Takeaway
In short, this case holds that after patent protection expires, competitors may use the product’s generic name and its publicly known, functional form, so long as they take reasonable steps to distinguish their goods and avoid passing off.
National Biscuit Company, which had acquired the Shredded Wheat business and goodwill of earlier producers, sued Kellogg Company for unfair competition. National Biscuit claimed exclusive rights to the name “Shredded Wheat” and to the familiar pillow-shaped biscuit. It alleged that Kellogg’s use of the same name and shape enabled Kellogg to pass its product off as National Biscuit’s.
The product had originated under patents issued to Henry Perky. Those patents covered the shredded-wheat product, its manufacturing process, and machinery used to make it; a design patent also addressed the pillow-shaped form. The relevant patents had expired years before the suit. Kellogg resumed making shredded wheat in 1927 and sold it in cartons prominently bearing the Kellogg name.
The District Court dismissed the complaint, finding that “Shredded Wheat” was descriptive and generic and that National Biscuit had not proved passing off or deception. The court of appeals initially affirmed, but on rehearing reversed and ordered an injunction against Kellogg’s use of the name and its manufacture and sale of pillow-shaped biscuits. After the court of appeals clarified its mandate to make the injunction broader, the Supreme Court granted Kellogg’s petitions for certiorari.
Issue #1
Whether National Biscuit had an exclusive right to use “Shredded Wheat” as a trade name.
Holding
No. “Shredded Wheat” was the generic name of the article, and Kellogg was entitled to use it when selling that article.
Reasoning
The phrase described the product with reasonable accuracy and was the name by which the public generally knew the pillow-shaped biscuit. A generic term identifies the product itself, not its source, so the original producer could not acquire an exclusive common-law right in it.
The patents used “shredded” descriptively, and “Shredded Wheat” became the general designation for the patented product during the patent period. When the patents expired, the public received both the right to make the formerly patented article and the right to use the generic name necessary to market it. Otherwise, the former patentee could retain a practical monopoly after the patent expired.
National Biscuit did not establish secondary meaning sufficient to convert the generic name into an exclusive trade name. Although consumers may have associated shredded wheat with the Niagara Falls producer because it was long the sole manufacturer, National Biscuit failed to show that the term’s primary significance to consumers was the producer rather than the product.
Kellogg did not lose its public right by waiting until 1927 to compete. The right to make an unpatented article and call it by its generic name does not depend on prompt or continuous use. Kellogg’s remaining obligation was only to use reasonable care to identify its own product and avoid confusion.
Issue #2
Whether National Biscuit had an exclusive right to sell shredded wheat in the familiar pillow-shaped biscuit form.
Holding
No. The pillow shape, like the generic name, had entered the public domain upon expiration of the relevant patent rights.
Reasoning
The pillow-shaped form was the form in which shredded wheat had been made under the basic patent, and the machines used under that patent were designed to produce that shape. A design patent had also been sought for the form. Once the patent protection ended, the public was free to make the article in the form in which it had been publicly known.
A manufacturer cannot claim exclusive rights in a product form where the public primarily associates that form with the article rather than a particular producer. The same principle that denied exclusivity in the generic name therefore denied exclusivity in the pillow shape.
The evidence also showed that the pillow shape was functional: using another form would increase cost and diminish the biscuit’s quality. Kellogg accordingly had legitimate competitive reasons to use the established shape.
Issue #3
Whether Kellogg’s use of the generic name and pillow-shaped form constituted unfair competition or passing off.
Holding
No. Kellogg took reasonable precautions to distinguish its product, and the evidence did not show passing off or actionable consumer deception.
Reasoning
Fair competition required Kellogg to distinguish its goods reasonably from National Biscuit’s, not to abandon the generic name or public-domain shape. Kellogg’s cartons differed markedly in size, form, color, and labeling, and they prominently identified the product as a Kellogg product.
Although some Kellogg cartons displayed two biscuits in a bowl of milk, similar to one of National Biscuit’s registered marks, the prominent Kellogg name substantially reduced any likelihood of confusion. Kellogg’s use of the name and shape allowed it to share in the goodwill of the product category, but that goodwill belonged to the public once patent and trademark protection did not prohibit competition.
The possibility of confusion from biscuits served outside their cartons was too limited to establish unfair competition. Kellogg’s biscuits differed in size and appearance, nearly all food-service sales came in distinctive individual cartons bearing the Kellogg name, and marking each individual biscuit was not commercially feasible. The law required reasonable means to prevent confusion, not an absolute guarantee against it.
Issue #4
Whether the Court should decide whether Kellogg’s use of the image of two biscuits in a bowl independently infringed National Biscuit’s trademark.
Holding
No. That trademark-infringement question was not before the Court for review.
Reasoning
The court of appeals had tied its treatment of the image to its broader unfair-competition injunction against Kellogg’s use of the name and pillow shape. It had not independently enjoined the image as trademark infringement.
National Biscuit did not seek certiorari on the separate trademark question. The Supreme Court therefore confined its decision to the asserted rights in the name and product form and left the independent effect of the image mark unresolved.