Bayuk Cigars, Ino

Text (OCR of the scan at left; may contain errors)

IN THE MATTER OF BAYUK CIGARS, INC.

COMPLAINT (SYNOPSIS), FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 20, 1914 Docket 1391. Complaint, Jttne 6, 1926-Deoittion, .E'~;;b. 8, 1928 Where the I:aland of Cuba had come to be recognized and considered by the cigar trade and consuming public of the United States as a country famous for its production of tobacco and cigars of superior quality and excellence, and the tobacco there grown had come to be known, designated and described to and by said cigar trade and purchasing public as Havana tobacco or Cuban tobacco, and to be in great demand in the United States, and cigars manufactured therefrom in whole or in part had come to be considered as more desirable and superior in quality to cigars composed wholly of tobacco grown elsewhere and to cigars containing a smaller pro· portion of l!iuch Cuban or llavana tobacco; and thereafter a domestic corporation engaged in the manufacture of cigars, with factories in the States of New York, New Jersey, and Pennsylvania, and in the sale and distribution thereof to wholesale and retail dealers, and the consuming public.

(a) Designated, described, banded, labeled, and sold, a 15-cent cigar, containing no Havana or Cubnn tobacco, as above set forth, "IIavana Ribbon", fea· tu1·ing the aforesaid words upon the bands and containers thereof, and extensively so advertisl>d the same under such name and designation 1n magazines and <laily newspapers of general circulation among the cigar trade and consuming publlc throughout the United States and various sec· tlons thereof, and in widely distributed signs, placards, posters, and similar advertising me<lin; and (b) Designated, described, banded, labeled and sold a 10 and 15 cent cigar, containing the aforesaid Havana or Cuban tobacco only in a minor propor· tion, "Mapacuba ", featuring the aforesaid word upon the brand thereof, together with the shield or coat of arms of the Republic of Cuba, and also UJlOn the labels of the containers thereof, together with a map of Cuba, a picture of the city and harbor of Havana, the aforesaid shield or coat of arms, and the words "Havana Cigars", together with pictures of the fortress of l\Iorro Castle at Havana, the Cuban fiag, tobacco fields such as are / common in Cuba, and the legend, In Spanish, "Guarantee--This package is eminently distinguished because It comps from a superior crop of Vuelta ~ .Abajo ", a Cuban district noted for Its fine tobaceo, and extensively so advertised said cigars, as above set folih, under the deslgnutlon, desct1potlon and representation "Mapacuba ", together with depictions of the m~ of Cuba, of the cigars In question with the aforesaid band, and of a box thereof, with la!Jels us above described; Complaint 12F. T. C. With the capacity and tendency to mislead and deceive and with the effect of misleading and deceiving many of the purchasing public Into believing the aforesaid cigars to be composed In whole or In part of Havana tobacco as above described, In the case of that first named, and to be wholly or princlpully so composed In the case of that last named, and to Induce the purchase of such cigars In such erroneous belief, and with the capacity and tendency to and with the effect of unfairly diverting trade from and otherwise injuring and prejudicing the busluess of competitors who rightfully and truthfully sell and distribute cigars' composed In whole, and cigars composed In part only, ot Havana or Cuban tobacco, and competitors who sell and distribute cigars composed of tobacco grown elsewhere than on the Island ot Cuba without In anywise representing their cigars as containing Cullan or Havana tobacco:

Held, That such practices, under the circumstances set forth, constituted unfair methods of competition.

Mr. II e'I1IT'J! Miller for the Commission. Mr. 0. Andrade, fr., of New York City, for respondent. SYNOPsis OF Complaint Reciting its action in the public interest, pursuant to the provisions of the Federal Trade Commission Act, the Commission charged respondent, a Maryland corporation, engaged in the manufacture of cigars and sale thereof to retail dealers in various States, and with principal office and place of business in Philadelphia, with naming products misleadingly, misbranding or mislabeling and advertising :falsely or misleadingly in violation of the provisions of ~ection 5 of such act, prohibiting the use of unfair methods of competition in interstate commerce.

