The daily telegram. [volume] (Clarksburg, W. Va.) 1901-1926, 1912-12-26
Government Files An Custer
Suit IN Federal Court in
City Of Detroit.
DEVICE IS EMPLOYED
Said Not to Bea Patent at All
in Matter of Sales TO the
Jobbers.

DETROIT Dec z6.-Tne kellogg
Toasted Corn F4ake Company IS AZ
legged to be violating the Sherman
law. in a petition IN equity, aaed in
the. United States district court here
oday by order OF AttOFney General
Wfckersham to settle for alp time the
extent to which a manufacture may
control retail prices. The company
and It's oHIoers engaged in the manu-
facture OF Kes1ogg's toasted corn
hakeS are charged with fixing prices
q which the fakes are sold TO re-
taller an-B consumer, preventing
competitaon which would reduce the
price to the public, and creating a
monopoly by concentrating the entire
interstate traf1c in. this commodity
in the hands OF jobbers and retailers
who abide by price agreements ex-
acted by the Defendants. II is alleged
that the defendants have invoked the
patent laws through the use Of a!
patented carton in which the cakes
are packed as mere subterfuge
and device to escape the provisions
OF the Sherman law. The government
asks for injunctions to prevent the
company, its officers and agents from
controlling the price of the breakfast
food after it leaves the hands OF the
manufacturer.
The following are named as de-
PENDANTS:
kellogg Toasted Corn Flake Com
pany, and VIII K. kellogg, WFlfred
c. kellogg and Andrew Rose, respec-
lively president. secretary and gen
eral manager OF the company ali OF |
Battle-GreelC, Mich.
The petition. filed by United states
Attorney Clyde /. Webster was drawn !
by James A Fowler, special assist
ant to the attorney general, and is re-
garded by the government as of vast
importance because of its bearing
upon the right oS a manufacturer 70
control prices TO the consumer.
1t is alleged that the company sells
only to jobbers refusing absolutely to
deal directly with consumers or with
the retail trade. The commodity, ac-
cording to the petition, is sold to
jcbbers at a uniform price under an
agreement that the jobbers VIII sell
to retailers at price fixed by the
defendants. The defendants are
charged with strictly enforcing the
agreement OF sale by absolutely re-
fusing to deal with any jobber who
fails TO maintain the specified price.
BY the use OF a patented carton,
the defendants. are alleged to control
the price at which retailers sell to
. consumers. 1t is pointed out that
notice signed by the Kellogg Corn
Flake Company is printed on a flap
of the carton in which the hakes are
packed aatlng that the package and
it's cofftents are sold conditionaflT
with the distinct understanding that
they Will not be retailed at less than
ten cents per package For selling
at less than that price. the vendor is
warned by the notice that he is
liable to prosecution as an infrinser
OF patent rights.
The government insists that tie
patented carton can AFFORD, no protec-
ton in attempting to fix resale prices
by retailers because, it is alleged:
The carton was not in fact patent
able as all Of its material features
had long been in use before the patent
was issued; the value of the carton
is negligible. the contents alone being
desired by the purchaser; the defend
ants having sold the cartons and con
tents to tjobbers have parted with all
title to the commodities and have no
LEGAL right TO fix prices at which the
retail purchaser from the jobber
shan be required to sen; and lastly
..its use is resorted TO as 4 mere
subterfuge and device to avoid the
provisions OF the antitrust cav and
the principles OF the common law
controlling such contracts.
The agreements, exacteG from job
bers and the conditions OF sale i'm
posed upon and accepted by the re-
taiIers, continues the petition, re
strain the interstate commerce on
this breakfast food in that they pre-
vent it from moving in interstate
commerce at prices other than those
fixed by the defendant company and
prevent all competition between deal
ers which can affect its cost to the
retailer or consumer. They pro-
duce.', it is added. "a monopoly Of
said interstate. commerce in that they