Venn v. Goedert

• Decision Date: 07 August 1962
• Docket Number: No. 4-60-Civ.-269.,4-60-Civ.-269.
• Citation: 134 USPQ 442,206 F. Supp. 361
• Parties: Ruth L. VENN, d/b/a Swanson Cookie Co., and John B. Norman, d/b/a Norman Cookie Co., Plaintiffs, v. Andrew M. GOEDERT, Willmar Cookie Co., Inc., and Willmar Sales, Inc., Defendants.
• Court: U.S. District Court — District of Minnesota

206 F. Supp. 361

134 USPQ 442

Ruth L. VENN, d/b/a Swanson Cookie Co., and John B. Norman, d/b/a Norman Cookie Co., Plaintiffs, v. Andrew M. GOEDERT, Willmar Cookie Co., Inc., and Willmar Sales, Inc., Defendants.

No. 4-60-Civ.-269.

United States District Court D. Minnesota, Fourth Division.

August 7, 1962.

Melvin Orenstein and Richard J. Fitzgerald, Minneapolis, Minn., for plaintiffs.

Frank J. Warner, Minneapolis, Minn., and H. Leigh Ronning, Willmar, Minn., for defendants.

DEVITT, Chief Judge.

Plaintiff Venn brings this action for damages and injunctive relief, alleging breach of contract, appropriation of trade secrets, unfair competition in the palming off of defendant's cookies as those of plaintiff and common law trademark violation.

Swanson Cookie Company, Battle Creek, Michigan, and Ruth Venn, its sole proprietor, are in the business of enfranchising bakeries in a number of states and in Canada with rights to bake and sell "Archway Home Style" cookies. The franchised bakeries are afforded the use of plaintiff's recipes, formulas and techniques. In 1953, defendant Goedert and his partner, Arthur Fox, were enfranchised to make, sell, and distribute cookies under the Archway label in the States of Minnesota, North Dakota and South Dakota. Fox later sold his interests to Goedert, and Goedert subsequently assigned his franchise rights to the Willmar Cookie Company, Inc., of which he is the principal stockholder. In May of 1960, plaintiff terminated the franchise agreement with Willmar Cookie Co., Inc. Defendants then began selling cookies under the label "Gurley's" Home Style cookies.

Under the terms of the franchise agreement, the Willmar Cookie Company agreed that its right to the use of the Archway label, the formulas, recipes, and techniques would cease upon termination of the agreement.

Plaintiff Venn alleges that defendants continued to use her recipes, formulas and techniques after the termination date. Plaintiff also contends that the defendants engaged in unfair competition by "palming off" in that they similarly packaged the same kind of cookies and failed to notify their various distributors of the change from "Archway" to "Gurley" cookies, and that the distributors failed to notify the grocers of the change, and that the defendants, by implication, caused the distributors to advise the grocers that the Gurley cookies were the same as the Archway cookies.

John B. Norman, d/b/a Norman Cookie Company, is also a plaintiff, and he seeks damages and injunctive relief. He was granted a franchise by Swanson for the territory of Minnesota, North Dakota and South Dakota, following the termination of the contract between Swanson and Goedert. It is Norman's claim that he was unable to carry on his business profitably because of the alleged conduct of Goedert in producing and selling cookies made with Swanson recipes and because of the palming off of Gurley cookies for Archway cookies.

The defendants Goedert, Willmar Cookie Company and Willmar Sales, Inc., deny the claims and allege by way of defense that plaintiff terminated the franchise agreement; that defendants' "Gurley" cookie is similar to the "Archway" cookie, but made from a different recipe; that all recipes were changed immediately following the franchise termination; that all distributors were advised of the change in cookies and instructed to so advise their retail outlets. The defendants argue that there is no such thing as a secret cookie recipe, and thus there could be no appropriation of a trade secret. Defendants further contend that the Gurley label was different in color from the Archway label, had different wording and arrangement of words, and resulted in a distinctly different appearance from the markings on the packages of Archway cookies.

The requisite diversity of citizenship and jurisdictional amount exist.

The case was tried by the Court without a jury.

Considering first the claims of breach of contract and appropriation of trade secret, the Court was much impressed with the testimony of Adrian VanderVoort, for 28 years head of the Dunwoody Baking School. He said there is no such thing as a secret formula in the baking business today, and that most formulas can be duplicated. He examined the cookie recipes represented by plaintiffs' Exhibit 16 and defendants' Exhibit CCC in the fruit and honey, oatmeal, ice box and sour cream categories, and said that these sets of cookies, one of Archway and one of Gurley, were made from different recipes and were not made from the same recipe. This testimony conflicted with the statement of plaintiffs' witness, Albert P. VanderKloot, an analytical chemist, who said the cookies were made from the same recipes. VanderVoort also examined plaintiffs' Exhibit 93, a compilation made by plaintiffs' chemist, and said that all 7 sets of examples were made from different recipes.

The defendants offered their recipe book in evidence. The manager of defendants' bakery, Edward H. Leschke, said that effective May 23, 1960, the termination date of the franchise, Gurley cookies were made from all new recipes obtained from the Wesson Oil Company, from General Mills and from other sources. He said: "I changed every recipe" after May 23, 1960. John S. Hansen, salesman for General Mills, said that he furnished the defendants with many recipes, both from General Mills and from other sources.

There was other evidence on both sides of the issue, but suffice it to say that from all of the evidence it was not made to appear that plaintiff had a secret recipe for cookies, or that cookie recipes are of a unique quality. Nor was it shown by a preponderance of the evidence that defendants made their Gurley cookies from the Archway recipe. The plaintiffs have not proved their...