that Hot Wax had permitted Turtle Wax’s advertising to go “unchecked” between one and two decades, while Turtle Wax invested a significant amount of time and money to develop and promote its products. Id.

Also as in Conopeo, the Hot Wax court noted that had Hot Wax brought its claims sooner, Turtle Wax could have “invested its time and money in other areas or simply renamed its product.” Id. Citing the “extreme length of the unreasonable delay,” the appellate court affirmed the dismissal on laches grounds. Id. c. The Public Interest and “Unclean Hands” as a Defense to Laches Merisant claims that because McNeil “intentionally and egregiously deceived consumers,” triable issues of fact exist as to whether McNeil can assert the equitable defense of laches.

Merisant claims one who acts inequitably cannot rely on an equitable defense. See Monsanto Co. v. Rohm & Haas Co., 456 F.2d 592 (3d Cir.1972) (“The guiding doctrine in this case is the equitable maxim that ‘he who comes into equity must come with clean hands.’ This maxim is far more than a mere banality. It is a self-imposed ordinance that closes the doors of a court of equity to one tainted with inequitableness or bad faith relative to the matter in which he seeks relief, however improper may have been the behavior of the defendant.”); W. Indian Sea Island Cotton Ass’n v.

Threadtex, Inc., 761 F.Supp. 1041, 1051 (S.D.N.Y.1991) (“In order to prevail on a laches defense, a defendant must establish his own good faith. Thus, a defendant claiming laches ‘must be able to demonstrate the absence of any intent to confuse and deceive the public ....”) (citations omitted). Courts have refused to accept a defendant’s laches defense when an issue of fact remained as to the defendant’s good faith. See W. Indian Sea Island Cotton Ass’n, 761 F.Supp. at 1051 (dismissing defendant’s motion for

summary judgment on laches grounds where the plaintiffs raised factual questions as to defendants’ good faith); but see Hot Wax, 191 F.3d at 826 (rejecting plaintiffs assertion that defendant’s laches defense was barred by its own “unclean hands” and declining “effectively to preclude the application of laches whenever a dispute of fact regarding the merits of a Lanham Act claim existed because ... conceivably all suits involving Lanham Act claims could involve accusations of fraudulent or deceptive conduct.”).

The Conopeo and Hot Wax courts considered the plaintiffs “public interest” claims and rejected them in both cases. In Conopeo, the court noted that the “public’s interest is especially significant when health and safety concerns are implicated, as with the advertising of over the counter medications.” Conopco, 95 F.3d at 194. However, the court noted that “while public health and safety concerns may well overwhelm other considerations in the application of laches,” in a misleading advertising case involving the thickness of pasta-sauce, such an outcome was not dictated. Id.

The Hot Wax opinion addressed both concerns of “public interest” and the plaintiffs assertion that the defendant’s “unclean hands” should bar use of the laches defense. The court noted that the defendant had offered evidence that purchasers of these products are satisfied by the performance of Turtle Wax. In response, the plaintiff could not provide any evidence to contradict this claim. Hot Wax, 191 F.3d at 827.

The court stated that, “[g]iven the fact that there has been no clear showing that the marketing of Turtle Wax’s products has had or is having a negative impact on the public interest, we conclude that the public interest does not stand in the way of the application of the doctrine of laches in the present case.” Id. Conopeo and Hot Wax, while not prece-dential in this Circuit, provide some guidance in this case. These two cases certainly cut against Merisant’s positions in certain respects and are distinguishable in others.

The length of the delay at issue here (four years) is closer to Conopeo (five years) than to Hot Wax (20 years).

As the court in Hot Wax noted, as the years add up,-the delay can become-more and more “inexcusable.” Even though four years is within the most closely analogous statute of limitations in this case, four years is not an inconsequential period of time in the commercial arena, especially for a large company (or a smaller company with a sizeable corporate parent) who endeavors to launch a new product on a nationwide scale, complete with a novel brand positioning, new packaging and print and television advertising, etc.

A four-year delay can be severely prejudicial when a company builds its entire product image and market positioning on a very specific advertising campaign, as McNeil has done with its Splenda campaign. As McNeil attests, it spent hundreds of millions of dollars over a period of a few years to develop and launch Splenda as a new entrant in an already highly competitive market. McNeil notes that some form of the “made from sugar” tagline appears on every package or individual packet sold, and that it has invested over $230 million on promoting its “made from sugar” image.

In other words, this case does not involve merely canceling a single television commercial if it is found to be misleading. McNeil argues that a successful outcome for Merisant would essentially derail Splenda’s entire, “ubiquitous” identity- Further, Merisant’s assertions that it was waiting to see how McNeil’s advertising would “evolve” and that it attempted to resolve its dispute with McNeil informally through correspondence or administrative complaints, were similarly rejected in either Conopeo or Hot Wax as insufficient excuses for a delay in bringing suit.

However, Conopeo is also distinguishable from this case in a different fashion because in Conopeo, Campbell’s advertising directly targeted Conopco’s competing product. Therefore, one could argue that the impetus was on Conopeo to defend itself against a direct attack and that Co-nopeo did sit on its rights too long by waiting five years, to sue. However, McNeil’s ads at issue here do not directly target Merisant or any other competitor. Instead, McNeil’s ads tend to distance McNeil from the other artificial sweetener manufacturers completely.

The criticism against McNeil is that it chose to position Splenda as competing with sugar, and not as competing directly against other artificial sweeteners. There is nothing per se misleading about this approach. Indeed, all table-top artificial sweeteners effectively compete, in some respects, against both sugar and the other artificial sweeteners on the market. This approach can become misleading, however, when a company creates the false perception among consumers that an artificial product is, in fact, sugar. That is what Merisant argues here.

