Stein, Jacob

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IN THE MA'ITER OF JACOB STEIN, TRADING AS CLIMAX RUBBER COMPANY' COMPLAINT, 1\IODIFIED FINDINGS, AND ORDER IN REGARD TO THE ALLEG~D VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 19b Docket 2303. Complaint, Feb. 20, 1933-Decision, Ap.r. 13, 1938' 'Vhere an individual engaged in offer and' sale of certain rubber, snuitur~·. au~ waterproof specialties, including infant bibs, baby pants, and crib ~heets' in describing same in certain advertisemeuts, pamphlets, and booklets- d (a) Represented that they were antiseptic and actually killed bacteria aud germs, facts being that while they did ha w• antiseptic properties 811 combatted growth of germs and bacteria which came in direct contact "'!tb them under normal conditions of use, and had power to inhibit to a la~f1~ extent growth and activity of bacteria brought In such contact, and to k many such germs and bacteria, they did not actually thus kill all geriJIS and bacteria; . 1 (b) Represented that said products were antiacid aud neutralized perspirat~o~ and other body wastes and completely deodorized all odors, facts belll r that while they had property of neutralizing, to a snb><tantlal extent, odo of such wastes when brought in close contact with them under normal con: ditions of use and had deodorant properties in combatting ol,noxious odo~~ developing from fermentation or putriflcation of such wastes when broug to in such contact as aforesaid, they were not completely effective so R~ deodorize and neutralize all such odors; . . to With tendency and capacity to mislead and deceive purchasing public III 9 erroneous and mistaken beliefs that said products actually killed all gernJ and bacteria and were completely effective in neutralizing odors as afor~; said, and would completely deodorize all such odors, irrespective of tlle':d origin or character, and into purchase of substantial quantities of sad , . d lice products in and on account of such erroneous and mistaken beliefs, JO ts as aforesaid, and with result of furnishing to dealers in its said prodnc e means and instrumentality whereby they might misrppresent true nnttJfd and character of same and extent to which they were effective in n;;e, an 1 increase sale thereof to purchasing public thereby, and with tendeurY capacity unfairly to divert trade to him from competitors who tlo HOt Jll•l to use of any such misleading statements and repre;;entations with respect . nature and effectiveness in use of their respective competitive product~~ Held, That such acts and practices were to the prejudice and injury of t public and competitors and constituted unfair methods of competition. Before Mr. ·william 0. Reel-•es, trial examiner. Mr. Edw. lV. Thomerson for the Commission. Mr. Natha:niel Phillips, of New York City, for respondent. 1 See, for original tlndinga and order, 22 F. T. C. 24. CLIMAX RUBBER CO. 1071 107(/ Complaint Complaint Pursuant to the provisions of an Act of Congress approved Septetnber 26 1914 entitled "An Act to create a Federal Trade Com- ' .nussion, to define' its powers and duties, and for other purposes," the Federal Trade Commission, having reason to believe that Climax Rubber Company, a corporation, hereinafter referred to as respondtnt, has been and is using unfair methods of competition in com- :tnerce, as "commerce" is defined in said Act of Congress, and in Violation of the Act of Congress approved June 16, 1933, known as the "National Industrial Recovery Act," and it appearing to said Commission that a proceeding by it in respect thereof would be in ~he public interest, hereby issues its complaint stating its charges ln that respect as :follows :

C01mt 1 2 ~ ARAGRAPH 1. Respondent is a corporation organized, existing and ~lo1ng business as such, with its office and principal place of business In the city of Drooldyn in the State of New York. Respondent has been and is engaged in offering for sale and selling to dealers therein and to other persons located at various places in the several States ?f the United States certain sanitary and waterproof specialties, 111~luding infant bibs, baby pants, and crib sheets. Respondent, when sa~d products are sold, causes the same to be transported from its said place of business in the city of Drooklyn, N. Y., to purchasers thereof in other States of the United States and in the District ?f Columbia, at their respective places of business, and there 18 now and has been for more than 1 year last past a course of trade and commerce by the said respondent in such products between and ~lnon.g the States of the United States and in the District of Co- . u~lbia. In the course and conduct of its said business, respondent 1 ~ In competition with other persons, firms, associations, or corporations who are likewise engaged in offering for sale and selling the srme, like, or competitive products in commerce between and among t le several States of the United States and within the District of columbia.

