Leonard, Inc., A. 0

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IN THE l\IATTER OF A. 0. LEONARD, INC.

C'OMPLAI"'T, FINDINGS, AND OHDJ.m IN REGARD TO THE ALLEGED VIOLAT£0N OF SEC. fi OF' AN ACT OF CO"'GRF.SS APPROVED SEPT. 26, 1914 Docket 2855. Compla.int, June '21, 1936-Decision, Jan. 15, 1931 Where a corporation Pngnged in manufacture, sale, uud distrilmtion of a product sold by lt under trade name "Leonard Ear Oil'' or "Leonard's Ear Oil"- Represented, through pamphlets, booldets, labels, statements on safety match box containers, and otherwise, that its said product was nn ear oil and possel-;sed sud! therapeutic properties as to relieve dt>afne,..s, facts being it did not, used us direl'ted or otherwise, uccomplish such result nnd was uot an ear oil;

With CU]mcity and tendency to mislt>thl uud deeeil·e purehn~er» of iti! products into the belief that in buying same they would obtain such oil and a product that po!isessed such therapeutic value lis to relie,·e deafness, and with effect of causing a substantial number of the purchasing public to buy its soitl Product on H<'count uf the mistaken aud CI'I'OIK'uus belit>f induced by its representation, and of unfairly di\·erting trade to it f1·om mnnr competitors !'ngaged in manufacture and distribution of products designed for similar usage, and who do not mlsr(•prelient thp cnpncltles or effects thereof; to the Ruh~<tantlnl injury and prejudice of competition in commerce: llclrl, That such nets aiel practif'l'S were to the prejudice of the public and comrwtltors and con:otitnted unfair methods uf compt>tition. Before Air. Williali~ C. Reaes, trial examinrr. Mr. T. II. Kemnedy for the Commission.

Rogers, RamRay & /Joge. of New York Cjty, for· rr~pmHlPnt. Comn.HNT Pursuant to tlte provisions of an .\ct of Congress approwu SL'ptem· her 2G, Hl14, entitled "An .Act to create a Federal Trade Commission, to define its powers and duties, and for ot!tPr purposes," the Federal Trade Commission, having reason to Lelie,·e that A. 0. Lc•onartl, Ine., n corporation, hereinafter referred to as responde11t, has brrn an,l 110W is using unfair nwthods of competition in commerce as "com· l'rlerce" is defint'd in said act, and it appearing to said Commi:;sion that a 1Jtoe£'eding by it in respect thHeof would be in the public interest, hereby issues its complaint, stating its charges in that re"pPct as follows:

p . t• ARAGRAI'II 1. Uespondent, A. 0. Leonard, Inc., IS a corpora 1011 crganized and existing undrr and by virtue of the laws of the State of New York, aml at all times herein referred to has maintained and now maintains its principal place of business at 70 Fifth A venue, Nrw York, N. Y. Respondent is, and for more than two yrars last past has been. 450 FEDERAL TRADE COl\Il\USSION DECISIONS Complaint 24 F.T. C. engaged in the manufacture of a preparation composed of an emulsion of mineral oil, soft soap, glycerine, and eucalyptol, and has been engaged in the sale of said preparation under the trade name of "Leonard Ear Oil" between anu among the various States of the United Statps and in the District of Columbia. During all of said time it has caused, and still causes, said product, when sold by it, to be transported from its place of business in New York, or other place.~ within the United States, to purchasers then•of, some located in the. State of New York and others locateu in the various States of the United States other than the State of origin of the shipment, and in the District of Columhia. In the Pourse and r.onuuct of its said business respondent is now, u11<l for more than two years last past. has been, in. constant competition with other corporations, persons, firms, anu partnerships engaged in the sale of products having properties, capacities, or effects claimeu for the saiu "Leonard Ear Oil"' by the respondent, as herein set forth, in commerce between and among the various States of the United States and in the District of Columbia.