Furthermore, while McNeil contends that Merisant cannot idly sit by and wait to see whether Splenda would be successful before deciding whether to sue, there is a legitimate difference between waiting to see whether an advertising campaign would be successful and waiting to see whether the same campaign would be misleading to consumers. In addition, in contrast to Conopeo, where the court dismissed the plaintiffs invocation of concerns to the public interest because “health and safety concerns” were not implicated in that case, such concerns are potentially implicated here. Conopco, 95 F.3d at 194.

While Merisant does not argue that Splenda is unhealthy or unsafe, as a general matter, it is important that consumers, including individuals with diabetes or other dietary restrictions, know whether the food products they purchase contain sugar, are “natural,” or are artificial. The facts surrounding Merisant’s alleged “delay” remain in dispute. The subjectivity that necessarily is an ingredient in the recipe of delay may be reason alone to leave this issue for a jury’s evaluation of the pertinent witnesses. The Court will not rule, that this juncture, that Merisant’s delay was “inexcusable” as a matter of law.

As a. matter of principle, however, the Court does not see that a company is bound to rush to court immediately upon becoming aware of a competitor’s potentially misleading advertising claim, on the assumption that such advertising may cause injury to it or the public interest. There is some credence to Merisant’s argument that before a product is launched, and even in the early stages of developing, advertising and marketing a product, it would be difficult (if not impossible) to determine whether a certain aspect of a product’s advertising would engender actual confusion among consumers.

Further, it may well not be prudent to sue a competitor over an advertising campaign that is still in flux, or a campaign that has not had even marginal success such that it could not have caused any actionable injury. There are certainly competing concerns here. For one, if McNeil’s advertising for Splenda is truly misleading, and if Meri-sant offers evidence that McNeil intended to mislead consumers, then its seems that principles of equity should prevent McNeil from successfully asserting a laches defense.

If, on the other hand, the facts reveal that McNeil simply succeeded in creating a revolutionary, highly lucrative marketing strategy, and Merisant only chose to sue McNeil once Merisant saw that McNeil’s strategy was clearly successful, then a laches defense is appropriate. Ultimately, whether to apply the doctrine of laches is a matter of the Court’s discretion. In Conopeo and Hot Wax, both courts noted that the plaintiff had not carried its burden of showing that the defendant had acted to deceive the public.

In this’case, however, Merisant has offered evidence that could permit a trier of fact to conclude that McNeil intended to manipulate impermissibly the public’s opinion as to Splenda’s characteristics. Our Court of Appeals approvingly cited the Supreme Court’s acknowledgment, in a patent infringement case, that the “ ‘guiding doctrine’ ” in matters of equity is the maxim that “ ‘he who comes into equity must come with clean hands.’ ” Monsanto, 456 F.2d at 598-99 (quoting Precision Co. v. Automotive Co., 324 U.S. 806, 814-16, 65 S.Ct. 993, 997, 89 L.Ed. 1381 (1945)).

The Supreme Court noted that this maxim “is a self-imposed ordinance that closes the doors of a court of equity to one tainted with inequitableness or bad faith relative to the matter in which he seeks relief,” and requires that the party seeking equitable relief “shall have acted fairly and without fraud or deceit as to the controversy in issue.” Precision, 324 U.S. at 814-15, 65 S.Ct. 993. Further, the Supreme Court stated that “[t]his maxim necessarily gives wide range to the equity court’s use of discretion in refusing to aid the unclean litigant.” Id. at 815, 65 S.Ct. 993.

In light of this judicial guidance, the Court finds that Merisant has offered sufficient evidence that raises genuine disputes of material facts as to whether McNeil’s hands are “unclean.” For example, in stark contrast to the story McNeil tells, in which Merisant is described as idly sitting by while McNeil builds Splenda’s product identity and erodes Merisant’s market share, Merisant describes a veritable “Sugargate” scenario.

As Merisant’s story follows, McNeil set out to intentionally deceive consumers into believing that Splenda is a natural product, McNeil lied to Merisant and other companies about its intentions in marketing Splenda, and initiated a “cover up” to eliminate any evidence that it intended to convey the misimpression that Splenda is “not an artificial product.” Merisant provides evidence that McNeil sought to “align” Splenda with sugar, and sought to communicate the message that Splenda was “natural” and to promote the misconception that Splenda “is not artificial.” Merisant’s Statement of Facts ¶¶ 152, 154; 2d Clark Deck Ex. 103.

An advertising presentation prepared by an outside advertising consultant for McNeil Specialty Products Company, included among a list of “carefully considered decisions,” the decision to “positions [sic] Splenda as ‘not artificial.’ ” 2d Clark Decl. Ex. 23 at EMCN-MER 810530. This presentation offered: Splenda: Think of it as sugar without the calories. — Strong “natural, ” “healthy” playback — Significant distance from “artificial sweeteners” Id. at EMCN-MER 810534.

According to Merisant, McNeil knew that it could not directly state to consumers that Splenda is natural, because Splenda is not a natural product, but that McNeil needed to allow consumers to “infer” the “naturalness” of Splenda. 2d Clark Deck Exs. 26, 34. Merisant cites to internal McNeil documents or third-party documents provided to McNeil that indicate that, at the very least, McNeil was aware that the perception existed among consumers that Splen-da was “natural” or was “not an artificial sweetener.” 2d Clark Deck Ex.