------CVl~!Cotnt II of the complaint, charging the methods, acts, and practices alleged as In lila at,on ot the standards of fair competition of t11e Sanitary and Waterproof Specialties suc~ul acturlng Industry, and particularly In violation of Article VI, Sec. 3, of the Code for aij u ~du~tz·y, and as In violation of Sec. 3 of the National Industrial Recovery Act, and F'ed 11 ~lr methods of competition In commerce w!thln the meanlug and Intent of the and e~a 1Trade Commission Act, as amended, was dismissed In the original order to C{'asetllls tes st Under Count I, In 22 F. T. C. 24, at 32, and Is accordingly not republished at 1m e. 1072 FEDERAL TRADE COMl\IISSION DECISIONS Findings 26F.T.C.

PAR. 2. Respondent, in the course and conduct of its said busine~s as described in paragraph 1 hereof, and in connec£ion with and a1d of so offering for sale and selling its said products, and as an indu~e­ ment to the purchase thereof, advertises said products above specifically mentioned upon labels thereon, in printed advertisements and otherwise as being made of rubber that has antiseptic and antia~id properties and powers, which actually kill bacteria and neutrahze perspiration and other body wastes, completely deodorizing all odors. In truth and in fact, said rubber and said articles made therefrom do not have antiseptic and antiacid properties and powers which actually kill bacteria and neutralize perspiration and other body wastes, completely deodorizing all odors. Said rubber and said articles made therefrom do not have any antiseptic or antiacid qualities of value, nor have they qualities and powers to neutralize acid perspiration.

PAR. 3. The use by respondent of said method and the :false and misleading statements and representations so made by respondent have the tendency and capacity to mislead and deceire the purchasing public into the erroneous belief that said statements and representations are true, and to induce the public in and because of such erroneous belief to purchase respondent's said products. Said false and misleading representations so made by respondent furnish to dealers in respondent's said products the means of misleading and deceiving the purchasing public into the erroneous belief that said statements are true, and to induce the public in and because of such erroneous belief to purchase respondent's said products. Said false and misleading 1·epresentations so made by respondent have the tendency and capacity to divert trade from the aforesaid competitors of respondent to the respondent and to dealers in respondent's said products.

P .AR. 4. The above alleged acts and practices of respondent are all 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 entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," approved September 26, HJ14. REPORT, l\Iodified FINDINGs AS TO THE Facts, AKD Onder Pursuant to the provisions of an Act of Congress approved September Z6, 1914, entitled "An Act to create a Federal Trade Cornmission, to define its powers and duties, and for other purposes," the Federal Trade Commission on February 20, 1935, issued and served its complaint in this proceeding upon respondent Jacob Stein, an CLIMAX RUBBER CO. 1073 1070 Findings individual tradina under the name and style of Climax Rubber Com- o .. Pany,• charO'inO'0 0 him with the use of unfair methods of competltwn In commerce in violation of the provisions of said act. Thereafter, the• proceedirw• 0 re..,.ularly0 came on for final hearing before the Comnussron on said complaint, the answer thereto, testimony and other evidence, briefs and oral argument of counsel in support of the complaint and in opposition thereto, and the Commission, on January 16, 1936, having duly considered the matter, found that the proceeding Was in the interest of the public and made its findings as to the facts and its conclusion therefrom and issued its order to cease and desist. Subsequently, the Commission reopened the case and testimony and other evidence in support of the complaint were introduced by Edward \V. Thomerson, attorney for the Commission, and in opposition thereto by Nathaniel P. Phillips, attorney for the respondent, before Wi~liam C. Reeves, an examiner of the Commission theretofore duly designated by it, and a stipulation as to the facts, in addition to all the testimony and other evidence already received in the entire proceeding, was entered into subject to the approval of the Commission ~nd said testimony fl.nd other evidence were duly recorded and filed 111 the office of the Commission and said stipulation was approved by the Commission. Thereafter, the proceeding regularly came on for final consideration by the Commission on said complaint, answer ~he.reto, all the testimony and other evidence and the aforesaid stipuation as to the :facts, and the Commission having duly considered the record finds that the proceeding is in th~ interest of the public ~nd makes this its modified findings as to the facts and conclusion ra wn therefrom :

