Atlantic Coast Oil Co. of New York, Inc

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IN THE MATTER OF ATLANTIC COAST OIL COMPANY OF NEW YORK, INC. COMPLAINT, FINDINGS, AND ORDER IN REGARD TO 'lhe ALLEGED Violation OF SEC. 5 OF AN .ACT OF CONGRESS .APPROVED SEPT. 20, 1914, Docket 2865. Complaint, June SO, 1936-Decision, Sept. 25, 1936 Where an association, In continuous operation for years and composed of practically all the refiners of motor oil produced from the Pennsylvania strata of oil fields, an,d of a large number of jobbers and distributors of such motor oil, organized to promote sale thereof, had caused large sums of money to be spent for such purpose and adopted emblem distinctive In arrangement, shape, color, and wording, and featuring words "Guaranteed 100 Per Cent Pure Pennsylvania Oil", for use by members on their labels and advertising to signify that distributor was an association member and that oil sold under emblem was pure, unadulterated oil, produced from said strata, so that, as result of such adoption and association activities, said emblem and name ''Pennsylvania", together with derivations thereof, had acquired a very definite and valuable secondary meaning to purchasing public in connection with sale of motor oil as Indicating and suggesting a pure, unadulterated oil produced from said Pennsylvania strata, such as decidedly preferred by substan!al portion of consuming Public; and thereafter a corporation engaged In business of blending and Wholesaling motor oils and greases in competition with others similarly engaged- (a) Caused its products to be offered for sale and sold in cans or containers bearing aforesaid emblem, together with phrase "Guaranteed 100 Per Cent Pure Pennsylvania Oil Specially Processed", and either word "Pennsylvania" or some derivation thereof and phrase "Permit No. -", so as to Indicate that said oil was pure, unadulterated Pennsylvania oil and that it was a member of said association, notwithstanding fact that oil in question was not such a product, but was composed of a blend of oils produced from other territories, and it was not a member of association in question, • nor entitled to use emblem thereof or word "License" or "Permit" therewith, or Word "Pennsylvania" or any deri>ation thereof in connection with offer W and sale of its products; and here the Society of Automotive Engineers had developed a system of numbers to indicate viscosities of motor oils and said system of letters and numbers, through long usage, had come to have a very valuable and secondary meaning when used In connection with sale of such products, for which, as thus correctly described, there was a very definite preference on the part of a substantial portion of consuming public; and thereafter aforesaid corporation- ( b) Caused to appear on cans and containers In which Its products were pacltaged and sold, lettering and numbers used by said society In system thus developed by it to Indicate relative viscosities, notw!thstand'ng fact oil thus offered and sold by It under said letters and numbers did not have viscosity thus Indicated;

Complaint 23F.T.C.

With capacity and tendency to confuse, mislead, and deceive trade and public through use of said emblem, etc., and said lettering and numbers, etc., and with result of Inducing their purchase of said corporation's products in the belief that they were buying a pure and unadulterated oil or grease produced from the Pennsylvania strata, etc., and oils of the true viscosity indicated by such lettet·s and numbers, etc., and with result of thereby plac· ing iu the hands of its jobbers, distributors, and retailer purchasers means of deceiving ultimate consumer, and of unfairly diverting trade from its competitors to it and to dealers in its said products; to the substantial injury of competition in commerce:

Ileld, That such acts and practices were to the prejudice of the public and competitors and constituted unfair methods of competition. Before !lfr. lV. lV. Sheppard, trial examiner. llfr. John Darsey for the Commission.

Mr. Robert Stillman, of New York City, for respondent. Complaint 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," the Federal Trade Commission, having reason to believe that Atlantic Coast Oil Company of New York, Inc., hereinafter referred to as respondent, has been and now is using unfair methods of competi· tion in commerce as "commerce" is defined in said act, and it appear· ing to the 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. Atlantic Coast Oil Company of New York, Inc., is a corporation existing by virtue of the laws of the State of New York, with its principal place of business located at Dry Harbor Road and Cooper Avenue, Glendale, Queens, New York City. For several years last past the respondent has been engaged in the business of blending and wholesaling motor oils and greases, in commerce behveen and among the various States of the United States, causing the said products, when sold, to be shipped or transported from its place of business in the State of New York to purchasers thereof located in States of the United States other than the State of New York. In the course and conduct of its business, the respondent has been and is in substantial competition with other partnerships, cor· porations, firms, and individuals likewise engaged in the business of wholesaling motor oils and greases in commerce as hereinabove described.

