X Laboratories, Inc.

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

IN THE MATTER OF X LABORATORIES, INC.

COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 1i OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 2564. Complaint, Sept. SO, 1935-order, Nov. 27, 1935 Where a corporation, engaged in the manufacture, compounding and sale of a cleaning fluid designated as "X Odorless Dry Cleaner", set forth upon tlle labels on the containers thereof that such cleaner was "Non-injurious to any fabric or color", and represented in advertisements, pamphlets and circulars that 1t would rl'move certain types of spots from fabrics, no matter how delicate, and leave no ring on materials upon which used, facts being that use thereof on fabrics dyed with fugitive or non-fast dyes impaired and affected the colors by causing same to bleed or run, and use thereof on certain fabrics and under certain conditions resulted in appearance of a spot or ring; with capacity to mislead purchasing public by causing it to believe that said cleaner removed grease and other spots without injury to fabrics or color and induce it to buy said product in such erroneous belief, and to divert trade to it from competitors engaged in the sale of similar cleaners :

Held, That such acts and practices were each and all to the prejudice of the public and competitors and constituted unfair methods of competition. Mr. R. L. Kennedy for the Commission.

UnderU'ood & Kilpatrick, of Washington, D. C., for respondent. Complaint 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, having reason to believe that the X Laboratories, Inc_, a corporation, hereinafter referred to as the respondent, has been and is using unfair methods of competition in commerce, as "commerce" is defined in said act, a~d it appearing to said Conunission that a proceeding by it in respect thereof would be in ~he public interest, hereby issues its complaint, and states its charges ln that respect as follows:

PARAGRAPH 1. The respondent is a corporation, organized, existinno and doing business under and by virtue of the laws of the State of I New York, with its principal office and place of business in the city l ?f New York, N. Y., and a factory in Cambridge, Mass. Respondent ris now and for more than two years last past has been engaged in the manufacture, compounding and sale of a cleaning fluid, desirrnated as "X Odorless Dry Cleaner", and, in the distribution ther:of in ~commerce between and among the various States of the United Complaint 21F.T.C.

States and the District of Columbia, causes and has caused said product, when sold, to be transported in interstate commerce from its places of business in the States of New York and Massachusetts to purchaoers thereof, some located in said States, and others located in 'various other States in the United States and the District o:f Columbia. PAR. 2. In the course and conduct of its said business, respondent is now and has been, for more than two years last past, in substantial competition with other corporations and with individuals, partnerships, and firms, engaged in the manufacture·, sale, and distribution of cleaning fluids and similar products, in interstate commerce between and among the various States in the United States and the District of Columbia, used for purposes similar to the purposes for which respondent's products are psed.

PAR. 3. In the course and conduct of its said business as hereinabove described, the respondent in soliciting the sale of and selling, in interstate commerce, a cleaner manufactured and sold by it under the name of "X Odorless Dry Cleaner", caused and still causes its said product to be placed in cans or containers, of half pint, pint or gallon capacity, upon each of which appears the statement that "X Odorless Dry Cleaner is absolutely non-inflammable, non-explosive and non-injurious to any fabric or color", and in advertisements, pamphlets, and circulars has stated that said cleaner will remove certain types of spots from fabrics, no matter how delicate, and that it leaves no ring on materials upon which it is used. PAR. 4. In truth and in fact the respondent's product hereinabove described, labeled and sold by respondent is not absolutely noninjurious to any fabric or color, and said misrepresentation is false, extravagant, misleading, and deceptive. The use of said product on fabrics, dyed with certain kinds of dyes, such as non-fast dyes, doe.s impair, harm, and affect the colors of such fabrics, by causing the same to bleed or run. The use of said product on certain fabrics, and under certain conditions or circumstances, does result in the appearance of a spot or ring on such fabrics, and in either or both of these ways such fabrics are in fact injured by the use of said product thereon. PAR. 5. Said advertisements and labels have had and still have the tendency and capacity to mislead and deceive; do mislead and deceive, and have misled and deceived the purchasing public, by causing it to believe that respondent's cleaner removes grease spots and other spots without injury to fabric or color; and to induce the purchasing public to buy respondent's cleaner, hereinabove described, in such erroneous belief; afford retail merchants an opportunity to perpetrate a fraud on the purchasing public, have the capacity and tend- .ency to divert, have unfairly diverted, and do unfairly divert trade to ' respondent from competing individuals, partnerships, and corporal X LABORATORIES, INC. 581 579 Findings tions engaged in the sale of like or similar cleaners in interstate com- Inerce, who truthfully and honestly advertise and label their cleaners. PAR. 6. The acts, practices, and representations of the respondent hereinabove set forth are all to the injury and prejudice of the public and the competitors of the respondent, in interstate commerce within the intent and meaning of Section 5 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."

REPORT, FINDINGS AS TO THE FACTS, AND 0REDER Pursuant to the provisions of an Act of Congress, approved September 26, 1914, entitled "An Act to create a Federal Trade Com- Inission, to define its powers and duties, and for other purposes", the Federal Trade Commission issued and served its complaint upon the respondent herein, X Laboratories, Incorporated, a corporation organized and doing business under and by virtue of the laws of the State of New York, and charging said respondent with the use of unfair methods of competition in commerce in violation of the provisions of said act.

