Harry Gottsagen

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IN THE MATTER OF HARRY GOTTSAGEN, MAX GOTTSAGEN, MARTIN GOT'l- SAGEN, ALEXANDER GOTTSAGEN, TRADING AS GOTHAM SALES COMPANY AND AS UNIVERSAL MER- CHANDISE COMPANY COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. Ci OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 1.!341. Complaint, Mar. 23, 1935-Decision, Nov. 4, 1935 Where a corporation engaged in the sale and distribution of assorted notions and novelties to the purchasing and consuming public throughout the several States, offered and sold large quantities of shoe laces upon the wrapper of each pair of which appeared in bold type "l\Iercerlzed Broadway Brand", notwithstanding fact that said laces, thus labeled, were not mercerized, to wit, laces treated with a caustic solution wbereby the tensil strength and microscopic appearance thereof were changed, but were cheap cotton laces imported from Japan;

With capacity and tendency to confuse, mislead and deceive memlwrs of the public into the belief that said product was in fact mercerized, and induce purchase thereof in such erroneous belief, and with effect of diverting trade to it from competitors, including those who in nowise misrepresent the quality and kind of their products, and with tendency so to divert, to their substantial injury and prejudice:

Held, That such practices, under the conditions and circumstances set forth, were all to the Injury of the publlc and competitors and constituted unfair methods of competition.

Before lllr. Robert S. II all, trial examiner. lllr. Dewitt T. Puckett for the Commission. lllr. Jerorne L. Greenberg, of New York City, for respondents. Col\! PLAINT Pursuant to the provisions of an Act of Congress entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes", the Federal Trade Commission, having reason to believe that Harry Gottsagen, Max · Gottsagen, l\fartin Gottsag('n, Alexander Gottsagen, and Alfred Gottsagen, co- Partners trading as Gotham Sales Company and Universal Merchand.Ise Company,' hereinafter referred to as respondents, have been and now are using unfair methods of competition in commerce, as "commerce'' is defined in said act, and it appearing to the Commission that a proceedi11g by it in respect thereof would be in the pubhc interest, states its charges in that respect as follows: . PARAGRAPH 1. The respondents, Harry Gottsagen, Max Gottsagen, Martin Gottsagen, Alexander Gottsagen, and Alfred Gottsagen, co- Partners, trading as Gotham Sales Company and as Universal Mer- 458 FEDERAL TRADE COl\IMISSION DECISIONS Complaint 21F. T. C. chandise Company, and having their principal office and place oi business at 14 E. 17th Street, New York City, are now and have been engaged in business as wholesalers of novelties, toilet articles, drug sundries, and other merchandise. Said respondents have ath·ertised and sold and are advertising and selling, or causing to be solu, throughout. the country, shoe laces which are advertised as "mercerized" laces. Also said shoe laces have affixed thereto brands or labels upon which the word "mercerized" is featured. Respondents sell or cause to be sold said shoe laces through the jobbing and other trade to the public residing in various States of the United. States. Respondents cause said commodities, when so sold, to be transported from their said place of business in New York City, into and through other States of the United States to said purchasers at their respective locations.

PAn. 2. In the course and conduct of their said business, respondents are in competition with other individuals, partnerships and corporations engaged in advertising, selling, and distributing in interstate commerce shoe laces intended. and used for the same purposes as those for which respondents represent their laces, as hereinafter set out, and respondents have been and are now in competition in interstate commerce in the sale of said shoe laces with such other individuals, partnerships, and corporations. PAn. 3. Respondents, in the course of their business have offered for sale and. sold shoe laces represented and labeled as "mercerized" shoe laces. Mercerized shoe laces are those laces which have been subjected to a chemical process which gives to the laces a silky, pol· ished appearance, and which lends added strength, thereby producing a more valuable and desirable shoe lace. In truth and in fact, the laces so represented, labeled and sold by respondents have not been subjected to a process of mercerization, and are not "mercerized" but instead are a cheap cotton lace imported from Japan. PAn. 4. The representations of respondents have the tendency and capacity to confuse, mislead and deceive members of the public into the belief that the said shoe laces of respondents are mercerized, as advertised on the label, and to induce them to buy and use the same because of such erroneous belief so engendered. Such representations unfairly divert trade to respondents from legitimate competitors who truthfully advertise similar products, and who are engaged in the sale in interstate commerce of products intended for and used for the same purposes ·as those for which respondents represent their products.

