General Handkerchief Mfg. Company, Inc.

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IN THE MATTER OF GENERAL HANDKERCHIEF MFG. COMPANY, INC.

COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. II OF AN .ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 2'1'12. Oomplaint, Apr. 1'1, 1986-Deciaion, May 20, 1936 Where a corporation, engaged in the sale and distribution of handkerchiefslucluded in its corporate name the letters "Mfg." and displayed said name on circulars, advertising matter and otherwise in all of its dealings with customers or prospective customers, and set forth on circulars distributed to such customers the words "Manufactured exclusively by General Handkerchief Manufacturing Co., Inc. • • • Chicago, Illinois; Factory • • • Newark, New Jersey. 'Ve manufacture • • • and welcome an opportunity of quoting you • • • ", and also distributed, as aforesaid, a circular containing words "We manufacture a complete line • • • " etc., and printed on its blllheads, circulated by it, following its corporate name, word "Manufacturers", facts being it did not make the Products dealt in by it, nor own or control any factory at Newark, Chicago, or any other place making the same, but sold products made by Persons or concerns other than itself;

With tendency and capacity to confuse, mislead, and deceive a substantial number of the purchasers of its products into the belief that it was a manufacturer and to purchase its said products in such erroneous belief, nnd in belief that in buying from 1t they were dealing with a manufacturer of established business standing and thereby gaining the advantages normany had by dealing with a manufacturer rather than one not a manufacturer, and benefitting, according to common belief among such pur- Chasers, by assurance of more uniform line of goods and greater contract reliability and greater desirablllty and advantage of such dealing, and With effect of diverting trade to it from competitors, among whom there are those who make and distribute such products dealt in by them, and similarly engaged jobbers, who respectively do not misrepresent their status as manufacturers; to the substantial injury and prejudice of substantial competition:

11 eza, That such practices, under the conditions and circumstances set forth, Were all to the prejudice of the public and competitors and constituted Unfair methods of competition.

Mr. T. H. /(ennedy for the Commission.

Meyers & Lesser, of Newark, N.J., for respondent. ColiiPLAINT t Pursuant to the provisions of an Act of Congress approved Seper 26, 1914, entitled "An Act to create a Federal Trade Com- ISSlon, to define its powers and duties, and for other purposes", Complaint 22F. T. C. the Federal Trade Commission, having reason to believe that the General Handkerchief Mfg. Company, Inc., a corporation hereinafter called the respondent, has been or is using unfair methods of competition in commerce as "commerce" is defined in said act, and it appearing to said Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. The respondent is General Handkerchief :Mfg. Company, Inc., a corporation organized in or about 1933 and existing under and by virtue of the laws of the State of Illinois, with its principal place of business located at 919 ·west Roosevelt Road, Chicago, Ill. It is and for more than one year last past has been engaged in the sale and distribution of handkerchiefs in commerce between and among the various States of the United States, causing the same when sold to be shipped from its place of business in the State of Illinois or other State of origin to purchasers thereof Io· cated in various States of the United States other than the State of Illinois or other State of origin. In the course and conduct of its business said respondent was at all times herein referred to, in com· petition with other corporations, individuals, firms, and partnerships likewise engaged in the sale and distribution in interstate commerce of similar products.

PAn. 2. In the course and conduct of its business as described in paragraph 1 hereof, said respondent included within its corporate name, under which to carry on its business, the letters "mfg." nn abbreviation of the word "manufacturing". It has used continuously since in or about 1933, and is now using said corporate name, con· taining the said letters "mfg." in soliciting the sale of and selling its products in interstate commerce. Respondent has caused its corporate name "General Handkerchief Mfg. Company, Inc." to appear on its letterheads, bill heads, business cards, circulars, adver· tising matter, and otherwise, and has caused its said name to appear in trade directories. All of said printed matter has been and is dis· tributed in interstate commerce to customers and prospective cus· tomers of respondent. Respondent has also solicited sales of its product by means of circulars distributed in interstate commerce to customers and prospective customers, said circulars containing the following representation:

Manufactured exclusively by General Handkerchief 1\Ifg. Com· pany, Inc., 919 West Roosevelt lload, Chicago, Illinois. Factory- 22-24 Prospect St., Newark, N. J.

We manufacture a full line of sanitary packed handkerchiefs and welcome an opportunity of quoting you on your special re· quirements.

GENERAL HANDKERCIIIEF :MFG. CO., INO. 577 575 Complaint Respondent has caused the following representation to be published in the annual directory of the handkerchief industry, 1935- 1936·:

General Handkerchief Manufacturing Company, Factory-919 West Roosevelt Road, Chicago, Illinois.

Said directory of the handkerchief industry was published by the ~andkerchief Industry Association, Inc., and was and is circulated In interstate commerce to customers and prospective customers of ~respondent. Respondent has circulated in interstate commerce to Its customers and prospective customers, a circular containing the following representation :

We manufacture a complete line of sanitary boxed men's handkerchiefs. On respondent's bill heads, following the aforesaid corporate name of respondent, respondent has caused to be printed the word "man- Ufacturers". In truth and in fact the said respondent does not make or Inanufacture the products sold by it, nor has it ever made or manufactured said products, nor does the respondent own or control a factory at Chicago, Ill., or Newark, N. J., nor does it own or operate or directly and absolutely control any factory at either of said places or elsewhere wherein the products sold by it are made or Inanufactured, but on the contrary respondent has filled and now ~lis orders with products made or manufactured in a factory which It does not own, operate, or control.