Ill at EMCN-MER 29008 (“Sugar sourcing for Splenda implied for many that it is: More natural.”); id. (listing under the “Identifying Some Less Positive Perceptions,” the statement, “[a]t the same time, ‘made from sugar’ caused some to be unclear as to whether: Splenda is truly natural."). Merisant argues that despite McNeil’s attempt to imply that Splenda was natural, in response to the April 22, 2002 letter from Merisant’s Mr. Donald, McNeil’s president Mr. Watts stated that “SPLEN-DA never has been promoted as ‘natural.’ ” 2d Clark Deck Ex. 105 at EMCN-MER 255963.

Further, Merisant asserts that not only had McNeil intended to promote Splenda as natural, but that there is evidence that McNeil had been successful in doing exactly that. Shortly after Mr. Watts responded to Mr. Donald, a Splenda “Business Update” noted that the attribute “not an artificial sweetener” was among the “largest gains post-media” for Splenda. 2d Clark Decl. Ex. 106 at EMCN-MER 23157. With respect to an alleged “cover up,” Merisant notes that McNeil had regularly polled consumers as to whether “not an artificial product” was an attribute that consumers associated with Splenda.

At some point in the fall of 2002, however, McNeil “drop[ped] the attribute ‘Is not an artificial product’ ” from its tracking study “for legal reasons.” 2d Clark Decl. Ex. 107; see also 2d Clark Decl. Ex. 54 at 95:14-96:16; 2d Clark Decl. Exs. 108-109 (removing a similar attribute from another tracking survey). McNeil vigorously disputes all of Meri-sant’s characterizations as to its allegedly deceptive intentions and misrepresentations.

Whether McNeil intended to deceive consumers, prevaricate to Merisant and others about its intentions and its data on consumer perceptions of Splenda, and whether McNeil removed a specific attribute from its tracking surveys for legitimate legal or business reasons or “to avoid generating incriminating information,” as Merisant contends, are all factual matters that are disputed by the parties. These matters directly pertain to whether McNeil’s hands are “unclean,” and, thus, whether McNeil is entitled to equitable relief.

Too many facts are in dispute at this stage when the Court must view the evidence presented in the light most favorable to the non-moving party. Anderson, 477 U.S. at 255, 106 S.Ct. 2505. It will be difficult for a movant to prevail on laches grounds at the

summary judgment phase, without a complete factual record compiled after a trial on the merits, and after a “ ‘a close scrutiny of the particular facts and a balancing of the respective interests and equities of the parties, as well as of the general public.’ ” Country Floors, 930 F.2d at 1066 (quoting 2 J. McCarthy Trademarks and Unfair Competition 573 (2d ed.1984)). Because the factual record before the Court contains numerous hotly contested disputes of material fact,

summary judgment on the laches issue is inappropriate. Therefore, McNeil’s motion for

summary judgment on laches grounds will be denied. 2. Merisant’s “Implied Falsity” Claims Merisant argues that Splenda’s claim “made from sugar, tastes like sugar” is impliedly false, and violates

Section 43(

a) of the Lanham Act. Merisant asserts that this phrase implies to consumers that Splenda contains sugar or is a natural product. As noted above, “liability under the Lanham Act arises if the commercial message is literally true or ambiguous, but has the tendency to deceive consumers.” Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharms. Co., 290 F.3d 578, 586 (3d Cir.2002).

McNeil claims that the statements that Splenda is “made from sugar” and “tastes like sugar” are in fact literally true, and that they cannot reasonably be perceived to mean that Splenda “contains” sugar or is a “natural” product. Further, McNeil claims that Merisant’s only evidence in support of the implied falsity claim is composed of two surveys that address consumer perceptions of Splenda’s packaging only. Thus, McNeil claims that it is entitled to

summary judgment on Merisant’s implied falsity claims with respect to all ads other than the Splenda package, a. McNeil’s Television and Print Advertising McNeil argues because Merisant’s surveys only address consumer perceptions of Splenda packaging, and do not address any other aspect of McNeil's advertising or marketing campaign for Splenda, McNeil is entitled to

summary judgment on Merisant’s implied falsity claims with respect to all media other than the Splenda package. McNeil argues that it is “firmly established that a survey of how consumers perceive a particular advertisement (such as a product package) is not probative of how consumers may perceive other aspects of a company’s advertising or marketing campaign.” Def. Mem. Supp. 42. However, McNeil does not cite a single ease to supports this proposition as it relates to product packaging, which, conceivably, could appear in one form or another in all of its television or print advertising.

Moreover, McNeil directs this Court to no case that addresses the issue of a common, “ubiquitous” logo or tagline that is pervasive throughout its entire advertising or marketing campaign. By McNeil’s own admission, Splenda’s entire product identity is based upon, and McNeil has capitalized upon, Splenda’s “unique sugar origins.” McNeil Statement of Facts ¶47. On the first page of its Memorandum in Support of its Motion for

Summary Judgment, McNeil argues that the “centerpiece” of its “high-profile,” $235 million-plus advertising campaign for Splenda, are the claims that Splenda is “made from sugar” and “tastes like sugar.” Def. Mem. Supp. Summ. J. 1. McNeil notes that a “made from sugar, tastes like sugar” tagline or logo has appeared on every box of Splenda sold since September 2000, and a similar form of the tagline has appeared on every yellow Splenda packet sold and in every print advertisement that McNeil has published and in every television commercial it has aired.

