Allura, Inc American Character Doll Co., Inc

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IN THE MA'ITER OF AMERICAN CHARACTER DOLL COMPANY, INC.

COMPLAIN'].', FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION 01!' SEC. 11 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 2728. Complaint, Feb. 20, 1936-Decision, Nov. 13, 1937 Where a corporation engaged in manufacture, sale, and distribution of dolls, to purchasers at various points In other States, and chiefly through departm:nt stores, toy ·stores, and mail order houses, in substantial competition With others engaged In manufacture, sale, and distribution, or sale and distribution, of such products in commerce among the various States and in C the District of Columblalrcularlzed doll trade with broadside displaying print of picture disclosing results of three weeks' immersion of one of its "paratex" hard rubber dolls, Bnd of co~ppqsition type doll., to the disadvantage of the latter, which was disclosed as in bad state of disintegration, and to the advantage of former, Which showed no ill effects, together with statement that such "Dramatic Test of Paratex: Dolls" was made by "buyer of a great retail store" and showed "absolutely no effect from its immersion" "for a Week" to "parate:x: doll," with "what happened to the other" plain enough, and an Invitation to "Make this dramatic test yourself In your own doll department" F and assertion that "It will sell Paratex dolls for you Right Now I"; nets being immersion test in question had been for three weeks and not one, composition dolls can be handled and faces and hands washed or bathed Without Injury thereto, and said test, by reason of age and Intelligence of child-buyers of composition dolls as compared with that of child users of rubber.-dolls,-.and other rele-v.ant. circumstances as to qualities desired in dolls, durability of composition dolls under ordinary and customary use, and actual condltions of ordinary usage and customary treatment, Which test failed to portray, did not prove Its "paratex" dolls more substantial or desirable or superior to the composition dolls for purposes intended.

'\Vtth • capacity and tendency to mislead and deceive substantial portion of trade and PUblic into erroneous belief that composition dolls were inferior because they would disintegrate if left in water, and with result that public, as consequence of such mistaken and erroneous belief, induced by such false and misleading representations, purchased substantial volume of Its said ~~oducts in preference to those of its competitors, and trade was unfairly IVerted to It from competitors likewise engaged in manufacture, sale, and distribution, or in sale and distribution, of dolls without In any way Unfairly disparaging products o! competitors or misrepresenting their own; li l to the substantial injury of competition in commerce: e ~ That such ·acts and practices, under the conditions and circumstances t escribed, were to the prejudice of the public and competitors and constl- Uted Unfair methods of competition.

e Be~ore Mr. Joseph A. Simpson and Mr. John lV. Bennett, trial xanuners. 1398 FEDERAL TRADE COl\'11\'IISSION DECISIONS Compla,lnt 25F. T.C.

rjr. Dewitt T. Puckett for the Commission. Jfr. Philip Goldfarb, 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 rea.son to believe that American Character Doll Company, Inc., hereinafter referred to as respondent, has been and is using unfair methods of competition in commerce, as "commerce" is defined in said act, and it appear.ing to said Com· mission 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 :

P.ARAGRAPH 1. Respondent, American Character Doll Company, Inc., is a corporation organized, existing, and doing business under and by virtue of the laws of the State of New York, with its prin· cipal office at 200 Fifth Avenue, New York, N. Y. It is now, and for several years last past has been, engaged in advertising and sell· ing dolls and toys between and among the various States of the United States and in the District of Columbia, and now causes, and for more than one year last past has caused, such products when sold by it to be shipped from its place of business in New York City aforesaid to the purchasers thereof, some located in the State of New York, and others located in the various other States of the United States and in the District of Columbia, and there is now, and has been for more than one year last past, a constant current of trade and commerce by the respondent in dolls and toys between and among the various States of the United States and in the Distdct of Columbia.

Respondent is, and for more than one year last past has been, in substantial competition with other corporations, and with individuals, firms, and partnerships engaged in the sale of dolls and toys between and among the various States of the United States and in the Dis· trict of Columbia.