Respondent, as charged, for about five years preceding the complaint, designated as" Havana Ribbon," a cigar made by it and composed entirely of tobacco grown elsew?ere than on the Island of Cuba, featured said name upon the containers of said cigars in which it ~hipped and delivered the same to its retail dealer vendees for display and sale by them to the consuming public, and upon the individual cigar bands or labels, and conspicuously so advertised the same in magazines, periodicals and other publications of general circulation throughout the United States and in certain sections thereof. Such use of said name and designation in the packing, banding, labeling and advertising of said cigars, as alleged, had the capacity and tendency to and did mislead and deceive many among the cigar tobacco trade and the cigar trade, and the consuming public into Lelieving said cigars to be composed of "Havana," tobacco i. e., tobacco grown on the Island of Cuba, and into purchasing the same BAYUK CIGARS, INO. 21 19 Complaint in such belief 1 and tended to divert business from and otherwise injure and prejudice competitors, many of whom sell cigars composed of "Havana" tobacco, as above pet forth, and rightfully and lawfully so represent the same and others of whom sell cigars neither so composed nor in anywise so represented; all to the prejudice of the public and of the respondent's competitors. Respondent" further, as charged, for about five years preceding the complaint designated ap "Mapacuba" a cigar made by it and composed of a mixture of tobaccos containing a small amount and proportion of " Cuban " tobacco, i. e., tobacco grown on the Island of Cuba, featured said name upon the containers of said cigars, together with conspicuous depictions of the Cuban flag, coat of arms, map, and a Spanish legend and statement, and upon the individual cigar bands or labels, and conspicuously so advertised paid cigars in magazines, periodicals and other publications of general circulation throughout the United States and in certain sections thereof. The use of the aforesaid name and designation in the packing, banding, labeling and advertising of said last named cigars, as alleged, had the capacity and tendency to and did mislead and deceive many among the cigar tobacco trade and cigar trade and the consuming public into believing said cigars to be composed of Cuban tobacco, as above set forth, or of such tobacco as the principal and predominant element, and into purchasing the same in such belief,2 and tended to divert business from and otherwise injure and prejudice competitors, many of whom sell cigars composed of Cuban tobacco as hereinabove set forth and rightfully and lawfully so represent the same, and others of whom sell cigars of which said Cuban tobacco is not the principal and predominating element and ingredient, without in anywise misrepresenting such Cuban tobacco as such principal and predominating element and ingredient; all to the prejudice of the public and respondent's competitors. • The complaint contains the following allegations relative to the use ot the term " Havana " tobacco and the preference for such tobacco : '' lor many years prior to the date hereof, tobacco has been a. commercial export product of the Island or Cuba, and the term " Havana " tobacco, hu for maey 7eara meant anti still means tobacco or Cuban growth to the cigar tobacco trade, the cigar trade and the consuming public, many of whom !Jove for many years considered and still cons!Jer said "Havana" tobacco superior in quality, for the manufacture of cigars, to tobacco grown elsewhere than on the Island of Cuba. Many among said trades and many of the consuming public have for many years considered and atlll consider that cigars made of said " Havana " tobacco are superior In quality to cigars .11ade or tobacco grown elsewhere thnn on the Island of Cuba."

• 'lbe complaint contains alle~:atlons as to the term "Cuban" tobncco and as to the preference for 11uch tobncco similar to those set forth l.ll the preceding footnote relatlns to "Uavana" tobacco.

Findings 12F.T.C.

Upon the foregoing complaint the Commission made the following REPORT, FINDINGS AS TO THE Facts, AND ORDER Pursuant to the provisions of an act of Congress approved September 2G, 1914, the Federal Trade Commission issued and served a complaint upon the respondent, Bayuk Cigars, Inc., charging it with the use of unfair methods of competitiop. in commerce in violation of the provisions of said act.