See id. 1-2; see also McNeil’s Statement of Facts ¶ 49 (stating that all exterior product packaging for Splenda sold in the United States have borne the Splenda tagline that Splenda is “made from sugar, tastes like sugar”); id. ¶ 50 (stating that all Splenda individual serving packets sold in the United States have borne the Splenda tagline that Splen-da is “made from sugar so it tastes like sugar”); id. ¶ 51 (stating that all television commercials have included a similar Splen-da tagline); id. ¶ 52 (stating that all print advertising has included a similar Splenda tagline).

If a jury were to find that “made from sugar” is impliedly false on a product package, the Court would be hard pressed to find the logic in permitting McNeil to utilize the exact same claim in other forms of media. Therefore, McNeil’s motion for

summary judgment on Merisant’s implied falsity claims, as applied to all advertising and marketing materials other than Splen-da packaging, will be denied. b.

Merisant’s “Implied Falsity” Claim in General McNeil argues that the statement “made from sugar” is true, unambiguous and not susceptible to the implication that Splenda “contains” sugar or is “natural.” McNeil undertakes a two-pronged attack: first, McNeil argues that Merisant’s surveys do not present a statistically high “confusion” rate that meets the Third Circuit Court of Appeals’ threshold tests; second, McNeil argues that surveys should not be used to determine the meaning of words. i.

Merisant’s surveys do not demonstrate confusion McNeil argues that the survey evidence that Merisant intends to present does not demonstrate confusion among consumers about the meaning of “made from sugar.” Merisant’s burden is to prove that McNeil’s advertising has the tendency to deceive a substantial portion of the intended audience. Novartis, 290 F.3d at 590 (citing Johnson & Johnson-Merck Consumer Pharm. Co. v. Rhone-Poulenc Rorer Pharm., Inc., 19 F.3d 125, 129 (3d Cir.1994)).

Courts have acknowledged that a “confusion rate” of as low as 7.5% to 10% may be adequate while a confusion rate of 15% is almost always deemed sufficient. Id. at 594 (confusion rate of 15% was sufficient, acknowledging that the Second Circuit Court of Appeals had indicated that a 7.5% rate of confusion would suffice); Sara Lee Corp. v. Kayser-Roth Corp., 81 F.3d 455, 466-67 & n. 15 (4th Cir.1996) (15 to 20% confusion was sufficient to establish “actual confusion ... to a significant degree”); Goya Foods, Inc. v.

Condal Distribs., Inc., 732 F.Supp. 453, 457 n. 7 (S.D.N.Y.1990) (9 to 10% confusion rate was sufficient to demonstrate “meaningful evidence of actual confusion”). McNeil claims that the surveys conducted by Merisant’s expert, Dr. Ostberg, revealed that only 9% of respondents said that Splenda’s package conveyed that Splenda contains real sugar, and that only 4% thought that Splenda is a “natural” product. Def. Mem. Supp. 40. Merisant, on the other hand, claims that Dr. Ostberg’s surveys reveal that 28% of respondents said that Splenda “contains real sugar” and 44% said that Splenda is a “natural” product. PI.

Mem. Opp’n 27. McNeil explains that the 9% and 4% responses were as a result of open-ended questions, and that the 28% and 44% responses resulted from different, “highly leading closed-ended” questions. Def. Mem. Supp. 40, 41 n. 30. McNeil argued that if this issue proceeds to trial, McNeil will prove that Dr. Ostberg’s surveys were biased and suggestive. Id. at 41 n. 30. The parties’ dispute on this point, however, demonstrates that this issue is ripe for trial.

Because genuine issues of fact remain relating to the percentage of consumers (if any) that are “confused” by McNeil’s advertising — which is the crux of a impliedly false advertising claim under the Lanham Act —

summary judgment on this basis is inappropriate. ii. Surveys should not be used to define words McNeil presents a second argument that Merisant’s “implied falsity” claims should be dismissed, which is that surveys cannot be used in court to define words. McNeil argues that truthful and unambiguous statements are not susceptible to proof that they are misleading under the Lan-ham Act. Def. Mem. Supp. 47.

Despite the law in the Third Circuit that even if a statement is “literally true,” it may be prohibited if it “has the tendency to deceive consumers,” McNeil argues, essentially, that Merisant cannot use survey evidence to define the word “from” in the phrase “made from sugar.” Novartis, 290 F.3d at 586; Santana Prods., 401 F.3d at 136. McNeil heavily relies on Mead Johnson Co. v. Abbott Laboratories, 201 F.3d 883 (7th Cir.2000) in support of its argument.

In Mead Johnson, the Court of Appeals for the Seventh Circuit reversed the district court’s holding that the phrase “1st Choice of Doctors” was misleading and violated the Lanham Act. The court of appeals criticized the district court’s reliance on a survey that indicated that consumers understood the phrase “1st Choice of Doctors” to mean that a majority of doctors preferred the product when, in fact, only a plurality of doctors preferred the product. Id. at 884. The court identified a “deeper problem,” namely, “the use of a survey in the first place” to define a word. Id. at 886.

The court noted that consumer surveys are “accepted ways to probe for things such as confusion about the source of goods, for confusion depends on the effect of a phrase or trade dress on the consumer,” but “never before has survey research been used to determine the meaning of words, or to set the standard to which objectively verifiable claims must be held.” Id. at 885-86 (citations omitted).