MODIFIED FINDINGS AS TO THE FACTS paragraph 1. Respondent is an individual trading under the name afd style o:f Climax Rubber Company, with his office and principal ~ace of business in the city of Brooklyn, in the State of New York. t respondent has been, and is, engaged in offering for sale and selling t~ dealers therein and to other persons located at various places in 6 several States of the United States certain rubber sanitary and ~aterproof specialties, including infant bibs, baby pants, and crib : ~ts. Respondent, when said products are sold, causes the same e transported from his said place of business in the city of llrook-1° y~ "!f· Y., to purchasers thereof in other States of the United States an lll the District of Columbia, at their respective places of business,and th · f ere Is now and has been for more than 1 year last past a course ~ trade and commerce by the said respondent in such products be- Ween and among the States of the United States and in the District 1074 FEDERAL TRADE CO:Ml\IISSION DECISIONS Findings 26F.T.O.

of Columbia. In the course and conduct of his said business, respondent is in competition with other persons, firms, associations, and corporations who are likewise engaged in offering for sale and selling the same, like, or competitive products in commerce between and among the several States of the United States and within the District of Columbia.

PAR. 2. In the course and conduct of his business as described herein, and for the purpose of promoting and inducing the sale and distribution of his aforesaid various rubber sanitary and waterproof specialties, the respondent has made use of certain advertising pamphlets and booklets wherein are used statements and representations purporting to be descriptive of said products and their effectiveness in use. In said pamphlets and booklets the respondent has stated and represented that said products are antiseptic and antiacid, and that they actually kill bacteria and germs, neutralize perspiration and other body wastes, and completely deodorize all odors. Such statements not only serve as representations that said products a:e antiseptic and antiacid and will kill bacteria and germs; that said products neutralize perspiration and other body wastes; and that said products completely deodorize all odors; but they have tl~e capacity and tendency to confuse members of the purchasing publ_Ic as to the extent to which said products are in fact antiseptic Jll character, the extent to which said products kill bacteria and germs, and the extent to which said products neutralize the odor from perspiration and other body wastes. Such purchasers may, on account of said tendency and capacity, be led to enoneously and mistakenly believe that said products actually kill all germs and bacteria ttnd are completely effective in neutralizing the o<lors of perspiration, urine, and other body wastes, and will completely deodorize all odors irrespective of origin or character. . PAR. 3. In truth and in fact, said products do have antiseptic properties and do combat the growth of germs and bacteria which come in direct contact with said products under normal conditions of use. Said products do have the power to inhibit, to a htrge extent, the growth and activity of bacteria brought in direct contact with them and to kill many such germs and bacteria. Said products do not, however, actually kill all germs and bacteria coming in direct contact with them. Said products are not completely e~ec­ tive so as to deodorize or neutralize all odors of perspiration, unne, or other body wastes. Said products do have the property of neutralizing to a substantial extent the odor of perspiration, urine, and other body wastes when such wastes are brought in close contact with said products under normal conditions of use. 'Vhile such CLIMAX RUBBER CO. 1075 lOio Order Products do not completely deodorize all odors, they do have deodorant properties in that said products combat the obnoxious odors de,:eloping from the fermentation or putrification of urine, perspiration, and other wastes when said wastes are brought in close contact With said products under normal conditions of use. P.AR. 4. The use by the respondent of said misleading statements Ut~d representations as to the nature, character, and effectiveness q;f ~atd. Products in use, has the tendency and capacity to mislead and ~.ece1ve the purchasing public into the erroneous and mistaken belefs that said products actually kill all germs and bacteria and are completely effective in neutralizing the odors of perspiration, urine, and other body wastes, and will completely deodorize all odors irrespective of origin or character, and into the purchase of substantial quantities of respondent's products in and on account of said errolleous and mistaken beliefs induced as aforesaid. Said misleading :tatements and representations made by the respondent also furnish 0h dealers in respondent's products a means and instrumentality ;~ ereby said dealers may misrepresent the true nature and characer of said products and the extent to which they are effective in ~lse and to increase the sales of respondent's products to the purchas- Ing public on account of such misrepresentations. The aforesaid tepre~entations so made by the respondent have the tendency and ~~Pacity to unfairly divert trade to the respondent and to dealers in Is products from respondent's competitors who do not make use of any misleading statements and representations with respect to the llature 'na d euechveness l!l' • m• use of t h e1r· respective· competitive· · 1)roducts.