PAR. 2. The Pennsylvania Grade Crude Oil Association is a nonprofit corporation organized in 1923, and has been in continuous ATLANTIC COAST OIL CO• OF NEW YORK, INC. 535 533 Complaint operation since that time. Its membership is composed of practically all of the refiners of motor oil produced in the Pennsylvania strata of oil fields and a large number of jobbers and distributors thereof. Its purpose has been and is to promote the sale of oil produced in the Pennsylvania strata of oil fields, and large sums of money have been spent to this end. The Association adopted an emblem to be used by each member on their labels and advertising matter, which signifies that such distributor is a member of the Association, and that oil sold under said emblem is a pure, unadulterated oil produced in the Pennsylvania strata of oil fields, and a bond is given by each member to assure these conditions to be true. The emblem is quite distinct in arrangement of shape, coloring, and Wording, the featured wording being "Guaranteed 100% Pure Pennsylvania Oil". As the result of the activity of the Association the emblem described supra, as well as the name "Pennsylvania" together with derivations thereof, have acquired a very definite and valuable secondary meaning to the purchasing public when used in connection with the sale of motor oils; they indicate and suggest a Pure, unadulterated oil produced in the Pennsylvania strata of oil fields for which a substantial portion of the consuming public have a very decided preference.

PAR. 3. The Society of Automotive Engineers has developed a syste:tn of numbers to indicate relative viscosities in motor oils, and through long usage this system of letters and numbers has come to have a very definite and valuable secondary meaning when used in connection with the sale of motor oils. The lower numbers used in the system developed by this Soci-ety indicate lighter oils to be U~ed in low temperature, while the higher numbers indicate heavi~r otls to be used in higher temperature or fast driving, and there IS a Very definite preference on the part of a substantial portion of the consuming public for oils of the true viscosity indicated by said numbers.

PAR. 4. In the course of sale of its motor oils and greases the respondent causes its products to be offered for sale and sold, in commerce as described supra, in cans bearing the emblem of the Pennsylvania Grade Crude Oil Association, the phrase "Guaranteed 100% Pur~ ,Pennsylvania Oil, Specially Processed", the word "Pennsyl- Vania·' or some derivation thereof the phrase "Permit No. -" together with said emblem so as to 'indicate that the oil contained in ~at'd c:tns is a pure, unadulterated' Pennsylvania oil or an oil produce.d tn the Pennsylvania strata of oil fields, and also that the respondent IS ~ member of the Pennsylvania Grade Crude Oil Association, when ln truth and in fact the oil contained in the said containers is not a .FJ;;DEUAL TRADE ~Ml\lission DECISIONS536 Comvlnint 23 F.'r.c. pure and unadulterated Pennsylvania oil but is one composed of a blend of oils produced in other~ territories, and when in truth and in .fact the respondent is" not a member of the Pennsylvania Grade Crude Oil Association and is not entitled to use the emblem of said associ"ation, or the word "license" or "permit'\ together with said em- ·blem, or the word "Pennsylvania" or any derivation thereof, h1 connection with the offering for sale and sale of its products. In the course of offering for sale and sale of its products the re.spondcnt also causes to appear on cans and containers jn which its products are packaged the lettering and numbers used by the Society of Automotive Engineers in the system which it has developed to indicate relative viscosities in motor oils, when in truth and in fact the oil offered for sale and sold by respondent under said.letters and numbers does not have the viscosity indicated by the letters and numbers so used.

