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Schweizerishe Kaeseunion Bern v. Saul Starck, Inc., 162 Misc. 485, 293 N.Y.S. 816

Facts

The plaintiff, Schweizerishe Kaeseunion Bern, which produces most of the Swiss cheese consumed in the U.S., sought to prevent the defendant from advertising Danish cheese as 'genuine imported extra fine quality Swiss cheese.' The defendant's cheese, while labeled as imported, was of inferior quality compared to Swiss cheese from Switzerland. The plaintiff argued that this advertising misled consumers and harmed the reputation of authentic Swiss cheese producers.

The plaintiff association, which manufactures in Switzerland most of the Swiss cheese consumed in this country, seeks to restrain the defendant from advertising and offering for sale as genuine imported Swiss cheese, cheese manufactured in Denmark.

Issue

Whether the defendant's advertising of Danish cheese as 'genuine imported extra fine quality Swiss cheese' constituted unfair competition.

Persons offering for sale as 'genuine imported extra fine quality Swiss cheese' Swiss cheese made in Denmark, of an inferior quality to that made in Switzerland at a price less than cheese made in Switzerland but more than domestic Swiss cheese, held engaged in 'unfair competition' by conveying to public impression that cheese offered was imported from Switzerland.

Rule

Unfair competition involves deception that misleads the public to the detriment of producers who maintain a standard of quality. Even if advertisements are literally true, they can still mislead consumers and create unfair competition if they imply a false impression about the product's origin or quality.

'Unfair competition' is deception practiced on public to the detriment of those whose skill and energy have produced in their product a standard of quality found desirable by the consuming public.

Analysis

The court found that the defendant's labeling of Danish cheese as 'genuine imported extra fine quality Swiss cheese' created a misleading impression that the cheese was from Switzerland. This was particularly significant given that 90% of Swiss cheese in the U.S. is imported from Switzerland, and the term had acquired a secondary meaning associated with high quality. The pricing strategy further indicated an intent to mislead consumers, diverting sales from authentic Swiss cheese and damaging its reputation.

While the defendant, in offering for sale 'genuine imported extra fine quality Swiss cheese' expresses a literal truth, it nevertheless conveys to the public the impression that the cheese offered is imported from Switzerland.

Conclusion

The court ruled in favor of the plaintiff, granting an injunction against the defendant's misleading advertising practices.

There will be judgment for the plaintiff for the relief requested in the complaint.

Who won?

The plaintiff, Schweizerishe Kaeseunion Bern, prevailed in this case because the court recognized that the defendant's advertising practices constituted unfair competition. The court emphasized that the misleading nature of the advertisements harmed the reputation of genuine Swiss cheese producers and misled consumers regarding the quality and origin of the product.

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