Skinner Mfg. Co. v. General Foods Sales Co.

• Decision Date: 30 September 1943
• Docket Number: 361.,Civil Actions No. 345
• Citation: 52 F. Supp. 432
• Parties: SKINNER MFG. CO. v. GENERAL FOODS SALES CO., Inc. SAME v. KELLOGG SALES CO.
• Court: U.S. District Court — District of Nebraska

52 F. Supp. 432

SKINNER MFG. CO. v. GENERAL FOODS SALES CO., Inc.

SAME v. KELLOGG SALES CO.

Civil Actions Nos. 345, 361.

District Court, D. Nebraska, Omaha Division.

September 30, 1943.

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William Ritchie, M. J. Flannigan, and Edward F. Fogarty (Ritchie & Swenson), all of Omaha, Neb., and C. Earl Hovey, of Kansas City, Mo., for plaintiff in both cases.

Edgar M. Morsman, Jr., and Edgar M. Morsman, III (Morsman & Maxwell), all of Omaha, Neb., and Clifton Cooper, of New York City, for defendant General Foods Sales Co.

George L. DeLacy (Kennedy, Holland, DeLacy & Svoboda), of Omaha, Neb., Matthias Concannon and Lee J. Gary, both of Chicago, Ill., and Edwin L. Harding, of Battle Creek, Mich., for defendant Kellogg Sales Co.

DELEHANT, District Judge.

A single memorandum is being filed in these two cases. That course seems to be appropriate.

The court has no thought that the cases are identical either in their facts or in their issues. Although the same plaintiff seeks in both cases injunctive relief for the protection of the same asserted property right, it seeks that relief against distinct and separate defendants, who, besides being competitors of the plaintiff, are competitors of each other. It is also true that the precise competitive technique of the two defendants is clearly distinguishable. Moreover, as will presently appear, the issues by which the defendants severally seek to defeat the plaintiff's quest for relief are more numerous in one case than in the other.

Yet the cases admittedly have much in common. They were not tried as a single case, but during the trial of each case, counsel for the defendant in the other case remained in the court room as observers and not always as passive observers, and virtually all of the evidence submitted in the case first tried was introduced by stipulations in the course of the trial of the later one. Then, of necessity, the facts touching the plaintiff's production and marketing of its own product and the history of the breakfast cereal business in general are common to both cases and are established largely by the same or similar evidence. Factually, the cases differ chiefly in the separate activities of the two defendants in the production and marketing of their respective products. Finally, the conclusion which the court has reached and the grounds upon which it is based apply with identical consequences to both cases.

So, the court is satisfied that one memorandum should not only suffice in this instance but even be more in order than the unnecessary repetition, in separate statements, of facts and legal considerations common to both cases. In each case, comprehensive findings of fact, conclusions of law, and a judgment are being filed, which are wholly divorced from those of the companion case. No attempt will be made here to restate the facts of the cases in detail and with appropriate distinctions. The court will merely set out some of the more salient general facts, and state, without any attempt at adequacy in citation of authorities, some of the considerations which have chiefly prompted its final judgments.

The pleadings are voluminous in each case. They have been supported by thousands of pages of testimony and an almost disconcerting number of exhibits, the general instructiveness of which, however, is manifest. The court is under an acknowledged obligation to counsel for all of the parties who, with conspicuous diligence, industry and legal scholarship, have drawn to its attention virtually all of the extensive legal literature upon the subject involved, in many excellent briefs and written arguments. The authorities cited have been carefully examined by the court, although a fair appraisal of the appropriate length of a memorandum of this character forbids the citation of more than a few of them.

Basically, the relief sought in each case is the same — prevention, through injunctive process, of alleged unfair competition by the defendant against the plaintiff. The plaintiff in each case, Skinner Manufacturing Company, is a Nebraska corporation, engaged in the manufacture and sale of food products for human consumption. General Foods Sales Company, Inc., defendant in Case No. 345 (which will hereafter be referred to as "the General Foods case"), is a Delaware corporation, lawfully doing business in Nebraska, and is the wholly owned subsidiary and principal marketing instrumentality of General Foods Corporation, which is and for many years has been a major American food manufacturer, one of whose principal lines is the well known "Post's" group of cereal foods. Kellogg Sales Company, defendant in Case No. 361 (which will hereafter be referred to as "the Kellogg case"), is a Michigan corporation, lawfully doing business in Nebraska, and is the wholly owned subsidiary and principal marketing instrumentality of Kellogg Company, also a major American food manufacturer, which manufactures the Kellogg line of cereal foods, whose production was initiated by Kellogg Company's predecessors nearly forty years ago. In the general American food market, General Foods Company is the producer and marketer of a more diversified group of products than Kellogg Company, to which, however, it ranks second in the production of cereal products.