PAR. 2. In the course and conduct of its business, described herein, respondent for more than two years last past has, by means of advertisements, testimonials, pamphlets, booklets, labels, statements on <;afety matchbox containers, and otherwise, rl:'presented, and still represents, that its said product is an ear oil and that its said product has such therapeutic properties as to relieve deafness. Rcspondl:'nt has distributed said advertising matter, testimonials, pamphlets, booklets, labels, and statements on safety matchbox containers among its prospecth'e customers and placed the same in the hands of its ag<>nts and distributors in various States of the United States for use by them in adverti!>ing its said product. Said r<>preseutations have been and are made by respondent in such a way that purchasers and prospective purchasers of respondent's product are l<>d to believe that respondent's product is an ear oil and posseSSl'S such therapeutic properties as to relieve deafness. In truth and in fact laid representations have been and are untrue, and respondent's said product is not, nor has it ever been an ear oil, nor does respond('nt's said product have, nor has it ever had such therapeutic properties as to relieve deafness. There is a preferl:'nce by a substantial number of retail dl:'alers in products having properti<>s, capacitil's, and effects claimed by respondent for its product, as hereinabove describl'd, and by a substantial part of the purchasing public for products that have the properties, capacities, or effl:'cts claimed by respondent for its product, as hereinabove set forth.

A. 0. LEONARD, INC. 451 449 Findings The aforesaid representations of respondent have had, and still have, a capacity and tendency to mislead and deceive, and have misled and deceived, and still mislead and deceive, retailers and the purchasing public into the erroneous belief that said product of ~·respondent has all the properties, capacities, or effects claimed for 1~ by the respondent, as aforesaid, and the use of said misrepresenta- ~Ions by the respondent causes them to purchase respondent's product In such erroneous belief. The aforesaid misrepresentations by the respondent have placed, and still place, in the hanLls of retailers of the product of respondent hereinabove described, the means of deceiving and misleading the purchasing public. PAn. 3. There are among the competitors of respondent manufacturers and distributors of products having properties, capacities, or effects similar to those claimed by the respondent for its product, who truthfully represent the properties, capacities, or effects of their said products; and there are also among the competitors of respondent manufacturers and distributors who do not misrepresent the properties, capacities, or effects of their said products. Dy the representations made by the respondent, us set out hereinabove, trade has been, and still is, unfairly diverted to the respondent from such competitors, and thereby substantial injury has been done and still is being done by respondent to competitors in interstate commerce.

PAR. 4. The above acts and things done by the respondent are all to the injury and prejudice of the public and competitors of respondent in interstate commerce within the meaning and intent of Section 5 of an Act of Congress approved September 26, 1914, ~ntitled "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 ORDER Pursuant to the provisions of an Act of Congress approved September 26, 1914, entitled "An Act to create a Federal Trade Com- •uiSsiOn,-· . to define its powers and duties, and for other purposes, " t l 1e Federal Trade Commission on June 27, 1936, issued and on July 1, 1936 served its complaint in this proceeding upon the respondent A. 0. Leonard, Inc., a corporation, charging it with the use of u?~air methods of competition in commerce in violation of the pro- VISions of !>aid act. After the issuance of said complaint and the filing of respondent's answer, the Commission, by order entered herein, granted respondent's motion for permission to withdraw said answer and to substitute therefor an answer admitting all the mate- 452 FEDERAL TRADE COI\Il\IISSJON DECISIONS Findings 24F.T.C.

rial allegations of the complaint to be true and waiving the taking of further evidence and all intervening procedure, which substitute answer was duly filed in the office of the Commission. Thereafter this proceeding regularly came on for final hearing before the Commission on the said complaint and the substitute answer, briefs and oral arguments of counsel having been waived, and the Commission having duly considered the same and being now fully ad vised in the premises, finds that this proceeding is in the interest of the public and makes this its findings as to the facts and its conclusion drawn therefrom:

FINDINGS AS TO THE FACTS PARAGRAPH 1. For more than two years last past the respondent, A. 0. Leonard, Inc., a corporation, has been organized and existing as a corporation under the laws of the State of New York, and has maintained during all of said time, and now maintains, its principal place of business at 70 Fifth Avenue, New York, N.Y. PAn. 2. For more than two y<>ars last past the respondent has been engaged in the manufacture, sale, and distribution of a product sold by it under the trade name "Leonard Ear Oil," or "Leonard's Ear Oil." This product has been sold by the respondent to various firms, persons, associations, or corporations located not only in the State of New York, but in other States of United States, and after sales have been consummated the respondent has shipped the purchased goods, or caused them to be shipped from respondent's place of business in New York, or from other States, to purchas<'rs thereof located in States other than th<' State of New York, or other than the State of origin of the shipment. The respondent has maintained a constant current of trade and commerce between and among various States of the United States and in the District of Columbia in the sale and distribution of its said product during all of the time referred to herein.