The court cautioned against “interpreting ‘misleading’ to include factual propositions that are susceptible to misunderstanding,” but noted that a “ ‘misunderstood’ statement is not the same as one designed to mislead.” Id. at 886. In other words, semantics must be more than just semantics. McNeil would have the Court follow Mead Johnson and hold that a survey cannot be used to determine the meaning of the word “from” in the phrase “made from sugar.” McNeil claims that the phrase “made from sugar” is literally “true, unambiguous, and not reasonably susceptible to misinterpretation.” Def. Mem. Supp. 52.

Using the Mead Johnson rubric, McNeil’s argument presents the question whether a survey used to determine consumers’ confusion in perceiving the phrase “made from sugar” is akin to defining the word “first,” as in “first choice of doctors,” or closer to probing for confusion as to the “source of goods” by testing the “effect of a phrase or trade dress on the consumer.” Mead Johnson, 201 F.3d at 886. The phrase “made from sugar,” may seem simple enough, and may eventually prove not to be misleading to consumers, but it has spawned a epic battle among the parties over proper diction and syntax.

For example, McNeil claims that “made from sugar” clearly excludes the

interpretation that Splenda is sugar, or that Splenda is made with sugar. Made with sugar would mean that sugar is an ingredient listed on the package. Drawing upon an often effective rhetorical device, McNeil asks the question, how could a consumer interpret a product that is “made from sugar” and “tastes like sugar” as actually being sugar? Def. Mem. Supp. 52. McNeil offers as an illustration the phrase . “made in America.” Def. Mem. Supp. 52.

McNeil contends that a survey could not be introduced to prove that the phrase “Splenda is made in -America” is misleading because it is perceived by consumers as meaning that “Splenda is made in a facility staffed only by well-compensated union workers.” Id.

However, to tweak McNeil’s illustration, say McNeil employed the claim that Splenda is “made in America,” when, in fact, although the sugar cane used as the starting point in the process is grown in Louisiana, it is then shipped to a manufacturing plant in Mexico, where a “patented, multi-step process” is performed to produce the resulting no-calorie sweetener. Next, the no-calorie product it is shipped to Pennsylvania, where it is packaged in a bright yellow packages for sale as Splenda. What does “made in America” mean in this context?

Does it mean that every step in the manufacturing process is performed in America? Or just one step? Therein, perhaps, lies the rhetorical rub. However, while McNeil argues what the phrase “made from sugar” cannot reasonably be interpreted to mean, it does not present as strong an argument that the actual meaning of “made from sugar” is clear to consumers.

In fact, as McNeil employs the phrase, “made from sugar” means that Splenda is made through a patented, multi-step process that starts with sugar and converts it, by replacing “three of eight hydroxyl groupings on the sucrose molecule with three chlorine atoms,” into a no-calorie, non-carbohydrate sweetener. McNeil’s Statement of Facts ¶ 5. Even though “[a] court is permitted to find as a matter of law, without discovery to establish what consumers actually believed, that no reasonable consumer could be misled by the challenged advertising,” that is not the case here. Haymond v.

Lundy, 2001 WL 15956, at *4, 2001 U.S. Dist. LEXIS 54, at *12 (E.D.Pa. Jan. 5, 2001). The decision whether to follow Mead Johnson may turn on whether “made from sugar” is merely “misunderstood” or whether it was deliberately designed to be misunderstood and, hence, to mislead. If the Court determines that Merisant has produced enough evidence showing that McNeil attempted to mislead consumers about Splenda’s sugar origins, then Mead Johnson could not be followed.

In addition, if the Court determines that survey evidence is being used to determine broader consumer confusion than just the meaning of the word “from”, then again, Mead Johnson is inapposite. The disputed facts as to McNeil’s alleged intent to deceive consumers over the “sugar-origin” of Splenda are recited above. Those same disputes of fact preclude

summary judgment on Merisant’s implied falsity claims. Accordingly, McNeil’s motion for

summary judgment on Merisant’s implied falsity claims will be denied. 3. Disgorgement of McNeil’s Profits McNeil’s third and final argument in its Motion for

Summary Judgment is that Merisant is not entitled to damages of disgorgement of profits of McNeil, also known as “accounting for profits.”

Section 35(

a) of the Lanham Act provides that a plaintiff shall be entitled, “subject to the principles of equity, to recover (1) defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.” 15 U.S.C. § 1117(a). The Court of Appeals for the Third Circuit, following the Fifth Circuit Court of Appeals’ lead in Quick Technologies v.

Sage Group PLC, 313 F.3d 338, 349 (5th Cir.2002), held that in evaluating whether equity supports disgorging the losing party’s profits, a court should consider the following factors, including but not limited to: (1) whether, the defendant had the intent to confuse or deceive, (2) whether sales have been diverted, (3) the adequacy of other remedies, (4) any unreasonable delay by the plaintiff in asserting his rights, (5) the public interest in making the misconduct unprofitable, and (6) whether it is a case of palming off. Banjo Buddies, Inc. v.

Renosky, 399 F.3d 168, 175 (3d Cir.2005) (quoting Quick Techs., 313 F.3d at 349 (citations omitted)). A plaintiff may recover the defendant’s profits if (1) the defendant has been unjustly enriched, (2) the plaintiff sustained damages or (3) disgorgement of profits is necessary to deter infringement. Banjo Buddies, 399 F.3d at 178. The Court of Appeals noted, in a trademark infringement case, that it was preferable for the plaintiff to receive a “windfall” instead of the defendant, because the infringing defendant “would be unjustly enriched and other would-be infringers would be insufficiently deterred.” Id.