Originally, the plaintiff's business involved principally, if not always entirely, the manufacture and marketing of paste food products for human consumption with emphasis upon macaroni, spaghetti and egg noodles. In that field it achieved and now retains a prominent position. In 1925, and apparently on or shortly before June 13 of that year, it devised a food product consisting of a cereal content of flakes composed of whole wheat with added bran and a small quantity of salt, with which was mixed a quantity of California raisins. To the product the plaintiff applied the name "Raisin-Bran", which had not theretofore been employed for the identification of any breakfast cereal. The approximate proportions by weight of the finished product, were, whole wheat, 72% and added bran, 8%, with a small added amount of salt, rolled into flakes, and raisins, 20%. With only minor variations, largely in the character of wheat utilized in the manufacturing process, the product has remained unchanged, and its name has never been altered. From the time it was first produced, the plaintiff has continuously caused the product to be manufactured and packaged for it under successive contracts, by another Omaha, Nebraska, food manufacturer and has marketed it only in packages, never in bulk, on its own responsibility. That practice still continues.

After applying unsuccessfully in 1925 for the registration of the term, "Raisin-Bran" as a trademark under the act of February 20, 1905, as amended, Title 15 U.S.C.A. § 81 et seq., the plaintiff in 1926 applied for and procured registration under the act of March 19, 1920, Title 15 U.S. C.A. § 121 et seq.

Until the advent of the products of the defendants, the plaintiff encountered no competition in the American food market for its product known as "Raisin-Bran". No product of identical, or even similar, content (that is, a cereal base with added dried whole fruit) was marketed generally in the country, nor was the name or any approximation of it applied to any commercially marketed cereal food.

The distribution of the plaintiff's product was relatively small and narrow at first, but it grew steadily both in gross volume and in area. It has consistently been given wide advertising by various means, including, among many others, store displays, booklets in considerable variety, newspaper, bulletin and magazine publicity, publicizing games, contests, and trick devices and the like. In more recent years resort has been had to an elaborate and widely disseminated radio publicity campaign conducted principally through spot programs produced from carefully prepared script material. In all, the plaintiff's cost of advertising its product up to the trial of the Kellogg case in the summer of 1943 had exceeded $857,000, of which $118,000 was expended in 1941 and $228,000 in 1942. The sales of the plaintiff's product in dollar volume exceeded $1,500,000 in 1942, and $770,000 in the first five months of 1943. The plaintiff's operations in its "Raisin-Bran" product have been profitable to it and this result has been notably achieved during recent years.

At all times during its marketing of its product, the plaintiff has claimed to have a right to the exclusive use of the term "Raisin-Bran" in application to a commercially marketed breakfast cereal and it has endeavored to promote, foster and safeguard that claim. It has consistently avoided the prefixing of its corporate name, or any variation or abbreviation thereof, to the designation "Raisin-Bran" on its packages, in its printed advertising or in its radio publicity, and has quite uniformly insisted that its product be branded and referred to simply as "Raisin-Bran". Upon its packages it has always identified itself as the origin of the product by a clearly legible, though inconspicuous, legend, somewhat similar to that presently employed, namely, "An exclusive product distributed by Skinner Manufacturing Co., Omaha, Neb.", occupying upon the package a position subordinate to the prominent designation of the product simply as "Raisin-Bran". Wholesale grocers in price sheets, and retail grocers in local advertising to the retail trade, even before the advent of the competing products, frequently though not always advertised and since the beginning of competition quite uniformly advertise the plaintiff's product as "Skinner's Raisin Bran" or "Raisin Bran, Skinner's". But this practice appears consistently to have been discouraged by the plaintiff, and to have resulted from the merchandisers' fairly general practice of connecting maker and product in advertising. On two occasions, and then briefly,...