The Snap, Crackle and Pop of IP protection

It is almost 80 years since Kellogg’s and the National Biscuit Company faced off at the US Supreme Court. At the centre of the dispute was the claim that Kellogg’s had ripped off National Biscuit’s Shredded Wheat breakfast product.

John Harvey Kellogg, who invented Corn Flakes, had said eating National Biscuit’s Shredded Wheat product was like “eating a whisk broom” after it was first introduced in 1891. But that did not stop Kellogg’s creating a rival product once National Biscuit’s patent covering the method of producing the Shredded Wheat product expired in 1927. National Biscuit, named Nabisco in 1971, filed a trademark infringement and unfair competition lawsuit in 1932. The US District Court for the District of Delaware dismissed National Biscuit’s claims, and on appeal the case went to the Supreme Court.

Kellogg’s landed a significant victory after the justices ruled 7-2 that the Shredded Wheat name was generic and that its pillow shape is functional. Justice Louis Brandeis, writing the majority opinion, ruled that the Shredded Wheat name was not eligible for trademark protection.

Brandeis said: “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 protected by patent or trademark is the exercise of a right possessed by all—and in the free exercise of which the consuming public is duly interested,” he added.

Professor of intellectual property law at the University of Oxford, Graeme Dinwoodie, described it as one of the most “versatile and influential trademark decisions” issued by the US Supreme Court. In his article “The Story of Kellogg Co v National Biscuit Co: Breakfast with Brandeis”, published in 2005, Dinwoodie said the case “had a direct impact on the structure of the Lanham Act ... and is a routine starting point for analysis in trademark opinions of lower courts”.

It is fair to say Kellogg’s has experienced various IP challenges in its 109-year history. The latest person to take on the mantle of protecting the company’s ideas is Jim Lewis, global IP counsel at Kellogg’s. Lewis joined the company in 2013 after spending 13 years at law firm Squire Patton Boggs, of which he was a partner for seven.

Tony the Tiger

Surveying Kellogg’s many brands, one can see the attraction for groups and businesses to attempt to cash in illegally on the company’s goodwill. Among the company’s key products are Special K, Rice Krispies, Fruit Loops, Frosties and Pringles, some of which are accompanied by much-loved mascots such as Tony the Tiger (Frosties) and Toucan Sam (Fruit Loops), not forgetting of course Snap, Crackle and Pop.

“Kellogg’s doesn’t face a lot of actual counterfeits of our core products in the marketplace,” Lewis says. Instead, the targets for counterfeiters “tend to appropriate the Kellogg’s brands and brands associated with our famous characters”.

Established in Battle Creek, Michigan in 1906, the company has grown to become a US institution, holding an important place on the average American home’s breakfast table. Its operations today are global and the company plays a big part in the world’s cereal marketplace. Its current market capitalisation is more than $23 billion.

Lewis’s role is to help maintain that success by protecting the very ideas that uphold the company’s key brands.

“I am responsible for managing the company’s global patent, trade secret and trademark portfolios and for anything else involving IP,” he says.

Lewis heads a global team scouring the planet for breaches of the company’s IP.

The success of protecting its brand relies on an important network of vigilant employees and “faithful customers” to detect infringements, he says.

“Our employees are extraordinarily protective of our brands and technology and I often learn of infringements through internal channels,” says Lewis.

“Our faithful customers also report infringements to us, through our consumer affairs department. We also work with a digital brand protection partner to detect and take action against internet infringements and website takedowns.

“We are an IP client to many law firms around the world and we find that they, too, are excellent eyes and ears for detecting patent and trademark infringements in faraway places,” he adds.

Monitoring 7,000 trademark registrations and around 1,000 patents and applications globally requires a culture of IP vigilance, from both staff and customers.

“While we hope still to avoid unnecessary patent litigation, I will be very interested to see how the UPC will change patent litigation in Europe."

Lewis says: “We maintain a very strong web of IP protection for our recipes, formulas, food preparation, packaging and machinery. Naturally, that web includes patents but trade secrets have always been a core element of our IP protection strategy.

“A lot of what makes our products so unique lies in our trade secrets, and by tightly maintaining them we’ve preserved the nuances that make our products so great,” he adds.

Cyber security

In the digital world, Kellogg’s has been involved in numerous Uniform Domain-Name Dispute-Resolution Policy disputes in 2015.

Cybersquatters seem to have taken advantage of the expansion of the new generic top-level domain (gTLD) system by registering Kellogg’s-related domain names. This year, Kellogg’s has successfully transferred addresses containing its registered trademarks that used the suffixes .email, .xyz, .club and .buzz.

Those four new gTLDs have proved to be among the most popular for internet users. But Kellogg’s may have to begin preparations for further abusive registrations. The Trademark Clearinghouse stated that in September and October .trading, .earth, .swiss and .sex were due to begin their sunrise period, while many more are due to flood the market. Alongside the English-language suffixes are the Chinese translations for .healthy, .information and .shop.

To address online concerns Lewis works with IP protection partners that specifically target abuses of its brands on the internet. Such abuses include the cybersquatting cases listed above that Kellogg’s dealt with this year.

"The success of the Frosties brand can be measured by the fact it retains a place at many people’s breakfast tables today."

Moving on to patent litigation, Lewis reports that he hasn’t been involved in much of it, but he is always prepared for potential lawsuits. He does, however, “anticipate that we will increasingly rely on our patent portfolio to gain competitive advantages”.

Lewis is also optimistic about the potential of the upcoming Unified Patent Court (UPC) to help patent owners.

“While we hope still to avoid unnecessary patent litigation, I will be very interested to see how the UPC will change patent litigation in Europe.

“The prospect of addressing patent issues in a single forum is, of course, immensely attractive,” he adds.

The new system will enable companies to obtain a single unitary patent covering the 27 participating nations (Spain excluded). For the UPC to come into effect, 13 of the 27 states have to ratify with the agreement; the signatures of France, Germany and the UK are mandatory.

So far, eight countries have ratified the agreement: Austria, Belgium, Denmark, France, Luxembourg, Malta, Portugal and Sweden. In May, many had thought the Court of Justice of the European Union’s dismissal of Spain’s challenge to the legality of the UPC would clear the way for its implementation, but in the same month, the UK Conservative Party won a surprise majority in the general election and has promised a referendum on the country’s EU membership. The referendum is due to take place by 2017 and some lawyers expect this to delay the UK’s ratification of the UPC agreement.

Like the best brand development strategies, the best IP protection strategies adapt to new challenges as they come, but retain the core elements that work. Witnesses of Tony the Tiger’s evolution over the last six decades will still recognise the tiger with the red scarf in today’s version, but cannot help noticing that the mascot has been modernised. The success of the Frosties brand can be measured by the fact it retains a place at many people’s breakfast tables today.

Since the Supreme Court’s 1938 Shredded Wheat ruling, Kellogg’s has successfully avoided being entangled in IP disputes that reach such a high level. Underpinning the company’s more than 100 years of commercial development is a strong web of patent and trade secrets protection. On this foundation, the Kellogg’s brands have been able to flourish with their goodwill protected by a vigilant IP team. But domestically and globally, the IP landscape is constantly shifting and changes may require Kellogg’s to further adapt its IP strategy for the future.