Further, “there is no requirement that the defendant’s profits approximate the plaintiffs damages.” Id. at 177. Merisant asserts that it will incur lost profits of $24 million as a result of McNeil’s allegedly false advertising and that McNeil will realize approximately $20.1 million in profits on sales allegedly diverted from Merisant by virtue of this conduct. Merisant also seeks to recover $176.1. million in profits that McNeil is alleged to have earned from all sources through 2006 as a result of its advertising.

McNeil claims that an accounting of profits is neither equitable nor appropriate here because it would result in a windfall to Merisant, it raises the risk of multiple recovery against McNeil from other lawsuits that are currently pending or, in the event that Merisant prevails in the lawsuits, other similar lawsuits that may follow, and that, in the false advertising context, accounting of profits is only appropriate when the subject advertisement specifically targets the plaintiff. Whether to award an accounting of profits to the plaintiff is a .decision that lies within the Court’s discretion.

See 15 U.S.C. § 1117(a). However, a decision that disgorgement of profits would be proper or improper here would be decidedly premature at this juncture. Even a cursory glance at the factors enumerated in Banjo Buddies undermines the argument that the Court could or should now conclude that disgorgement would be inequitable here. Merisant has alleged that McNeil intended to deceive the public, and that through McNeil’s alleged misconduct, Merisant’s sales have been diverted. These allegations, if somehow proven, would mitigate in favor of disgorging McNeil’s profits according to the Banjo Buddies calculus.

See Banjo Buddies, 399 F.3d at 175. Of course, McNeil aggressively disputes these allegations, and none of these issues have been yet decided by a trier of fact. As such, these are highly contested disputes of material facts that preclude the Court from granting

summary judgment on this issue. Therefore, McNeil’s motion for

summary judgment will be denied with respect to this claim. D. Merisant’s Motion for Partial

Summary Judgment on McNeil’s Second Affirmative Defense of Unclean Hands McNeil raises an affirmative defense of “unclean hands.” By asserting an “unclean hands” defense, McNeil argues that Merisant should be precluded from seeking relief because of its own “unclean” conduct. McNeil argues that, before Splenda was launched, Merisant and its predecessors “embarked on a strategy to emphasize the assertedly ‘natural components’ of their artificial sweeteners in order to differentiate their products from those of their competitors.” Def. Mem. Opp’n (Unclean Hands) 1.

McNeil argues that Merisant adopted a “natural” marketing position and used the word “nature” or other concepts in order to position its products as more natural and less artificial. McNeil cites the following instances of Merisant’s “unclean hands” conduct, with respect to Merisant’s Equal, NutraSweet, Same and Candarel Nature products: 1.Equal: Merisant highlights the fact that aspartame, the sweetening ingredient in Equal, is “made by joining two amino acids naturally found in wholesome foods like milk, meats and grains,” which are “foods we eat every day.” D. Sandler Decl. Ex. 7. 2.

NutraSweet: Merisant implies that NutraSweet is natural when it makes the comparative claim that “unlike saccharine, NutraSweet is the sweetener your body treats naturally.” Def. Mem. Opp’n (Unclean Hands) 5. 3. Same with Sugar: Merisant acquired an aspartame-based artificial sweetener named “Same,” which was available for sale in Puerto Rico. In 2003, a Merisant subsidiary introduced a product called “Same with Sugar” that used sugar as a bulking agent, even though, McNeil argues, sugar adds nothing to the product’s taste.

McNeil avers that Merisant launched “Same with Sugar” in a trade dress that was similar to Splenda, and included a logo that read “made with sugar.” McNeil cites certain documents that indicate that Merisant intended to launch Same with Sugar to gain a more “natural” positioning. 4. Candarel Nature: In January 2005, a Merisant subsidiary launched an artificial sweetener named “Cander-el Nature,” which is sold exclusively in Mexico. McNeil objects to the word “Nature” in the products name.

McNeil cites documents produced in this litigation that indicate that Merisant launched Candarel Nature in order to pursue a “natural” positioning for its artificial sweetener. A district court has wide discretion in refusing to aid unclean parties, and the Court is not bound by any formula which would limit that discretion. Haft v. Dart Group Corp., 841 F.Supp. 549, 577 (D.Del.1993). For a defendant to mount a successful unclean hands defense, the defendant must prove that the “plaintiffs conduct is inequitable and that it involves the subject matter of the plaintiffs claim.” Ciba-Geigy Corp. v. Bolar Pharm.

Co., 747 F.2d 844, 855 (3d Cir.1984). In the Third Circuit, a defendant asserting an “unclean hands” defense must introduce “clear, convincing evidence of ‘egregious’ misconduct.” Citizens Fin. Group, Inc. v. Citizens Nat’l Bank, 383 F.3d 110, 129 (3d Cir.2004). “Egregious misconduct” can take the form of “fraud, uneonscionability, or bad faith on the part of the plaintiff.” S & R Corp. v. Jiffy Lube Int’l, Inc., 968 F.2d 371, 377 n. 7 (3d Cir.1992); see also Sanofi-Aventis v. Advancis Pharm.

Corp., 453 F.Supp.2d 834, 856-857 (D.Del.2006) (rejecting the “unclean hands” defense and holding that although defendant put forth some evidence that plaintiffs may have had a competitive purpose in filing the action, “clear, convincing and unequivocal evidence” of “egregious” conduct was lacking); Highmark, 276 F.3d at 174 (“The equitable doctrine of unclean hands applies when a party seeking relief has committed an unconscionable act immediately related to the equity the party seeks in respect to the litigation.”).