Respondent having entered its appearance herein and filed its answer to said complaint, hearings were had at which testimony was taken and evidence introduced by counsel for the Commission in support of the allegations of the complaint and by respondent in opposition thereto before an examiner of the Commission theretofore duly appointed. Said evidence, including a transcript of the testimony taken, was filed of record in the office of the Commission, and thereafter briefs and oral argument were submitted by counsel for the Commission and for the respondent. Thereupon this proceeding came on regularly for decision; and the Federal Trade Commission, having duly considered the record, and being now fully advised in the premises, makes this its report, stating its findings as to the facts and its conclusions drawn therefrom: FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent Bayuk Cigars, Inc., is a corporation organized in the year 1920, and existing under and by virtue of the laws of the State of Maryland, with its principal office and place of business in the City of Philadelphia, State of Pennsylvania. It is, and since the date of its organization has been, engaged in the business of manufacturing cigars and the sale and distribution thereof to wholesale and retail cigar dealers and to the consuming public throughout the several States of the United States and the District of Columbia. It maintains and operates eleven cigar factories situated in the States of New York, New Jersey, and Pennsylvania, and six branch jobbing houses located in the cities of New York, N. Y.; Philadelphia, Pa.; Detroit, Mich.; Flint, Mich.; Grand Rapids, Mich.; and Indianapolis, Ind. During the past five years its average annual production and sales have been in excess of 200,000,000 cigars. In distributing said cigars sold by it, respondent causes same to be transported and delivered from its aforesaid places of business or factories through and into the various other States of the United States and the District of Columbia to the respective purchasers thereof in such other States and in said District; and in BAYUK CIGARS, INO. 23 19 Fin<llngs so carrying on said business respondent is, and since the date of its organization has been, continuously engaged in interstate commerce and in direct active competition with many individuals, partnerships, and other corporations engaged in the sale and transportation of cigars in commerce between and among the several States of the United States and the District of Columbia. PAn. 2. Among the cigars manufactured and sold by respondent in interstate commerce, as set forth in paragraph 1 hereof, are two different types of cigars, the one designated, described, branded, labeled and sold by respondent as" Havana Ribbon"; and the other designated, described, branded, labeled and sold by it as " Mapa. cuba", which brands of cigars are and have been produced and continuously marketed by respondent among the trade and consuming public throughout the United States since the aforesaid date of its organization. The generally advertised retail prices of the so-called " Havana Ribbon " cigars are 5 cents each and, in a larger size, 8 cents each or two for 15 cents; and respondent's annual sales of same are in excess of 77,000,000. The generally advertised retail prices of the so-called "Mapacuba " cigars are 10 cents each, two for 25 cents, and 15 cents each, depending upon sizes or shapes; and respondent's annual sales of this brand exceed 15,000,000 cigars. PAR. 3. In preparing its so-called "Havana Ribbon" cigars for sale and distribution respondent caused, and still causes, to be placed upon ea.ch of said cigars a paper band bearing conspicuously tho words" Havana Ribbon"; and said cigars containing said band were and still are packed by respondent in the customary cigar containers of the respective capacities of 25 and 50 cigars, to which containers respondent also caused, and still causes, to be affixed in sundry places labels and brands bearing in large and conspicuous letters the words "Havana Ribbon". Said cigars so banded, packed, labeled, and branded were and still are displayed, offered for sale, sold and . distributed by respondent to wholesale and retail dealers and to the consuming public; and in the regular course of business and in accordance with respondent's purpose and plan of distribution, said cigars still so banded, packed, branaed and labeled were and are displayed, offered for sale, sold and distributed by dealers among themselves and to the consuming public. To further and promote the sale of said cigars respondent also caused, and still causes, extensive advertisements thereof to be published and displayed (a) in magazines and daily newspapers of general circulation among the cigar trade and. consuming public throughout the United States and in various sections thereof; and (b) in widely distributed signs, placards, posters and similar advertising media, in all of which Findings 12F.T.C.