PAR. 3. There is a preference on the part of certain purchasers or Prospective purchasers located in different States of the United States, for products similar to those sold by respondent to be resold by retail to the public for buying directly from the manufacturer thereof. There is an impression and belief existing among certain of said purchasers or prospective purchasers of handkerchiefs, that a Inore uniform line of goods may be purchased from a manufacturer than from one not a manufacturer; that more reliance can be placed on a manufacturer with regard to the carrying out of contracts than can be placed on one not a manufacturer, and that dealing with a Inhanufacturer is preferable and more advantageous to the purchaser t an is dealing with one not a manufacturer. The use by the respondent of "mfg." in respondent's corporate name, and the use by ~he respondent of the words "manufactured", "manufacture" and factory", as described in paragraph 2 hereof, has a tendency and capacity to mislead and deceive purchasers who are customers and Findings prospective customers of respondent by causing them to believe that respondent actually owns and operates, or directly and absolutely controls the factory in which products sold by respondent are made or manufactured, or that respondent itself makes or manufactures its products and that as a result thereof they will secure an advantage in dealing with respondent. The aforesaid representations by re· spondent have a tendency and capacity unfairly to divert trade to respondent from other corporations, associations, individuals, firms, and partnerships who are actually manufacturing products similar to the products of respondent, and those competitors of respondent who do not manufacture similar or like products to those of respond· ent for sale and distribution in interstate commerce, but who truth· fully advertise and label their products and who do not claim and represent themselves to be manufacturers. PAR. 4. The practices of respondent described hereinabove are all to the prejudice of the public and of respondent's competitors, and have been and are unfair methods of competition in interstate corn· merce in violation of the provisions of Section 5 of an Act of Con· gress approved September 26, 1914, entitled "An Act to create P. Federal Trade Commission, to define its powers and duties, and for other purposes."

REPORT, Findlngs AS TO THE FACTs, AND Onder Pursuant to the provisions of an Act of Congress, approved Sep· tember 26, 1914, entitled "An Act to create a Federal Trade Com· mission, to define its powers and duties, and for other purposes", t?e Federal Trade Commission on April 17, 1936, issued and served 1t~ complaint in this proceeding upon the respondent, General Jlandf kerchief Mfg. Co. Inc., a corporation charging it with the use 0 unfair methods of competition in commerce in violation of the pro· visions of said act.

Respondent answered said complaint and in said answer admitted the allegations of the complaint and the facts therein set forth to be true, and stated that it waived hearings on the charges set fo:th in the complaint; that it refrained from contesting the proceed1n~ and that it consented that the Commission make, enter, issue an serve upon it without hearing or other intervening procedure findings as to the facts and an order to cease and desist from the metho 9 of competition alleged in the complaint. . Thereafter the proceeding came on regularly for final hearlflc>11 before the Commission on the said complaint and the answer thereto, and the Commission having duly considered the same and being GENERAL HANDKERCHIEF 1\IFG. CO., INC. 579 575 Findings ~ully advised in the premises, finds that this proceeding is in the ~nterest of the public and makes this its findings as to the facts and lts conclusion drawn therefrom.

FINDINGS AS TO THE FACTS Since in or about 1933 the respondent, General Handkerchief Mfg. Co. Inc., has been organized and exists as a corporation under and by virtue of the laws of the State of Illinois, with its principal office and place of business located at 919 West Roosevelt Road, Chicago, T~l. Since said 1933 respondent has been engaged in the sale and distribution of handkerchiefs and has sold its products to various firms, persons, associations or corporations located not only in the State of Illinois, but other States of the United States, and after sales have been consummated the respondent has shipped the purchased goods or caused them to be shipped from its place of business in the State of Illinois, or from other States of the United States, to purchasers thereof located in States other than the State of Illinois, or than the State of origin of the shipment. During all the time that respondent has been engaged in the foregoing business there have been other firms, associations, partnerships, or corporations engaged in similar business to that of· respondent, to Wit, the sale and distribution of handkerchiefs in interstate com- Inerce. The respondent during all of the aforesaid time was and still is in competition in commerce in the sale of said products with other individuals, firms, and corporations likewise engaged in the Sale and distribution of said or similar products in interstate com:rnerce.

. In soliciting the sale of its products, respondent has continuously Included within its corporate name the letters "Mfg.", which is an ~bbreviation of the word "Manufacturing." This corporate name General Handkerehief Mfg. Co. Inc." has appeared on respondent's1 etterheads, billheads, business cards, circulars, advertising matter, and otherwise in all of its dealings with respondent's customers or Drospective customers.