CONCLUSION t. T{:e aforesaid acts and practices of the respondent, Jacob Stein, 1 1 ~ 1 ~ng as Climax Rubber Company, are to the prejudice of the )~ Ic and of respondent's competitors, and constitute unfair methin commerce, within the intent and meaning of 8 ?f competitionsocechon A ~ 0 f <> f an 26, 1914,e ct of Congress, approved September 1 1 lt eel "An Act to create a Federal Trade Commission, to definei: 8 powers and duties, and for other purposes." MODIFIED ORDER TO CEASE AND DESIST 1therea.~, The Commission heard this proceeding" upon the recordanc1 un b · f ea t-'on ne s and oral argument of counsel for the Commission 1~ nc for the respondent and on January 16, 1936 made its findings tis1etop the· facts· and its conclusion that said respondent had violated rovlsions of an Act of Congress approved September 26, 1914, FEDERAL TRADE CO~Il\IISSION DECISIONS1076 Order 26F.T.C· entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," and issued its order to cease and desist based thereon; and Whereas, The Commission on February 12, 1936 reopened the case for the purpose of receiving further testimony and other evidence; and lVhereas, Such testimony and other evidence were introduced by Nathaniel Phillips, attorney for the respondent, and Edward W· Thomerson, attorney for the Commission, before 'Villiam C. Reeves, an examiner of the Commission theretofore duly designated by it; and lVhereas, A stipulation as to certain facts was entered into between "\V. T. Kelley, Chief Counsel of the Commission, and t~ 18 respondent, which stipulation has been approved by the ComJU15' sion; and Whereas, The Commission has on this date modified its said fin~· ings as to the facts and has duly considered the entire record here111 and being now fully advised in the premises; It is ordered, That the order to cease and desist issued on January 16, 1936 be, and the same is hereby, modified so as to read as follows:

It is ordered, That the respondent, Jacob Stein, trading and doing business under the name of Climax Rubber Company, or under a1~Y other name, his agents, representatives, servants, and employees, 1~ connection with the sale and distribution of rubber sanitary ai~ waterproof specialties, including infant's bibs, baby pants, and crib sheets, in interstate commerce or in the District of Columbia, do cease and desist from representing, directly or indirectly: 1. That said products actually kill all germs and bacteria, pro· vided, however, that the respondent is not hereby prohibited from representing that said products have antiseptic properties and coni· bat the growth of germs and bacteria; 1 2. That said products are completely effective in neutralizing ~~ odors of perspiratioi1, urine, and other body wastes, or that sal. products completely deodorize all odors, provided the respondent 15 not hereby prohibited :from representing that said products com?at obnoxious odors developing from the fermentation or putrificatJOll of urine, perspiration, or other body wastes. It is fwrther ordered, That the respondent shall, within 30 days after the service upon him of this order file with the Commission. !l report in writing setting forth in detail the manner and forll lll which he has complied with this order.

1\IARCELLE CANDIES, I~C. 1077 Syllabus