PAR. 2. In the course and conduct of its business, as described in paragraph 1 hereof, respondent, in soliciting the sale of and selling its "Sally Jane" dolls, to purchasers and prospective purchasers thereof, located in various States of the United States, distributed circulars among the retail doll trade, which circulars were used by the said trade in offering for sale and selling said dolls to the pur· chasing public. Said circulars featured certain pictorial illustrations AMERICAN CHARACTER DOLL CO., INC. 1399 1397 Complaint of two dolls, immersed in a jar of water. One of the dolls seemed to show no ill effects from such immersion, but the other doll appeared to· be -in a-bad ·state of disintegration, its legs· having fallen off an~ the body portion having cracked, broken, and peeled. The followmg phraseology accompanied these pictures: THIS DRAMATIC TEST OF PARATE.."\: DOLLS Was made by the buyer of a great retail store who Insisted upon PROVING to himself that PARATEX dolls are actually PROOF against wear and water * * * Here's what actually happened when he put an ordinary composition doll and a p ARATEX doll into two pickle jars of water for a WEEK * • • The PARATEX doll showed absolutely no effect from its immersion • • • What happened to the other, is plain enough Make this dramatic test yourself in your own doll department. It will sell P.AR.A.TEX dolls for you RIGHT NOW! . In truth and in fact, the pictures of the featured test displayed lll said advertising matter were made three weeks after the tests Were initiated, and not, as alleged, one week after the test was ~ta~ted. Dolls are not made to be left in water; nor are dolls of Jrdmary composition inferior products because they are nonresistant to w~ter. The test displayed in said advertising matter has the capacity and tendency to unwarrantedly disparage dolls of ordinary c~mposition in that it tends to cause, or convey, an erroneous belief \at such dolls of ordinary composition are inferior products because t ey are nonresistant to water and that such dolls, being nonresistant to water, will not withstand the ordinary usaae and treatment forth' h ~ Ic dolls are made and to which they are usually and customarily sub' Jected by the average user of said dolls . . PAn. 3. The use by the respondent of the representations set out In paragraph 2 hereof, have had and do have the capacity and tendency to mislead and deceive and do mislead and deceive wholeralers, retailers, and the purchasing public into the belief that com · · position dolls are inferior to Paratex or rubber dolls, and to Purchase such dolls from respondent in preference to competitorscom · · h position dolls because of such erroneous belief. There are among t e competitors of respondent, as mentioned in paragraph 1 hereof, manufacturers and distributors of dolls and toys who do not misreptesent the· respective qualities of composition dolls and Paratex or rubber dolls, nor utter disparaging statements about competitors' Products, who likewise advertise, sell, and distribute dolls and toys a~ong the various States of the United States and in the District ° Columbia. By the representations aforesaid, trade is diverted to Findings 25F.T. C.

respondent from such competitors; thereby substantial injury is being done and has been done by respondent to substantial competition in commerce as herein set out.

PAR. 4. Said acts and practices of respondent are all to the preju· {lice of the public and respondent's competitors, and constitute unfair methods of competition in commerce within the intent and meaning of Section 5 of an Act of Congress, entitled "An Act to aeate a Federal Trade Commission, to define its powers and duties, and for other purposes," approved September 26, 1914. REPORT, FINDINGS AS TO THE FACT.3, AND OnnEn Pursuant to the provisions of an Act of Congress approved Sep· tember 26, 1914, entitled "An Act to create a Federal Trade Conl· mission, to define its powers and duties, and for other purposes," the Federal Trade Commission, on February 20, 1936, issued and on Feb· ruary 24, 1936, served its complaint in this proceeding upon respond· ent, American Character Doll Company, Inc., charging it with the use of unfair methods of competition in commerce in violation of the provisions of said act. After the issuance of said complaint, and the filing of respondent's answer thereto, testimony and other ed· dence in support of the allegations of said complaint were intro· duced by Dewitt T. Puckett, attorney for the Commission before Joseph A. Simpson and John \V. Dennett, examiners of the Coal· mission theretofore duly designated by it, and in opposition to the allegations of the complaint by Philip Goldfarb, attorney for tha respondent; and said testimony and other evidence were duly recorded and filed in the office of the Commission. Thereafter, the proceeding regularly came on for final hearing before the Commis· sion on the said complaint, the answer thereto, testimony and other evidence, briefs in support of the complaint and in opposition there· to (respondent having not requested oral argument), and the Com· mission 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 con· elusion drawn therefrom:

