The Detroit times. [volume] (Detroit, Mich.) 1903-1920, 1912-12-26
Attacks agreements Demanded
by Battle Creek Concern
Against Underselling
SUIT FILED IN FEDERAL
COURT IN DETROIT
Kellogg Company, It's Claimed,
Tries to Operate Under pat
emit Monopoly Decision"

New application OF the Sherman
anti-trust law was made in an i'm
portant suit fled in Detroit today
by the federal government. The ac-
ton is aimed against the growing
practice OF manufacturers in at
tempting to tx a uniform jobbers'
and retailers price for their pro-
ducts and was brought against the
Kellogg Toasted Corn Flake COM
pany, of Battle Creek, Will X. KEEL
Iogg. Wilfred c. Kellogg, and An
drew Ross. II the governments con-
tentions are sustained by the court.
the way will be open for the depart
ment of justice to aid materially in
reducing the cost OF living. by fore
ing manufacturers of staples to re-
move all restrictions on "cut rate"
sales OF their products
The bill filed today attacks the
plan by which the Kellogg company
exaets an agreement from jobbers
and retailers TO whom their break
fast food Is sold, to sell at not less
than a specified price, the penalty
for violation OF this agreement be-
Ing forfeiture OF further selling
rights. In recent months. the gov
eminent alleges the company has
taken advantage OF the so-called
patent monopoly decision" OF the
supreme court of the United States,
to patent the carton in which their
product Is sold, and to threaten job
bers and retailers who sell below the
ngure the manufacturers fix with
prosecution for infringement pa
tent rights" Carrying out this
plan, the bill alleges the Kellogg
company prints on their cartons a
notice stating that the jobber and
retailer, In purchasing the corn
flakes, accept them only on condi-
ton OF selling at certain specified
prices
This scheme of taking advantage
OF the patent laws to enforce uni
formity in sale prices the govern
ment brands as a mere subterfuge
and desire to avoid the Sherman
law"
BY operation OF tAe selling restric-
ton plan, the government contends,
sthere. is no competition between
jobbers which can affect the. price
Of the article 70 the retailer. nor Is
there any competition between either
the jobbers or retailers which can
benefit the consumers by reducing
The prices to them" A monopoly is
formed, 1t Is asserted, because or
a.. Al 10 M
who abide by the agreements and ex-
slnsion from trading in the product
IL those who refuse to enter into the
selling plan.
The patent monopoly decision
laid down the principle that manu-
iacturers of patented devices had the
right to fix the selling price OF the
articles. The government asserts
\ hat the Kellogg concern took out
patent on a carton, and then lalo
down conditions Of sale OF the car
ton, attempting to utilize the patent
monopoly decision in this respect.
The government condemns this plan.
alleging that the status OF the carton
Is negligible. The bill also calls at
tention to the fact that the company
does not sell direct 10 consumers.
A decision declaring the selling
plan Illegal and violative OF the
Sherman law is requested In the bill.
The bill OF the government alleges
that the Byrne patent upon which the
resale agreement was based TO avoid
violation of the Sherman act, Is not
rood patent, that the principal fea-
lures of it upon which the patent is
claimed were In use long before the
patens was granted. The bill states
that the co,p fakes were sold In Sc
package cases for which the jobbers
paid $3.50, and that they were sold to
retailers at $275 and upwards in va
rious sections OF the country.
The government seeks TO restrain
the Kellogg company from making
agreements OF the sort complained OF,