Respondent, having entered its appearance and having filed 'its answer herein, entered into a stipulation whereby it was stipulated and agreed that a statement of facts signed and executed by respondent, by its counsel, and \V. T. Kelley, chief counsel for the Federal Trade Commission, subject to the approval of the Commisf:ion, are the facts in this proceeding and shall be taken by the Federal Trade Commission as such and in lieu of testimony before the Commission in support of the charges stated in the complaint, or in opposition thereto, and that said Commission may proceed further upon said statement of facts, stating its findings as to the facts and conclusion thereon and entering its order disposing of the Proceeding:

And thereupon, this proceeding came on for final hearing and the respondent, having waived the filing of briefs and the hearing of oral argument herein before the Commission, and said Commission having approved and accepted said stipulation as to the facts and having duly considered the record and being now fully advised in the premises, makes this its findings as to the facts and conclusion: FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent is a corporation, organized, existing and doing business under and by virtue of the laws of the State of New "York, with its principal office and place of business in the city of N"ew York, N. Y., and a factory in Cambridge, Mass.; and respondent is now and since September 28, 1934, has been engaged in the Findingl!l 21 F. T. C. manufacture, compounding and sale of a cleaning fluid designated as "X Odorless Dry Cleaner", and, in the distribution thereof, in commerce between and among the various States of the United States and the District of Columbia, causes and has caused said product, when sold, to be transported in interstate commerce from the places of business in the States of New York and Massachusetts to purchasers thereof, some located in said States, and others located in various other States in the United States and the District tJf Columbia.

PAR. 2. In the course and conduct of its said business, respondent is now and has been, for more than two years last past, in substantial competition with other corporations and with individuals, partnerships, and firms engaged in the manufacture, sale and distribution of cleaning fluids and similar products, in interstate commerce between and among the various States in the United States and the District of Columbia, used for purposes similar to the purposes for which respondent's products are used.

PAR. 3. In the course and conduct of its said business as hereinabove described, the respondent in soliciting the sale of and selling, in interstate commerce, a cleaner manufactured and sold by it under the name of "X Odorless Dry Cleaner", caused and still causes its said product to be placed in cans or containers, of half pint., pint or gallon capacity, upon each of which appears the statement that "X Odorless Dry Cleaner)' is "Non-inflammable, non-explosive, non-injurious to any fabric or color", and in advertisements, pamphlets, and circulars has stated that said cleaner will remove certain types of spots from fabrics, no matter how delicate, and that it leaves no ring on materials upon which it is used. PAR. 4. In truth and in fact the respondent's product hereinabove described, labeled, and sold by respondent is not absolutely noninjurious to any fabric or color; the use of said product on fabrics dyed with certain kinds of dyes, such as fugitive or non-fast dyes, does impair, harm, and affect the colors of such fabrics, by causing the same to bleed or run; the use of said product on certain fabrics, and under certain conditions or circumstances, does result in the .appearance of a spot or ring on such fabrics; and in either or both of these ways such fabrics may in fact be injured by the use of said product thereon.

PAR. 5. Said advertisements and labels have had and still have the capacity to mislead the purchasing public, by causing it to believe that respondent's cleaner removes grease spots and other spots without injury to any fabric or color, and to induce the purchasing public to buy respondent's cleaner, hereinabove described, in such erron~ous belief; and said advertisements have the capacity to divert X LABORATORIES, INC. 583 579 Order trade to respondent from competing individuals, partnerships, and corporations engaged in the sale of like or similar cleaners in interstate cornrnerce. CONCLUSION The aforesaid acts and practices of respondent, X Laboratories, Incorporated, are each and all to the prejudice of the public, and to the competitors of respondent, and constitute unfair methods of competition in commerce within the intent and meaning of Section 5 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."

ORDER TO CEASE AND DESIST This proceeding having been duly heard by the Federal Trade Commission upon a complaint of the Commission, the answer of the respondent, and a stipulation entered into between the respondent herein, X Laboratories, Inc., a corporation, by its counsel, H. C. Kilpatrick, and counsel for this Commission, and the Commission having made its findings as to the facts and its conclusion that said respondent has 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", Now, therefore, it is hereby ordered, That the respondent, X Laboratories, Inc., a corporation, its officers, agents, representatives, and employees, in connection with the distribution, offering for sale, and sale of X Odorless Dry Cleaner, in interstate commerce, forthwith cease and desist from:

. Advertising or labeling its X Odorless Dry Cleaner as non- Injurious to any fabric or color, as leaving no ring on materials upon Which it is used, or as a cleaner of spots from fabrics no matter ?ow delicate, or other statements having the same or similar mean- Ing, or which may have the capacity or tendency to lead purchasers to the belief that the colors or fabrics of materials dyed with fugitive dyes, will not be injured by the use of said product, or that it will Under no circumstances leave a ring on material on which it is used. ' It is further ordered, That the respondent shall within 60 days after the service upon him of this order, file with the Commis- ~ion, a report in writing setting forth in detail the manner and form In which he has complied with the order to cease and desist hereinabove set forth.

FEDERAL TRADE COMMISSION DECISIONS584.

Complaint 21F.T.C.