Courts in this Circuit require the “nexus” between the plaintiffs alleged misconduct and the defendant’s conduct that is the subject of the plaintiffs action to' be “close.” Id.; Diamond Triumph Auto Glass, Inc. v. Safelite Glass Corp., 441 F.Supp.2d 695, 709 (M.D.Pa.2006) (quoting Highmark). Courts will apply the. doctrine of unclean hands “ ‘only for such violations of conscience ,as in some measure affect the equitable relations between the parties in respect of something brought before the court for adjudication.’ ” Highmark, 276 F.3d at 174 (quoting Keystone Driller Co. v. Gen.

Excavator Co., 290 U.S. 240, 245, 54 S.Ct. 146, 78 L.Ed. 293 (1933)); Pharmacia Corp. v. GlaxoSmithKline Consumer Healthcare, L.P., 292 F.Supp.2d 594, 610 (D.N.J.2003) (“[CJourts do not apply the unclean hands doctrine just because plaintiffs have engaged in some inequitable conduct; rather, the inequitable conduct identified by the defendant must evince a very close nexus to the defendant’s own misconduct that initially gave rise to the suit.”).

Finally, to establish a defense of unclean hands, the defendant must allege that the defendant was injured “as a result of the misconduct.” Pharmacia Corp., 292 F.Supp.2d at 610 (citation omitted); see also Santana Prods., 249 F.Supp.2d at 523 (requiring a defendant to show that the plaintiffs wrongdoing injured the defendant). The Third Circuit Court of Appeals has also held that injury to the public interest is a relevant consideration as well.

Citizens Financial, 383 F.3d at 129 (noting that “the extent of actual harm caused by the conduct in question, either to the defendant or to the public interest, is a highly relevant consideration”) (quoting Republic Molding Corp. v. B.W. Photo Utilities, 319 F.2d 347, 349-50 (9th Cir.1963)). Merisant argues that its past advertising highlighting certain “natural” aspects of its products was not “egregious,” “unconscionable” or “inequitable.” Merisant further argues that there is no nexus between McNeil’s “made from sugar” advertising, and the general “natural” advertising approach that McNeil challenges.

Finally, Merisant argues that there has been no injury — either to McNeil or to the “public interest” — that warrants imposing an “unclean hands” defense. 1.

Merisant’s Conduct is Not “Egregious,” “Unconscionable” or “Inequitable” McNeil advances a rather interesting argument in support of its “unclean hand” defense, in that it does not argue that Merisant’s conduct is “egregious,” “unconscionable” or “inequitable.” Rather, to oppose Merisant’s motion, McNeil presents the paradoxical argument that Merisant should be barred by its own “unclean hands” even though “neither the actions of Merisant nor those of McNeil in highlighting the origins of their products are wrongful.” Def. Mem. Opp’n (Unclean Hands) 2.

Indeed, McNeil specifically admits that Merisant has not engaged in inequitable conduct. See id. at 14 (“Consistent with Merisant’s Position, McNeil Believes that Neither Merisant Nor McNeil Has Engaged in Inequitable Conduct.”). McNeil contends, however, that if Meri-sant is permitted to bring its claims, “McNeil must be allowed to present to the jury Merisant’s own conduct, so that the jury may determine whether Merisant’s claims should be barred ... because it has long engaged in essentially identical behavior to that which it challenges.” Id.

However, the defense of “unclean hands” is not a mere “they did it too” defense, but instead serves as a shield against a plaintiffs claims when the plaintiff has engaged in “egregious misconduct.” See Citizens Financial, 383 F.3d at 129. Thus, McNeil finds itself in the peculiar position of not wanting to argue that Merisant’s past conduct is egregious, because that would seriously risk the implication that McNeil’s own “factually indistinguishable” conduct rises to the same level.

McNeil describes a total of four alleged instances of Merisant’s “unclean hands,” all four of which involve, McNeil argues, an implied claim that Merisant’s artificial products are “natural.” According to McNeil, Merisant touts Equal’s “natural” ingredients, and advertises the body’s ability to treat NutraSweet “naturally.” In addition, Merisant sells a product called “Same with Sugar” using the logo “made with sugar” on its packages, and a product called “Canderel Nature,” sold exclusively in Mexico, which is an artificial sweetener that uses sugar as a bulking agent.

However, McNeil goes on to essentially concede that the first two examples of Merisant’s “unclean hands” — its representations with respect to Equal and NutraSweet — are in fact true. McNeil admits that amino acids are found “naturally” in protein-containing foods, including meats, grains and dairy products. Merisant’s Statement of Facts (Unclean Hands); McNeil’s Response (Unclean Hands) ¶¶ 41-42. In addition, McNeil admits that the human body does metabolize aspartame, unlike saccharin and sucralose, into components that are also provided “naturally” by other foods.

Merisant’s Statement of Facts (Unclean Hands); McNeil’s Response (Unclean Hands) ¶¶ 40, 43^6. The parties dispute the propriety of addressing at all the advertising of Same with Sugar, a product sold by a Merisant subsidiary in Puerto Rico, and Canderel Nature, a product sold by a Merisant subsidiary in Mexico.

Merisant argues that only products that are sold in the United States are relevant to this case, such that products sold exclusively in Puerto Rico and Mexico, respectively, each of which is a consumer market that is distinct from the United States, cannot be used to support McNeil’s “unclean hands” defense. This geographical argument emanates from a discovery dispute between the parties that spans the past several years. During one of the parties’ numerous discovery disputes in this case, McNeil objected to providing documents from McNeil affiliates operating outside the United States. See J. Landis Decl. Ex. 6.