PAn. 5. The use by respondent of the emblem of the Pennsylvania::t Grade Crude Oil A:.s.sociation, the word "Pennsylvania"· or any derivation thereof, the word "license" or "permit" together with said emblem, the lettering and numbers used by the Society of Automotive Engineers to indicate relative viscosities, in connection with the offering for sale and sale of its motor oils and products as aforesaid, has the capacity and tendency to confuse, deceive and mislead the trade and public, and is calculated to and does confuse, deceive, and mislead the trade and public, and as a result of said acts and practices the tra"de and public are induced to buy respondent's products in the beliefs that they are purchasing n pure and unadulterated motor oil or grease produced in the Pennsylvania strata of oil fields, and that they are purchasing oils of the true viscosity indicated by the letters and numbers on the containers in which respondent's oHs are packaged. That through and by virtue of the aforesaid acts nnd practices the respondent has placed and is placing in the hands of its jobbers, distributors, and retailer purchasers the means of deceiving the ultimate consumer. In consequence of the aforesaid acts and practices trade is unfairly diverted from respondent's competitors and from dealers in the products of respondent's competitors to the respondents and dealers who sell respondent's products. Substantial injury is thereby done by respondent to substantial com· petition in commerce, a·s hereinabove set forth. PAn. G. The acts and things done by respondent, and the methods and practices employed, used nnd indulged in by it, as hereinabove alleged, described, and set forth, are all to the injury and prejudice of the public and to respondent's competitors, and constitute unfair methods of competition in interstate commerce within the intent and ATI.ANTIC COAST OIL CO. Olf N~W YORK,: INC, .537 533 . ;Findings meaning of Section 5 of an Act of .Congr~ss :approved September 26, 1914, entitled "An Act to cr~at~ a. Federal Tra<)e Commis!?ion, tQ .define its powers and duties, and for other purposes." • ' REPORT, FINDINGS AS TO THE F A,CTS, AND ORDER J Pursuant to the provisions of an Act of ConO'res:.: approved Sep-. ' ,., tember 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, on June 30, 1936, issued and served its complaint in this proceeding upon respondent, Athintic Coast Oil Company of New York, Inc., a corporation, charging it with th~ Use of unfair methods of competition in commerce in violation of the provisions of said act. On August 24, 1936, the respondent filed its answer in which answer it admitted all the material allegations of the complaint to be true and stated that it· waived hearing u~ the charges set forth in the said complaint and consented that, W~th?ut further evidence or other intervening procedure, the Comnussion might issue and serve upon it findings as to the facts and conclusion and an order to cease and desist from the violations of law charged in the complaint. Thereafter, the proceeding regularly ca~e on for final hearing before the Commission on the said com- ~laint and the answer thereto, and the Commission having duly con- ~ndered the same, and being now fully advised in the pre~ises, finds ~hat this proceeding is in the interest of the public, and makes this lts findings as to the facts and its conclusion drawn therefrom! FINDINGS AS TO Tile FACTS • PARAGRAPH 1. The Atlantic Coast Oil Company of New York, Inc., 18 a New York corporation with its principal place of business -~cated at Dry Harbor Road and Cooper A venue, Grcenuale, Quee~s, ew York City. It has for several years last past been engaged m ~he business of blending' anu wholesaling' motor oils and greases,1 ,., ,., . d n commerce between and among' the various States of the Unite States. It causes its products wh~n solu to be shipped or transported :from its place of business in the State of New York to purchasers thereof located in States of the United States other than the State of N · · Wlth ew York. It has been and is in substantial competition other partnerships corporations firms and individuals likewise eng d ' ' . ' . age in the business of wholesaling' motor oils and greases Ill .commerce between and among' the vario'""us States of the United States. PAn. 2. The Pennsylvania bGrade Crude Oil Association is a non- Profit corporation organized in 1923, and has been in continuous Findings 23F.T.O.

operation since that time. Its membership is composed of practically all of the refiners of motor oil produced from the Pennsylvania strata of oil fields, and also a large number of jobbers and distribu· tors thereof. It was organized to promote the sale of said oil and it has caused large sums of money to be spent to this end. The association adopted an emblem to be used by each member on their labels and advertising matter, which emblem signifies that such distributor is a member of the association, and that oil sold under the said emblem is a pure, unadulterated oil produced from the Pennsylvania strata of oil fields. A bond is given by each member to assure that said members will maintain the prescribed standard. The emblem is quite distinct in arrangement of shape, color, and wording, the featured wording being "Guaranteed 100 Per Cent Pure Pennsyl· vania Oil." Pursuant to the activities of the association, the emblem described supra, as well as the name "Pennsylvania", together with derivations thereof, has acquired a very definite and valuable sec· ondary meaning to the purchasing public when used in connection with the sale of motor oil. They indicate and suggest a pure, un· adulterated oil produced from the Pennsylvania strata of oil fields for which a substantial portion of the consuming public have a very decided preference.