FINDINGS AS TO THE FACTS • PARAGRAPH 1. The respondent, American Oharo.cter Doll Com· pany, Inc., is a corporation organized in 1919 and doing bw:iness under the laws of the State of New York. Its principal office is at 200 Firth Avenue, New York, N.Y., and its factory is at 1027 Metro· politan A venue, Brooklyn, N. Y. The .respondent is now, and since Al\IERIOAN CHARACTER :POLL CO., INC. 1401 1397 Findings 1919 has been, engaged in the manufacture, sale, and distribution of <lolls.

When orders are received for respondent's dolls, it causes them to be shipped from its factory at Brooklyn, N. Y., to the purchasers thereof located at various points in States of the United States other than ,the State of New York. Said dolls are marketed chiefly through department stores, toy stores, and mail-order houses. At all times mentioned herein the respondent has maintained a constant cur:ent of trade in said dolls, in commerce among and between the Vanous States of the United States.

At all times since respondent entered into said business, it has been in substantial competition with other corporations and with Partnerships, and individuals likewise engaged in the manufacture, sale and distribution or in the sale and distribution ·of dolls, in commerce among and between the various States of the United States and in the District of Columbia.

PAR, 2. Dolls are classified, as to type, according to the materials Used in their manufacture. Composition dolls are manufactmed !rom Wood flour, rosin, starch, and glue. The materials are molded Into a form by a heating process. Rubber dolls are made from crude rubber. Practically all dolls on the market today ara either com- Position dolls or rubber dolls. Many years ago most doh::; were made of a hard breakable substance and were known as bisque dolls. Because they were heavy and easily broken, they were gradually supplanted by composition dolls and rubber dolls. During the past two or three years respondent has been offering for sale and selling a hard rubber doll which it calls a "paratex" doll. "Paratex" dolls are manufactured by respondent according to a secret formula. Respondent has featured its "paratex" doll in its advertising, representing it to be superior to composition dolls be- ~cause it is impervious to water. Said "paratex" doll is manufaetmecl to be sold in competition with the more expensive composition dolls, such as the Shirley Temple doll.

PAR, 3. In April 1935, a representative of J. C. Pennej Company took two dolls, one of which was a composition doll known as l11e Sh~rley Temple doll and the other a "paratex" doll heretofore described, and immersed each of said dolls up to the neck in a jar of '~after. Three weeks after said immersion, pictures were taken of 1 le do1Is. The picture of the composition doll showed it to be in a bad. state of disintegration. The legs had fallen off and the body covermg had cracked and had peeled off in places. The pictme of the "paratex" doll disclosed no ill effects of the water upon it. The respondent herein obtained a negative of said picture from a .J. C. Findings 25 F. T. C. Penney Company employee, had prints made therefrom, and circularized said picture in the form of a broadside among the doll trade. Alongside the picture appeared the· following-statement. THIS DRAMATIC TEST OF PARATEX DOLLS was made by the buyer of a great retail store who insisted upon PROVING to himself that PARATEX dolls are actually PROOF against wear and water • • • Here's what actually happened when he put an ordinary composition doll and a PARATEX doll Into two pickle jars of water for a WEEK • • • The PARATEX doll showed absolutely no effect from its immersion • • • What happened to the other, is plain enough Make this dramatic test yourself in your own doll department. It will sell PARATEX dolls for you RIOHT NOW I In fact, the dolls. had actually been in the water for three weeks at the time the picture was taken and not one week as represented by the respondent.

