Kellogg Co. v. National Biscuit Co.

Kellogg Co. v. National Biscuit Co.
Kellogg Co. v. National Biscuit Co.
	Supreme Court of the United States
Argued October 10, 1938; Decided November 14, 1938
Full case name	Kellogg Co. v. National Biscuit Co.
Citations	305 U.S. 111 ( more ) 59 S. Ct. 109; 83 L. Ed. 73; 1938 U.S. LEXIS 1137
Case history
Prior	Case dismissed in favor of defendant, Delaware district court, 1935; dismissal upheld, Circuit Court of Appeals, 1936; upon rehearing, dismissal vacated and mandate sent to district court, Circuit Court of Appeals, 1936; certiorari denied, U.S. Supreme Court (302 U.S. 733, 58 S.Ct. 120); injunction entered per mandate in favor of plaintiff, 1938, Delaware district court; mandate "clarified", Circuit Court of Appeals, 1938; certiorari granted, U.S. Supreme Court, 304 U.S. 586, 58 S.Ct. 1052.
Holding
	After a patent expires or becomes invalid, the patent holder cannot use unfair competition law to prevent a rival from selling goods of the same shape under the same (non-trademarked) name.
Court membership
	Chief Justice Charles E. Hughes Associate Justices James C. McReynolds · Louis Brandeis ; Pierce Butler · Harlan F. Stone ; Owen Roberts · Hugo Black ; Stanley F. Reed
Case opinions
Majority	Brandeis, joined by Hughes, Stone, Roberts, Cardozo, Black, Reed
Dissent	McReynolds, joined by Butler

Last updated May 05, 2020

Kellogg Co. v. National Biscuit Co., 305 U.S. 111 (1938), is a United States Supreme Court case in which the Court ruled that the Kellogg Company was not violating any trademark or unfair competition laws when it manufactured its own Shredded Wheat breakfast cereal, which had originally been invented by the National Biscuit Company (later called Nabisco). Kellogg's version of the product was of an essentially identical shape, and was also marketed as "Shredded Wheat"; but Nabisco's patents had expired, and its trademark application for the term "Shredded Wheat" had been turned down as a descriptive, non-trademarkable term.

The Court therefore "forcefully applied the principle that once a patent has expired, its benefits are to be freely enjoyed by the public."^[1]Kellogg has been called possibly "the Supreme Court's most versatile and influential trademark decision."^[2] It had a direct impact on the structure of the Lanham Act and is a "routine starting point for analysis in trademark opinions in lower courts."^[2]

Background

Inventor Henry Perky developed a shredded wheat machine and introduced the cereal in 1893; he was issued utility patents in 1895 on both the shredded wheat and on the machine. John Kellogg tasted a sample and commented that they were like "eating a whisk broom."^[3] Nevertheless, the cereal became successful, and Perky's company, the Shredded Wheat Company, continued to manufacture the product after he retired.

The Kellogg Company started manufacturing shredded wheat cereal in 1912 after Perky's patents expired; after the Shredded Wheat Company objected, Kellogg stopped manufacturing their version in 1919. The nature of the settlement is not clear.^[4] In 1927, the Kellogg Company resumed manufacturing shredded wheat, prompting a lawsuit from the Shredded Wheat Company; the lawsuit was settled. In 1930, the Shredded Wheat Company was acquired by the National Biscuit Company (later Nabisco), which again sued Kellogg, both in Canada and in the United States, for unfair competition.

Nabisco complained in its lawsuit about Kellogg's use of the term "Shredded Wheat"; the similarity of its cereal biscuits' shape to the Nabisco cereal biscuits; and Kellogg's use on the product box of a picture of two of the pillow-shaped cereal biscuits submerged in milk. The complaint about the picture was based on trademark law; the other two complaints were that Kellogg's was fraudulently trying to "pass off" its cereal as Nabisco's. Nabisco had previously failed in its attempt to register "Shredded Wheat" as a trademark, as the U.S. Patent and Trademark Office had rejected the registration, as descriptive.