Since in or about 1933 the respondent has also carried the following ;epresentations on the circulars distributed in interstate commerce bo customers or prospective customers "Manufactured exclusively Y General Handkerchief Manufacturing Co. Inc., 919 \Vest Roose- \>elt Road, Chicago, Illinois; Factory-22-24 Prospect Street, Newhrk, New Jersey. \Ve manufacture a full line of sanitary packed an~kerchiefs and welcome an opportunity of quoting you on your !Pec1al requirements." There has also appeared in the Annual Di- ,,ectory of the Handkerchief Industry for 1935-1936 the following: General Handkerchief Manufacturing Company-Factory 919 West 11889:! 111-30-VOL 22----89 Findings 22F.T.C.

Roosevelt Road, Chicago, Illinois." Said directory of the handkerchief industry was and is circulated in interstate commerce to customers and prospective customers of respondent. Respondent has also circulated in interstate commerce to its customers and prospective customers a circular containing the following representation: "We manufacture a complete line of sanitary bo:x:ed men's handkerchiefs."

Respondent has also caused to be printed on respondent's billheads following its corporate name the word "Manufacturers." These bil~­ heads have likewise been circulated in interstate commerce in ordl· nary business transactions of the respondent. As a matter of fact at no time since 1933 has the respondent ev~r made or manufactured the products which it has sold, nor has 1t ever owned or absolutely controlled any factory during said time. Respondent has not owned or controlled factories at either Newark, N.J., Chicago, Til., or any other place, nor does it now own or control any factory where the products sold and shipped by it in interstate commerce have been made or manufactured. However, respondent has at all times since 1933 sold products which have been made or manufactured by persons, firms or corporations other than itself. The representations above referred to which have been made by respondent by the use of the letters "Mfg." the words "Manufac· turers", "Manufactured", "Manufacture", "Factory-22-24 Prospect Street, Newark, New Jersey" and "Factory-919 'Vest Roosevelt Roa~, Chicago, Illinois" have been made in such a way that respondent 6 customers or prospective customers were and are led to believe that respondent operates a factory or is a manufacturer. It is the common belief among purchasers or prospective pur· chasers of respondent's products located in various States of the United States that handkerchiefs can be purchased directly from ~ manufacturer with assurance of a more uniform line of goods thall can be obtained from one not a manufacturer; that more reliance ca~ be placed upon a manufacturer with regard to the carrying out 0 t contracts than can be placed upon one not a manufacturer; and tha dealing with a manufacturer is preferable and more advantageot to the purchaser than is dealing with one not a manufacturer. 'f 1e representations made by respondent above referred to have the c~­ pacity and tendency to mislead and deceive the purchaser of respoll · ent's products into believing that when purchasing said products fro~ respondent they are dealing with a manufacturer of established bnSl£ ness standing and that such purchasers are thereby gaining all 0 • the advantages that they normally gain by dealing with a manniaC turer rather than one not a manufacturer. GENERAL HANDKERCHIEF MFG. CO., INC. 581 575 Order The representations of respondent, as aforesaid, have had and do have the tendency and capacity to confuse, mislead, and deceive a substantial number of the purchasers of respondent's products into the belief that respondent is a manufacturer, and to purchase respondent's products in such erroneous belief . . There are many competitors of respondent who manufacture and distribute products similar to those sold by respondent in interstate conunerce who do not misrepresent their status as a manufacturer, ~ho likewise sell and distribute products similar to those sold and distributed by respondent in various States of the United States, ~nd there are jobbers engaged in business similar to that conducted Y respondent who do not represent themselves to be manufacturers. Respondent's acts and practices as hereinabove set forth tend to and do divert trade to respondent from such competitors to the substantial injury and prejudice of such competitors. CONCLUSION The practices of the respondent under the conditions and circumstances set forth in the foregoing findings are to the prejudice of the PUblic and of respondent's competitors, and are unfair methods of competition in commerce and constitute a violation 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 dutiE-s, and for other purposes."

ORDER TO CEASE AND DESIST . This matter coming on to be heard by the Federal Trade Commis- 81~11 Upon the complaint of the Commission, answer of respondent, ~aid answer admitting all the allegations of the· complaint and the acts therein set forth to be true and stating that the said respond- :~t d~sires to waive hearing on the charges set forth in the complaint, that It refrains from contesting the proceedings and that it consents at the Commission may make, enter, issue, and serve upon it, without hearing or other intervening procedure, findings as to the facts a~d an order to cease and desist from the methods of competition ~ eged in the complaint, and the Commission having made its findl gs as to the facts and its conclusion that said respondent has vioeat~d provisions of an Act of Congress approved September 26, 1914, pntitled "An Act to create a Federal Trade Commission, to define its inowers and duties, and for other purposes" and being fully advised the premises· , Order 22F.T.C.

It is now ordered, That the respondent, General Handkerchief Manufacturing Company, Inc., and its agents, representatives, servants and employees in connection with the offering for sale and sale of handkerchiefs in interstate commerce, cease and desist from: Representing directly or indirectly through and by use of its corporate name, letterheads, circulars, advertising literature or in any other manner that it is a manufacturer.

It is further ordered, That the respondent above named within 30 days after the service upon it of this order, shall file with the Commission a report in writing setting forth in detail the manner in which this order has been complied with. HOLLYWOOD CANDY CO. 583 Syllabus