McNeil’s contention, which was conveyed in a March 23, 2006 letter from McNeil's counsel to Merisant’s counsel, was that “McNeil’s advertising claims in foreign markets are not [sic] simply not relevant to this case, which, again, focuses solely on McNeil’s advertising in the U.S. market.” Id. at 1-2. The parties raised this issue at an April 11, 2006 status conference before the Court.

The outcome of this dispute was that materials related to products sold in foreign countries are not relevant to this case and would not be discoverable, but that documents related to products sold in the United States are discoverable even if held by a foreign custodian. See J. Landis Deck Ex. 7. At oral argument on these motions, counsel for McNeil contended that McNeil objected to searching files of foreign custodians for relevant documents, but that documents related to products sold in foreign countries that were produced by custodians in the United States were produced during discovery and are relevant.

Jan. 30, 2007 Tr. 117:14-118:1. However, counsel for McNeil’s March 23, 2006 letter states the more appropriate position in this case, which is that “McNeil’s advertising claims in foreign markets are not [sic] simply not relevant to this case,” such that information and documents pertaining to products sold outside the United States are similarly irrelevant. J. Landis Deck Ex. 6. at 1-2.

Because documents and information related to products sold outside the United States are irrelevant to this law suit, any information related to Candarel Nature, which is not sold in the United States, but is sold by a Merisant affiliate in Mexico, is not admissible. With respect to Puerto Rico, McNeil argues that Merisant has attempted to position Same with Sugar as a “natural” product, by naming it “Same with Sugar, ” and by including on its packages a banner that reads “made with sugar” and images of sugar cane fields.

McNeil quotes a Merisant representative as stating that with Same with Sugar, the company hoped to convey a “more natural positioning.” McNeil’s Response (Unclean Hands) ¶ 103. However, a distinguishing feature of Same with Sugar is that it is made with 97.5% real sugar. Merisant’s Reply (Unclean Hands) ¶ 99; see also B. Lasky Decl. Ex. 11 (“A positioning statement that reflects a more natural image will be developed based on the fact that the formula is 97.5% sugar, but it costs less than other similar products.”).

Therefore, Same with Sugar’s banner that reads “made with sugar” is literally true because Same with Sugar is, in fact, made with sugar, i.e., it contains sugar. See B. La-sky Decl. Ex. 11 (“New ‘Same with Sugar’ is not made from sugar, it is made WITH sugar, and it costs less than other products”.). The package for Same with Sugar lists “sugar” as the first ingredient, along with “aspartame” and “acesulfame potassium.” B. Lasky Deck Ex. 8. The Court reiterates that McNeil does not argue that the labeling for Same with Sugar is false or misleading or that Merisant’s conduct in this regard is inequitable. See Def.

Mem. Opp’n (Unclean Hands) 18 (stating that “neither Merisant nor McNeil acts ‘inequitably’ or ‘egregiously’ by truthfully informing consumers that their products are ‘made from sugar’ (in the case of Splenda) or ‘made with sugar’ (in the case of Same with Sugar or Canderel Nature))”. The Court agrees. Naming a product, “Same with Sugar”, which is actually composed of 97.5% real sugar, is not misleading. 2.

Nexus Between Merisant’s Conduct and Its Claims McNeil states that it is “well established that a Lanham Act plaintiff may not on the one hand claim that a defendant has engaged in unfair competition, while at the same time engaging in conduct factually indistinguishable from that which it challenges.” Def. Mem. Opp’n (Unclean Hands) 18. However, in support of this “well established” principle, McNeil goes on to cite cases where the defense of unclean hands applied because the plaintiffs conduct was inequitable.

Furthermore, the cases McNeil cites describe conduct by the plaintiff that is nearly identical to the defendant’s allegedly violative conduct, so that by definition, if the defendant were to be found liable for its inequitable conduct then plaintiff should not be able to recover because its conduct was similarly inequitable. It is clear that the entire artificial sweetener industry wants to shy away from the perception that its products are, in fact, artificial.

In that regard, Merisant, McNeil and other companies highlight the “natural” components of their products, and the Court expects that the trial will surely include evidence in that regard. However, Merisant’s claims are very specific: that “made from sugar” is, in fact, impliedly false because it gives consumers the impression that Splenda contains sugar or is either natural or more natural than competitors’ products.

There is a difference between highlighting the “natural” aspects of a product and actually attempting to imply (falsely) that a product is, in fact, natural or made from an ingredient found in nature. Under Third Circuit precedent, the “nexus” between the defendant’s conduct and the plaintiffs conduct must be close. Merisant’s Complaint alleges five counts against McNeil.

Specifically, Merisant argues that the claim that Splenda is “made from sugar” is literally and impliedly false, the claim “made from sugar so it tastes like sugar” is literally and impliedly false, Splenda’s implied claim that it is natural is false and misleading, and Splenda’s implied claim that it contains sugar is false and misleading. Merisant challenges specific advertising slogans and argues that Splenda is not actually made from sugar, and that to state otherwise is to imply that Splenda contains sugar or is somehow a “natural” product.

However successful or unsuccessful Merisant’s claims eventually will be, the Court finds that the examples McNeil has provided of Merisant’s “unclean hands” conduct does not have a nexus that is close enough to McNeil’s conduct to survive

summary judgment. 3. Injury to McNeil, to the Public Interest McNeil argues that Merisant’s conduct has caused harm to McNeil and to the public. McNeil argues that the public has been injured because certain surveys indicate that consumers are deceived — or at least confused — by Merisant’s positioning of its artificial sweeteners as “natural.” Careful not to ove

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