Opinion of the Court

In a 7–2 opinion written by Justice Brandeis, the U.S. Supreme Court rejected Nabisco's arguments, and allowed Kellogg to continue to manufacture its shredded wheat cereal, and name it "Shredded Wheat".

On the protection of the cereal's shape, the Court decided that the shape was functional and that there was a right to copy it after its patent expired, as the use of unfair competition and trademark laws could otherwise be used to impede the ability of rivals to create any competitive product, even though the patent had expired.

On the picture of the two shredded wheat biscuits in the bowl of milk, the Court noted that "the name Kellogg was so prominent on all of the defendant's cartons as to minimize the possibility of confusion", and hence there was no fraudulent "passing off" of Kellogg's cereal biscuits as having been created by Nabisco.

On the use of the term "Shredded Wheat", the Court ruled that the term was generic and not trademarkable; and dismissed a claim by Nabisco that it had acquired a "secondary meaning" under case law.

The Court concluded:

Kellogg Company is undoubtedly sharing in the goodwill of the article known as 'Shredded Wheat'; and thus is sharing in a market which was created by the skill and judgment of plaintiff's predecessor and has been widely extended by vast expenditures in advertising persistently made. But that is not unfair. Sharing in the goodwill of an article unprotected by patent or trade-mark is the exercise of a right possessed by all - and in the free exercise of which the consuming public is deeply interested.^[5]

Justice McReynolds and Justice Butler dissented, writing that Kellogg was "fraudulently seeking to appropriate to itself the benefits of a goodwill built up at great cost by the respondent", which should be viewed as illegal.^[6]

Subsequent developments

Kellogg has become a foundation of the functionality doctrine, that product designs that are intrinsic to functionality cannot be protected under unfair competition or trademark laws, because this would impede the ability of competitors to make a rival product.^[7]

Trademark law was in a state of flux in 1938, when Kellogg was decided, and the U.S. Department of Justice sought to explicitly codify the Kellogg decision into law, as part of the Lanham Act.

One commentator maintained that one could properly—

...view Kellogg as vindication of the views that he [Brandeis] expressed in INS [v. AP]. That Nabisco had invested in the shredded wheat product did not give it control over the use of the pillow shape (or the term SHREDDED WHEAT); it had no property right against misappropriation of the shape after the expiry of the patents. Instead, Brandeis inquired [only] whether Kellogg had engaged in any acts of misrepresentation.^[8]

Related Research Articles

Breakfast cereal is a traditional breakfast food made from processed cereal grains, primarily in Western societies. Warm cereals like porridge and grits have the longest history. Ready-to-eat cold cereals, appearing around the late 19th century, are most often mixed with milk, but can also be paired with yogurt instead or eaten plain. Fruit or nuts are sometimes added. Many breakfast cereals are produced via extrusion. Some companies promote their products for the health benefits that come from eating oat-based and high-fiber cereals. In the United States, cereals are often fortified with vitamins but can still lack many of the vitamins needed for a healthy breakfast. A significant proportion of cereals are made with high sugar content. Many are marketed towards children, feature a cartoon mascot, and may contain a toy or prize.

Corn flakes, or cornflakes, is a breakfast cereal made by toasting flakes of corn (maize). The cereal was created by William Kellogg in 1894 for his brother John Kellogg. John Kellogg wanted a food that would be healthy for the patients of the Battle Creek Sanitarium in Michigan where he was superintendent. The breakfast cereal proved popular among the patients, but Will Kellogg wanted to add sugar to increase the popularity. John Kellogg did not approve of this, so Will Kellogg started his own company Kellogg Company to produce corn flakes for the wider public. A patent for the process was granted in 1896, after a legal battle between the two brothers.

Nabisco is an American manufacturer of cookies and snacks headquartered in East Hanover, New Jersey. The company is a subsidiary of Illinois-based Mondelēz International.