PAR. 5. The above alleged acts and practices of respondent are all to the prejudice of the public and of respondent's competitors and GOTHAl\I SALES CO., ETC. 459 457 Findings constitute unfair methods of competition in commerce within the intent and meaning of Section 5 of an Act of Congress entitled "An Act to create a Feel era 1 Trade Commission, to define its powers and duties, and for other purposes", approved September 26, 1914. REPORT, FINDINGS AS TO THE FACTS, AND ORDER Pursuant to the provisions of an' 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", the Federal Trade Commission issued and served complaint upon the respondents, Harry Gottsagen, Max Gottsagen, Martin Gottsagen, Alexander Gottsagen, and Alfred Gottsagen, copartners,· trading as Gotham Sales Company and as Universal Merchandise Company, charging them with unfair methods of competition in violation of Rection 5 of said Act, and respondents duly filed their answer thereto. Thereafter, respondents having entered their appearance, testimony was taken and evidence received in support of the complaint and on behalf of respondents, and duly reduced to writing and recorded and filed in the office of the Commission. Subsequently, this proceeding came on for final hearing on the record, and the Commission having duly considered the record and the brief of counsel for the Commission, and being fully advised in the premises, finds that this proceeding is in the interest of the public, and makes this its findings as to the facts and conclusion drawn therefrom:

FINDINGS AS TO THE FACTS P ARAORArH 1. The respondents, Harry Gottsagen, :Max Gottsagen, Martin Gottsagen, Alexander Gottsagen, and Alfred Gottsagen, are co-partners, trading as Gotham Sales Company and as Universal Merchandise Company. Their principal office and place of business is at 14 East Seventeenth Street, New York, N. Y. They also have branch stores in Chicago, Ill., New Orleans, La., and San Francisco, Calif. Respondents now are, and have been for the past nine years, engaged in the sale and distribution in interstate commerce of assorted notions and novelties to the purchasing and consuming public throughout the several States of the United States, and cause said Products, when so sold, to be transported from their place of business in New York City through and into other States of the United States to their said vendees at their respective points of location and residences. In the course and conduct of their said business respondents are in competition with other individuals, and with firms, partnerships and corporations engaged in the sale and distribution of like Conclusion 21F.T. C.

products in commerce between and among the various States of the United States, which products so sold and distributed by such competitors are used for purposes similar to those purposes for which respondents' products are used.

PAR. 2. Respondents, in the course and conduct of their business, as described in paragraph 1 hereof, offered for sale and sold large quantities of "Broadway Brand" shoe laces labeled "mercerized". On the wrapper of each pair of said laces appeared the following in bold type:

1\IERCERIZED BROADWAY DRA~D A mercerized shoe lace is one which has been treated with a caustic solution, which process increases the tensil strength of the lace and also increases its sensitiveness to dyeing. The microscopic appearance of the fibre is also changed. The public is willing to pay more for mercerized laces than for laces which are not mercerized. In truth and in fact, the said "Broadway Brand" shoe laces labeled "mercerized" by respondents were not mercerized laces, and had not been treated with a caustic solution which increases the tensil strength .'lnd changes the microscopic appearance of the laces, but were cheap cotton laces imported from Japan.

PAn. 3. The representations of respondents, as aforesaid, have had and do have the tendency and capacity to confuse, mislead, and deceive members of the public into the belief that respondents' "Broadway Brand" shoe laces labeled "mercerized" are mercerized shoe laces. Said representations of respondents have had and do have the tendency and capacity to induce members of the public to buy and use respondents' laces because of the erroneous beliefs engendered, as above set forth, and to divert trade to respondents from competitors engaged in the sale in interstate commerce of shoe laces. PAn. 4. There are among the competitors of respondents in the sale of their products, those who in nowise misrepresent the quality and kind of their competing products, and respondents' acts and practices, as hereinbefore set forth, tend to and do divert the business to respondents from their competitors, to the substantial injury and prejudice of such competitors.

CONCLUSION 'l11e practices of said respondents, under the conditions and circumstances described in the foregoing findings, are all to the injury of the public and of.respondents' competitors, and constitute unfair methods of competition in commerce, and are in violation of an Act .of Congress approved September 26, 1914, entitled "An Act to create GOTHAM: SALES CO., ETC. 461 457 Order a Federal Trade Commission, to define its powers and duties, and for other purposes."

ORDER TO CEASE AND DESIST This proceeding having been duly heard by the Federal Trade Commission upon the complaint of the Commission, the answer of respondents, the testimony in support of the charges of said complaint and in opposition thereto, and brief filed by counsel of the Commission, and the Commission having made its findings as to the facts and its conclusion that said respondents have violated the provisions of an 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"- /t is ordered, That respondents, Harry Gottsagen, :Max Gottsagen, Martin Gottsagen, Alexander Gottsagen, and Alfred Gottsagen, copartners, trading as Gotham Sales Company and as Universal Merchandise Company, their officers, directors, agents, representatives, servants and employees, in connection with the sale, offering fo:r sale, or distribution in interstate commerce and in the District of Columbia of shoe laces, cease and desist from representing by express statements or by implication, or otherwise, that any of the said laces are mercerized, when such is not the fact. It is iurther ordered, That respondents, within 60 days from and after the date of service upon them of this order, shall file with the Commission a report in writing, setting forth in detail the manner and form in which they are complying with the order to cease and desist hereinbefore set forth.

Syllabus 21F. T. C.