PAn. 3. The Society of Automotive Engineers has developed a system of numbers to indicate relative viscosities in motor oils. Through long usage this system of letters and numbers has come to have a very definite and valuable secondary meaning when used in connection with the sale of motor oils. The lower numbers used in the system developed by this society indicate lighter oils to be used in low temperatures, while the higher numbers indicate heavier oils to be used in higher temperatures or fast driving. There is a very definite preference on the part of a substantial portion of the con· suming public for oils of the true viscosity indicated by said numbers. PAn. 4. The Atlantic Coast Oil Company of New York, Inc., caused its products to be offered for sale and sold in commerce, as described supra, in cans or containers bearing the emblem of the Pennsylvania. Grade Crude Oil Association, the phrase "Guaranteed 100 Per Cent Pure Pennsylvania Oil Specially Processed", the word "Pennsyl· vania" or some derivation thereof, the phrase "Permit No. -" to· gether with said emblem, so as to indicate that the oil contained in said cans or containers is a pure, unadulterated Pennsylvania oil, and also that respondent is a member of the Pennsylvania Grade Crude Oil Association. In truth and in fact the oil contained in the said containers is not such an oil as indicated, but is one corn· posed of a blend of oils produced from other territories. In truth ATLANTIC COAST OIL CO. OF NEW YORK, INC. 539 533 Conclusion and in fact the respondent is not a member of the Pennsylvania Grade Crude Oil Association and is not entitled to use the emblem of said association, or the word "License" or "Permit", together with ~aid emblem, or the word "Pennsylvania" or any derivation thereof, In connection with the offering for sale and sale of its products. The Atlantic Coast Oil Company of New York, Inc., also causes to appear on cans and containers in which its products are packaged a.nd sold the lettering and numbers used by the Society of Automot~ve Engineers in the system which it has developed to indicate relative viscosities in motor oils. In truth and in fact the oil offered for sale and sold by it under said letters and numbers does not have the viscosity indicated by the letters and numbers so used. PAn. 5. The use of the emblem of the Pennsylvania Grade Crude Oil Association, the word "Pennsylvania" or any derivation thereof, the• word "License" or "Permit" to(l'either0 with said emblem, the letter- ~ng and numbers used by the Society of Automotive Engineers to Indicate relative viscosities, by the Atlantic Coast Oil Company of New York, Inc., in connection with the offering for sale and sale of its motor oils and products as aforesaid, is calculated to and has the capacity and tendency to confuse, deceive, and mislead the trade and public. As the result of said acts and practices the trade and Public are induced to buy respondent's products in the belief that they are purchasing a pure and unadulterated oil or grease produced from t~e Pennsylvania strata of oil fields, and that they are purchasing Oils of the true viscosity indicated by the letters and numbers on the c?ntainers in which respondent's oils are packaged. Through and by VIrtue of the aforesaid acts and practices the respondent has placed and is placing in the hands of its jobbers, distributors, and retailer Purchasers the means of deceiving the ultimate consumer, and as the result trade is unfairly diverted from respondent's competitors, to the res · 1.. Pondent and dealers who sell respondent's products. Substantia ~nJu:y is thereby done by respondent to competition in commerce as eremabove set forth.

CONCLUSION .The aforesaid acts and practices of the respondent, Atlantic Coast .011 c . d'1CC company of New York Inc a corporation, are to the perJUof h ' ., · · t e public and of respondent's competitors, and constitute un~alr lllethods of competition in commerce within the intent and meanmg of ~ection 5 of an Act of Congress: approved September 26, 19~4, entitled "An Act to create a Federal Trade Commission, to define Its Powers and duties, and for other purposes." Order 23F.T.C ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission and the answer of respondent, in which answer respondent admits all the material allegations of the complaint to be true, and states that it waives hearing on the charges set forth in said complaint and consents that, without further evidence or other intervening procedure, the Commission may issue and serve upon it findings as to the facts and conclusion and an order to cease and desist from the violations of law charged in the complaint, and the Commission having made its findings as to the facts and 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."

It is ordered, That the respondent, Atlantic Coast Oil Company of New York, Inc., a corporation, its officers, representatives, agents, and employees in connection with the offering for sale, sale and distribution of its motor oils and greases in interstate commerce or in the District of Columbia, do forthwith cease and desist from: (1) Representing through the use of the emblem of the Pennsylvania Grade Crude Oil Association that it is a member of said association, unless nnd until such is the case.

(2) Representing through the use of the emblem of the Pennsylvania Grade Crude Oil Association, the phrnse, "Guaranteed 100 Per Cent Pure Pennsylvania Oil, Specially Processed", the word "Pennsylvania" or any derivation thereof, the phrase "Permit No. -'', or the word "License" together with said emblem, that the oil or greases being offered for sale or sold by it are pure, unadulterated Pennsylvania oils or greases produced in the Pennsylvania strata of oil fields, unless and until such is the case. (3) Representing, through the use of the letters and numbers developed by the Society of Automotive Engineers to indicate relative viscosities in motor oils, that the products being offered for sale and sold have the viscosities indicated by said numbers and letters, when such is not the case.

It is further ordered, That the respondent shall, within GO days after service upon it of this order, file with the Commission a report in writing setting forth in detail the manner and form in which it has comolied with this order.

ACME DISTILLERIES, INC. 541 Syllabus