Weet-Bix is a high-fibre and low-sugar breakfast cereal manufactured in Australia and New Zealand by the Sanitarium Health Food Company.

Raisin bran is a breakfast cereal containing raisins and wheat bran. Raisin bran is manufactured by several companies under a variety of brand names, including the popularly known Kellogg's Raisin Bran, General Mills' Total Raisin Bran, and Post Cereals' Raisin Bran. This popular breakfast cereal is a staple in households all over the United States because of its advertised nutritional value.

Nutri-Grain is a brand of breakfast cereal and breakfast bar made by the Kellogg Company.

The Kellogg Company, doing business as Kellogg's, is an American multinational food manufacturing company headquartered in Battle Creek, Michigan, United States. Kellogg's produces cereal and convenience foods, including crackers and toaster pastries and markets their products by several well known brands including Corn Flakes, Frosted Flakes, Pringles, Eggo, and Cheez-It. Kellogg's mission statement is "Nourishing families so they can flourish and thrive."

Rice Krispies is a breakfast cereal marketed by Kellogg's in 1927 and released to the public in 1928. Rice Krispies are made of crisped rice, and expand forming very thin and hollowed out walls that are crunchy and crisp. When milk is added to the cereal the walls tend to collapse, creating the "Snap, crackle, and pop" sounds.

Triscuit is a brand name of snack crackers produced by Nabisco, which take the form of square baked whole wheat wafers. They were invented in 1900, a patent was granted in 1902, and the Shredded Wheat Company in Niagara Falls, New York, began production the next year.

Post Consumer Brands is an American consumer cereal manufacturer that makes Honey Bunches of Oats, Pebbles, Great Grains, Post Shredded Wheat, Post Raisin Bran, Grape-Nuts, Honeycomb, Frosted Mini Spooners, Golden Puffs, Oh's, Cinnamon Toasters, Fruity Dyno-Bites, Cocoa Dyno-Bites, Berry Colossal Crunch and Malt-O-Meal hot wheat cereal.

Cereal Partners Worldwide S.A. is a joint venture between General Mills and Nestlé, established in 1991 to produce breakfast cereals. The company is headquartered in Lausanne, Switzerland, and markets cereals in more than 130 countries.

Chex is a brand of breakfast cereal currently manufactured by General Mills. It was introduced in 1937 and was originally produced and owned by Ralston Purina of St. Louis, Missouri. The name "Chex" reflects the "checkerboard square" logo of Ralston Purina. The Chex product line was part of the Ralston portion of Ralston Purina, which was spun into Ralcorp in 1994. The product line was sold to General Mills in 1997. For many years, advertisements for the cereal featured the characters from Charles Schulz's Peanuts comic strip.

Sunshine Biscuits was an independent American baker of cookies, crackers, and cereals. The company, whose brand still appears today on a few products, was purchased by Keebler Company in 1996, which was subsequently purchased by Kellogg Company in 2000. Around that time, Sunshine Biscuits was headquartered in Elmhurst, Illinois, the same town in which Keebler was located until 2001.

International News Service v. Associated Press, 248 U.S. 215 (1918), also known as INS v. AP or simply the INS case, is a 1918 decision of the United States Supreme Court that enunciated the misappropriation doctrine of federal intellectual property common law—that a "quasi-property right" may be created against others by one's investment of effort and money in an intangible thing, such as information or a design. The doctrine is highly controversial and criticized by many legal scholars, but it has its supporters.

Shredded wheat is a breakfast cereal made from whole wheat formed into pillow-shaped biscuits. It is commonly available in three sizes: bite-sized, miniature, and original. Both smaller sizes are available in a frosted variety, which has one side coated with sugar and usually gelatin. Some manufacturers have produced "filled" versions of the bite-size cereal containing a raisin at the center, or apricot, blueberry, raspberry or cranberry filling.

Henry Drushel Perky was a lawyer, businessman, promoter and inventor. Perky is the inventor of shredded wheat.