advertisements respondent designated, described and represented said cigars as "Havana Ribbon" cigars; and through which advertisements it caused and still causes to be sold to the trade and consuming public large quantities of said so-called "Havana Ribbon" cigars. PAR. 4. Each of said so-called "Mapacuba" cigars as and when marketed by respondent contained and still contains a paper band, placed thereon by respondent, displaying conspicuously the word "Mapacuba" together with a device consisting of a star and stripes simulating in general appearance the shield, emblem, insignia or coat of arms of the Republic of Cuba. When marketed by respondent said so-called "Mapacuba" cigars, containing aforesaid paper band, were and still are packed, displayed, sold and distributed by it in the customary cigar containers of the respective capacities of 25 and 50 cigars, to which containers respondent caused to be attached labels and brands prominently and conspicuously displaying the word" :Mapacuba" in sundry places; and a map of Cuba; picture of tha city and harbor of Havana, Cuba; also said device of a star and stripes simulating the shield, insignia, emblem or coat of arms of the Republic of Cuba. In addition to the foregoing, respondent caur;:ed to be displayed upon said containers in which it packed and marketed the so-called "Mapacuba" cigars up to and including the spring of 1924: certain labels displaying the words "Havana Cigars " in sundry places, pictures of the fortress of Morro Castle at Havana, Cuba, with the Cuban flag; also pictures of tobacco fields such as are common in Cuba, and an inscription in the Spanish language, a free translation of which is as follows: GUARANTEE.-This package is eminently distinguished because 1t comes from a superior crop of Vuelta Abajo. . (Vuelta Abajo is the name of a district in Cuba noted for its production of fine tobacco). Throughout the course of respondent's business and in accordance with its purpose and plan of distribution said so-called" Mapacuba" cigars have been displayed and marketed in and by the cigar trade and to the consuming public under the name, designation and description of "Mapacuba" and as banded, packed, branded and labeled by respondent as hereinabove set forth. To promote and further the sale and distribution of said so-called "Mapacuba" cigars, respondent has caused for more than two years last past extensive advertisements thereof to be published (a) in magazines and newspapers of general circulation among the trade and consuming public throughout the United States and in various sections thereof; and also (b) in. widely distributed display signs, placards, posters, and similar advertising media, in all of which BAYUK CIGABS, INO. 25 19 Findings advertising matter such cigars were and are designated, described and represented as" Mapacuba" cigars; and in many of said advertisements respondent caused to be pictured a map of Cuba, one or more of said cigars containing aforesaid paper band, and also a box of said cigars showing the above mentioned labels which depict said device simulating the shield, insignia, emblem or coat of arms of the Republic of Cuba and the city and harbor of Havana, Cuba. PAR. 5. At all times since the date of respondent's organization and for many years prior thereto, tobacco has been extensively grown on the Island of Cuba and exported therefrom to the United States and other countries both in the form of leaf tobacco and in cigars; and said Island is recognized and considered by the cigar trade and consuming public of the United States as a country famous for its production of tobacco and cigars of superior quality and excellence. The tobacco grown in Cuba is, and since time immemorial has been, known, designated and described to and by the cigar trade and purchasing public throughout the United States as "Havana tobacco " or " Cuban tobacco," which terms are synonymous in meaning and are used interchangeably. Said Havana tobacco or Cuban tobacco is in great demand in the United States and during all the times herein mentioned the same has been and still is extensively marketed and consumed in the form of cigars. Many of the cigar trade and consuming public of the United States have for years considered and still consider that cigars made in whole or in part of said Havana or Cuban tobacco are more desirable and are superior in quality to cigars composed wholly of tobacco grown elsewhere than on the Island of Cuba and to cigars containing a smaller proportion of said Cuban or Havana tobacco. None of said so-called "Havana Ribbon" cigars which have been manufactured and sold by respondent, as set forth above, contained any Havana or Cuban tobacco, but were composed or manufactured wholly of tobacco grown elsewhere than on the Island of Cuba. Said so-called "Mapacuba" cigars manufactured, advertised and sold by respondent as above set forth contained Havana or Cuban tobacco only in minor proportion, which proportion of Havana or Cuban tobacco varied from about 20 per cent to not exceed approximately 50 per cent; all other parts, constituting the greater or principal portion of said cigar, were manufactured of tobacco grown elsewhere than on the Island of Cp.ba. PAR. 6. The use by respondent of the word "Havana" in the branding, labeling, advertising, and describing of its said so-called "Havana Ribbon" cigars containing no Havana or Cuban tobacco, all as hereinbefore set forth, is false and misleading and has and had the capacity and tendency to, and did, (a) mislead and deceive many Ooncluslon 12F.T.C.

of the purchasing and consuming public into the erroneous belief that said so-called" Havana Ribbon" cigars were manufactured and are composed in whole or in part of Havana tobacco or tobacco grown on the Island of Cuba; and (b) thereby cause purchasers to buy said cigars in such erroneous belief.