PAn. 3. The respondent, during all of the timo herein referred to, has represented that its product, "Leonard Ear Oil," or "Leonard's Ear Oil," is an ear oil and possesses such therapeutic properties as to relieve deafness.

PAR. 4. There are other corporations, individuals, associations, and partnerships engaged in similar business to that of the respondent, to wit: tho sale and distribution of products which will relieve deafness. Said other corporations, individuals, associations, and partnerships have been and are engaged in commerce among and between the various States of the United States in said business. A. 0. LEONARD, INC. 453 44!) Findings The respondent during all of the aforesaid time, was, and still is, in competition in such commerce in the sale of the said "Leonard Ear Oil," or "Leonard's Ear Oil" with such other corporations, imlividuals, associations, and partnerships likewise engaged in the sale and distribution of products having an efficacy similar to that claimed by the respondent for "Leonard Ear Oil," or "Leonard's Ear Oil." • PAR. 5. In soliciting the sale of its product respondent has contmuously, during all of the aforesaid time, represented by pamphlets, booklets, labels, statements on safety-match box containers and otherwise, that its product is an ear oil and that said product possesses s~ch therapeutic properties as to relieve deafness. These representations have been made through advertising mediums and otherwise, and have been caused by respondent to be circulated to customers and prospective customers residing in the various States. PAR. 6. As a matter of fact, respondent's said product, "Leonard Ear Oil," or "Leonard's Ear Oil" whe>n used as directed by the respondent or in any other manner does not relieve deafness, nor is said product an ear oil.

PAR. 7. There is a preference among members of the purchasing public, located in various States of the United States for an ear (lil and for a product that possesses such therapeutic properties as to relieve deafness and the foregoing representations by the respondent describe a product that members of the public desire to purchase. The representations made by the respondent above referred to have ~he capacity and tendency to mislead and deceive the purchasers of lts product into believing that when they purchase said prouuct they will obtain an e:tr oil and a product that possesses such thera- Peutic properties as to relieve deafness.

PAR. 8. The representations of the respondent as aforesaid have had, and do have, the tendency and capacity and effect of causing a substantial number of the purchasing public to buy respondent's product on account of the mistaken and erroneous belief induced by respondent's representations.

PAR, 9. There are many of the competitors of respondent who manllfacture and distribute products desit:rned for similar usage to that sold and distributed by the respondentin various States of the United States, who do not misrepresent the capacities or pffects of their Products.

nespondent's acts and practices as hereinaboye set forth tend to, and do, unfairly divert trade to rpspondent from such competitors, to the su bstantial· injury and prejudice· of compe t't'1 wn m' commerce among- and bet\wen the various States of the United States. Order 24F.T.C.

CONCLUSION The aforesaid acts and practices of the respondent, A. 0. Leonard, Inc., are to the prejudice of the public and of respondent's competitors, 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 heard by the Federal Trade Commission upon the complaint of the Commission and the answer filed herein on January 11, 1937, by respondent admitting all the material allegations of the complaint to be true and waiving the taking of further evidence and all other intervening procedure, 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."

It is ordered, That the r£>spondent A. 0. Leonard, Inc., a corporation, its officers, reprcspntatives, agents, and employees, in connection with the offering for sal£>, sale, and distribution of a product designated as ''Leonard Ear Oil," or "Leonard's Ear Oil" or any product of substantially the same composition and ingredi£>nts as that now sol<l by the respondent nmler the name of "Leonard Ear Oil," or "Leonard's Ear Oil" or under any other name in interstate commerce or in the District of Columbia, do forthwith cease and desist from r£>presenting that said product is an ear oil or that said product has such therapeutic properties as to relieve deafness or from making representations of similar import and effect.

It is further ordered, That the respondent shall, within ()0 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 complied with this order.

ALVITA PRODUCTS CO. 455 Syllabus