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." 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. 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.
Read more about this topic: Kellogg Co. V. National Biscuit Co.
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