Weetabix is a whole grain wheat breakfast cereal produced by Weetabix Limited in the United Kingdom. It comes in the form of palm-sized rounded rectangle-shaped biscuits. Variants include organic and Weetabix Crispy Minis (bite-sized) versions. The UK cereal is manufactured in Burton Latimer, Northamptonshire, and exported to over 80 countries. Weetabix for Canada and the United States is manufactured in Cobourg, Ontario, in both organic and conventional versions.

Raisin Wheats is a Kellogg's breakfast cereal available in the United Kingdom, made from shredded wholegrain wheat and filled with raisin. The cereal is made in bite-sized pieces measuring 3/4in x 1in and is packaged in boxes weighing 0.5 kg.

The misappropriation doctrine is a U.S. legal theory conferring a "quasi-property right" on a person who invests "labor, skill, and money" to create an intangible asset. The right operates against another person "endeavoring to reap where it has not sown" by "misappropriating" the value of the asset. The quoted language and the legal principle come from the decision of the United States Supreme Court in International News Service v. Associated Press, 248 U.S. 215 (1918), also known as INS v. AP or simply the INS case.

References

↑ David W. Carstens, Preemption of Direct Molding Statutes: Bonito Boats v. Thunder Craft Boats, 3 Harv. J.L. & Tech. 170 (1990).
1 2 Graeme B. Dinwoodie, "The Story of Kellogg Co. v. National Biscuit Co.: Breakfast with Brandeis", p. 1, Retrieved on 15 December 2008.
↑ Graeme B. Dinwoodie, "The Story of Kellogg Co. v. National Biscuit Co.: Breakfast with Brandeis", p. 3, Retrieved on 15 December 2008.
↑ Graeme B. Dinwoodie, "The Story of Kellogg Co. v. National Biscuit Co.: Breakfast with Brandeis", p. 5, Retrieved on 15 December 2008.
↑ Kellogg Co. v. National Biscuit Co., 305 U.S. 111, 122 (1938), Brandeis, J.
↑ U.S. Supreme Court, U.S. Supreme Court 301 U.S. 111, Kellogg Co. v. National Biscuit Co.
↑ Graeme B. Dinwoodie, "The Story of Kellogg Co. v. National Biscuit Co.: Breakfast with Brandeis", p. 22, Retrieved on 15 December 2008.
↑ Graeme B. Dinwoodie, The Story of Kellogg Co. v. National Biscuit Co.: Breakfast with Brandeis p. 29 (2005).

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[1] David W. Carstens, Preemption of Direct Molding Statutes: Bonito Boats v. Thunder Craft Boats, 3 Harv. J.L. & Tech. 170 (1990).

[dinwoodie1-2] 1 2 Graeme B. Dinwoodie, "The Story of Kellogg Co. v. National Biscuit Co.: Breakfast with Brandeis", p. 1, Retrieved on 15 December 2008.

[3] Graeme B. Dinwoodie, "The Story of Kellogg Co. v. National Biscuit Co.: Breakfast with Brandeis", p. 3, Retrieved on 15 December 2008.

[4] Graeme B. Dinwoodie, "The Story of Kellogg Co. v. National Biscuit Co.: Breakfast with Brandeis", p. 5, Retrieved on 15 December 2008.

[majority_opinion-5] Kellogg Co. v. National Biscuit Co., 305 U.S. 111, 122 (1938), Brandeis, J.

[opinion-6] U.S. Supreme Court, U.S. Supreme Court 301 U.S. 111, Kellogg Co. v. National Biscuit Co.

[7] Graeme B. Dinwoodie, "The Story of Kellogg Co. v. National Biscuit Co.: Breakfast with Brandeis", p. 22, Retrieved on 15 December 2008.

[8] Graeme B. Dinwoodie, The Story of Kellogg Co. v. National Biscuit Co.: Breakfast with Brandeis p. 29 (2005).