PAR. 7. Respondent's use, in connection with its cigars containing Havana tobacco in part only, of the word "Mapacuba" and of the simulation or depiction of the flag, shield, emblem, insignia or coat of arms of the Republic of Cuba, the map of Cuba, Cuban scenes and of said Spanish inscription, all as hereinbefore set forth, is false and misleading, has and had the capacity and tendency to, and did, (a) mislead and deceive many of the purchasing and consuming public into the erroneous belief that said so-called" Mapacuba" cigars were manufactured wholly or principally and mostly of Cuban tobacco; and (b) cause purchasers to buy said cigars in such erroneous belief. PAR. 8. There are among the competitors of respondent mentioned in paragraph 1 hereof many who rightfully and truthfully sell and distribute in competition with respondent cigars composed in whole, and also cigars composed in part only, of Havana or Cuban tobacco. There are also many of said competitors who sell and distribute in competition with respondent cigars composed wholly of tobacco grown elsewhere than on the Island of Cuba and who in no wise represent that their cigars contain any Cuban or Havana tobacco. Respondent's acts and practices in branding, labeling and advertising its cigars with the words "Havana " and "Mapacuba" and with said likenesses and•simulations of tho flag, shield, emblem and insignia of the Republic of Cuba; map of Cuba; said scenes of the city and harbor of Havana, Cuba; said Spanish inscription and scenes of Cuban tobacco fields, all as hereinbefore set forth, had the capacity and tendency to and do unfairly divert trade from and otherwise injure and prejudice the business of said competitors. CONCLUSION The acts and things done by the respondent in the advertising, branding and labeling of its cigars as and under the conditions and circumstances set forth in the foregoing findings as to the facts are to the injury and prejudice of the public and respondent's competitors, are unfair methods of competition in interstate commerce and constitute a violation of the act of Congress approved September 26, 1914, entitled "An ac~ to create a Federal Trade Commission, to define its powers and duties, and for other purposes." BAYUK CIGARS, INC. 27 19 Order ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission, the ans\Yer of respondent thereto, the testimony, evidence, briefs and argument of counsel; and the Commission having made its findings as to the facts with its conclusion that respondent has violated the provisions of the act of Congress approved September 26, 1914, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes", It is now ordered, That respondent Dayuk Cigars, Inc., its officers, directors, agents, representatives, servants, and employees cease and desist, in connection with the sale and distribution of cigars in interstate commerce- (1) From using the word "Havana", or other word or words of similar import, alone or in conjunction with the word "Ribbon," or other word or words, as or in a brand name for or as descriptive of any such cigars which are not composed entirely of tobacco grown on the Island of Cuba;

(2) From using the word "Mapacuba," or other word or words of similar import, as or in a brand name for or as descriptive of any such cigars which are not composed in whole or in part of tobacco grown on the Island of Cuba;

(3) From using the word "Mapacuba," or other word or words of similar import, as or in a brand name for or as descriptive of any such cigars which are composed in part only of tobacco grown on the Island of Cuba, unless said word be immediately followed and accompanied by a word or words in letters equal or greater in size, visibility and conspicuousness, clearly and unequivocally indicating or stating that such cigars are not composed wholly, but in part only, of tobacco grown on the Island of Cuba; (4) From using a depiction simulating the flag, emblem, insignia or coat-of-arms of the Republic of Cuba, map of Cuba, Cuban tobacco fields, city or harbor of Havana, Cuba, or depiction of similar import, in the advertising, branding, or labeling of any such cigars which are not composed in whole or in part of tobacco grown on the Island of Cuba;

(5) From using a depiction simulating the flag, emblem, insignia or coat of arms of the Republic of Cuba, map of Cuba, Cuban tobacco fields, city or harbor of Havana, Cuba, or depiction· of similar import, in the advertising, branding or labeling of any such cigars which are composed in part only of tobacco grown on the Island of Cuba, unless such depiction be accompanied by a word or Order 12F.T.O.

words of equal or greater visibility and conspicuousness, clearly and unequivocally indicating or stating that such cigars are not composed wholly, but in pn.rt only, o£ tobacco grown on the Island oi Cuba;

(G) From representing in any other manner whatsoever that any of said cigars contain or are composed in whole or in part of tobacco grown on the Island of Cuba, when such is not true in fact. It is furth-er ordered, That respondent, Bayuk Cigars, Inc., shall within sixty days after the service upon it a copy o£ this order file with the Commission a report in writing setting forth in detail the manner and form in which it has complied with the order to cease and desist hereinbefore set forth.

AMERICAN PHOTO-ENGRAVERS' ASS'N ET AL. 29 Syllabus