PAR. 4. From the testimony of doll buyers for three leading department stores and the proprietor of a toy and doll store it is found that composition dolls are not made to withstand immersion-in-water tests and that they are not inferior products because they will disintegrate if left in water for substantial periods of time. Composition dolls, as a rule, are sold to children who are old enough to understand that dolls of that character cannot be left in water. Rubber dolls of the cheaper variety are designed to be sold to infants too young to understand how to care for expensive composition dolls. Composition dolls can be handled and their faces and hands can be washed or bathed without injury to said dolls. The essential qualities desired in dolls by children are attractiveness, style of dress, type of wig, finish, and, especially among older children, likeness to living models. Parents desire a doll that is sufficiently durable to withstand the use to which the doll will be subjected by children. Composition dolls are sufficiently durable to withstand the ordinary and customary use to which dolls are subjected by children under ordinary and usual conditions of use. Composition dolls are not immersed in water for any substantial period of time. The comparative test made, as hereinabove set forth, does not prove that the "paratex" dolls are more substantial, desirabl~ or superior to composition dolls for the purposes intended inasmuch as such a test does not accurately portray the actual conditions of ordinary usage and customary treatment to which dQJls are subjected and such test affords no basis in fact for the representations made.

AMERICAN CHARACTER DOLL CO., INC. 1403 1397 Order PAR. 5. The use by respondent of the representations described herein in its advertising literature has had and now has the capacity and tendency to mislead and deceive a substantial portion of the ~trade and public into the erroneous belief that composition dolls are Inferior products because they will disintegrate if left in water. As a COIIsequence of the mistaken and erroneous belief induced by the false and misleading representations above referred to, the public has purchased a substantial volume of the respondent's products in Preference to the products of its competitors with the result that trade has been unfairly diverted to the respondent from its competi- ~ors likewise-·engaged in the manufacture, sale and distribution or In the sale and distribution of dolls, who in no way unfairly disparage their competitors' products or misrepresent their own products. As a result thereof a substantial injury has been done, and is now being done, by respondent to competition in commerce among and between the various States of the United States and in the District of Columbia.

CONCLUSION . ~he aforesaid acts and practices .of said respondent under the con- <htions and circumstances described in the foregoing findings of facts are to the prejudice of the public and of competitors of re- ~pondent and constitute unfair methods of competition in commerce In violation of an Act of Congress approved September 26, 1914, ~ntitled "An Act to create a Federal Trade Commission, to define lts powers and duties, and for other purposes." ORDER TO CEASE AND DESIST . This proceeding having been heard by the Federal Trade Commis- .Sion upon the complaint of the Commission, the answer of respond- -ent, testimony and other evidence taken before Joseph A. Simpson an~ John ,V, Bennett, examiners of the Commission theretofore duly ·?esignated by it, in support of the allegations of said complaint and ln opposition thereto, briefs filed herein by De Witt T. Puckett, ·counsel for the Commission, and by Philip Goldfarb, counsel for re~p?ndent (no oral argument having been requested), and the Comlllisswn having made its findings as to the facts and its conclusion that said respondent has violated the provisions of an Act of Con- -~ress approved September 26, 1914, entitled "An Act to create a ederal Trade Commission, to define its powers and duties, and for ·other purposes."

It i8 ordered, That the respondent, American Character Doll Coml)any' Inc., a corporation, its officers, representatives, agents, and 1404 FEDERAL TRADE CO~Il\IISSION DECISIONS Order 25F. T.O.

employees in connection with the offering for sale, sale and distribution of dolls in interstate commerce or in the District of Columbia do forthwith cease and desist from:

1. Representing, through the use of comparative water immersion tests, or other similar tests which do not fairly simulate actual conditions of ordinary and customary usage, or through any other mean:; or device, or in any manner, that, because. of imperviousness to water when immersed for extended periods of time, its dolls are superior to composition dolls;

2. Representing, directly or by inference, through the use of comparative tests, or otherwise, that composition dolls are inferior products because they are not impervious to water when immersed for substantial periods of time.

It is hereby further ordered, That the said respondent shall within 60 days from the date of the service upon it of this order file with this Commission a report in writing, setting forth the manner and form in which it shall have complied with this order. MELLS MANUFACTURING COMPANY 1405 Syllabus