Dermay Perfumers, Inc

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IN THE MATI'ER OF DERMAY PERFUMERS, INC.

COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 3257. Complaint, Nov. 1, 1937-Decision, Apr. 13, 1988 'Vhere a corporation engaged in sale and distribution of perfumery and toilet articles to purchasing and consuming public- (a) Represented through word "Factory" on letterheads and invoices, and other· wise, that it was manufacturer of products ofrered and sold by it, facts being it neither made nor compounded same, nor owned, operated n.or controlled a factory or mill so doing; with capacity and tendency to IJll~ lead and deceive purchasers Into erroneous belief that In buying sue products from it they were dealing with manufacturer thereof and thereby' saving middleman's profit and obtaining other advantages; >d (b) Displayed word "Paris" on its merchandise and on labels of packaged products, and represented through matter appearing on letterheads an "·ere labels of products and In other ways, that they originated In, Ol' d Imported from, France, facts being 1t had no Paris place of business and· its said products were made and compounded in United States; with te~ f ency and capacity to mislead and deceive purchasers Into erroneous vel!; that In buying same they were purchasing perfumes or toilet articles Jllll ~ or compounded in France and imported therefrom, such as long in gren demand among trade and consuming public and considered superior by want' to the domestic product, and purchased in preference thereto; ·r (c) Represented that Its said products had values greatly in excess of tbCI actual retail selling prices and values, through price-marks placed thereon which were greatly In excess of such actual prices and values and in ~ 0 sense represented either, with result that members of purchasing publl~ were led into erroneous and mistaken belief that said products' aetna values and selling prices were stamped or marked thereon, in accordance with custom of marking or stamping such actual retail price or value .~; commodities, as understood and relied on by public as indication of qual! e to extent of purchasing merchandise in substantial volume in dependenc thereon;

With effect of misleading substantial portion of purchasing public into erron~· ous belief that such representations were true and into purchase of sui; stantlal quantities of said products as result thereof, and of unfairbO diverting trade to It from competitor manufacturers and distributors ~ do not misrepresent status or nature of their respective businesses, the Ollr;: of their products, or prices at which same are sold, or otherwise publ s t untrue claims therefor, in their advertisement, sale and distribution ;e competitive products In commerce among the various States and in t District of Columbia: tbe Held, That such acts and practices were to the prejudice and Injury of public and ~ompetitors and constituted unfair methods of competition. Before Air. lV. lV. Sheppard, trial examiner. Mr. Dewitt T. Puckett for the Commission.

Mr. Elliot B. Pal-ey, of New York City, for respondent. DERMAY PERFUMERS, INC. 1087 1086 Complaint COl\! PLAINT Pursuant to the provisions of an Act of Congress, approved Sepnllssion, h~nlber. 26to' 1914define' entitledits powers"An andAct duties,to createanda Federalfor otherTradepurposes,"Comthe Federal Trade Commission, having reason to believe that Dermay Perfumers, Inc., a corporation, hereinafter referred to as respondent, has been and is usilw unfair methods of competition in commerce, as "~0lllll1erce" is defim~d in said act and it appearing to said Commis- ~1011 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:

• PAR.l..GRAPH 1. Respondent, Dermay Perfumers, Inc., is a corporabon, organized in 1924 and doing business under the laws of the State of New York. Its principal office and place of business is at 347 Fifth Avenue, New York, N.Y.

Responden~ is now, and since the date of incorporation has been, engn.ged in the sale and distribution of perfumery and toilet articles to the purchasing and consuming public located in various States of the United States and in the District o:f Columbia. Respondent now causes, and since the date of its incorporation has caused, its Products, wh£>n sold, to be shipped from its place of business in New ork, N. Y., to the purchasers thereof located in the various otherl . states of the United States and in the District of Columbia. There 1~ now, and has been at all times mentioned herein, a constant current 0 trade in perfumery and toilet articles, by the respondent, between °anf dColumbiaamong the. various States of the United States and in the District .Respondent is, and since 1924 has been, in substantial competition 'With other corporations and with partnerships and individuals en- ?aged in the sale and distribution of perfumery and toilet articles ~ commerce between and among the various States of the United states and in the District of Columbia.

~ AR, 2. During the time respondent has been in business as de- ~cribed in paragraph 1 hereof, it has represented, and still represents, • Y ~cans of certain printed matter appearing on its letterheads and ~;1Voices, and in various other ways, that it is the manufacturer of 1e products which it offers for sale and sells. On its letterh£>ads and invoices the following appears: Dermay, Inc., PERFUMERS General O.tnces and Factory 625 West 43rd Street New York, N.Y.

Complaint ~uF.T.C· In truth aml in fact, the respondent does not manufacture or compound the products which it offers for sale and sells, nor does it o':·n and operate, or directly and absolutely control a factory or mill wherein its said products are manufactured or compounded. It is a common belief among the purchasing public that such merchandise can be purchased direct from the manufacturer thereof u.D a considerable saving in price and that other advantages can be secured by so purchasing. The representations made by respondent,, as alleged herein, have the tendency and capacity to mislead and deceive the purchasers of respondent's products into the erroneous belief that when they purchase said products from respondent they are dealing with the manufacturer of said products and thereby are saving the middleman's profit and obtaining other advantages. PAR. 3. In the course and conduct of its business, as aforesaid, the respondent has represented and still represents, by means of printed matter appearing on its letterheads, the labels attached to its products, and in other ways, that certain of its products originate in or a.re imported from France, and that it hn,s a place of business in Ptlns, France. The word "Paris" appears on its letterheads and on the labels affixed to its packaged products.

In truth and in fact the respondents products do not origimlte in and are not imported from France nor does· it have a phtce of business in Paris, France. Its products are manufactured and cOJl1pounded in the United States of America.

Perfumes and certain toilet articles of French origin have for many years enjoyed widespread popularity and good\vill and have been very much in demand among the trade and consuming public througho~lt the United States. Many persons believe that perfumes and certa~n toilet articles manufactured in France are superior in quality and lll many other ways to perfumes and toilet articles manufactured and compounded in the United States and prefer to purchase perfumes and certain toilet articles of French origin in preference to perfumeg and toilet articles manufactured or compounded in the United States. The aforesaid representations of the respondent have the tendency' and capacity to mislead and deceive the purchasers into the erroneous belief that when they purchase respondent's products they are pur· chasing products which were, in fact, manufactured or compounded in France and imported into the United States. PAR. 4. By price marks placed upon certain of its said products, r~­ spondent represents to customers and )?rospective customers that sttld products have values greatly in excess of the actual retail selling prices and in excess of the actual values thereof. DERMA Y PERFUMERS, INC. 1089 1086 Complaint The price marks placed upon said products, as aforesaid, are greatly in excess of the actual retail selling prices of said products and are in excess of the true and actual values thereof and in ·no sense represent either the true values or true selling prices of the Jlrotlucts so marked but are greatly in excess of the prices at which the same are sold or intended to be sold in the usual course of trade. . The public generally understands the custom of marking or stamp- :tng the actual retail price or value on various commodities and has been led to, 1.tnd does, place its confidence in the price markings so stamped on commodities and the representations thereby made as lo t.?e quality o£ the product to the extent that it purchases a substantial volume of merchandise in reliance "on this aforesaid custom. As ~ result of the respondent's representations, members of the purchas- Jng public are led to erroneously and mistakenly believe that the actual value and selling price of respondent's products are the prices stamped or marked thereon when, in fact, the prices so stamped or rn~rked are fictitious and in no sense repre>sent the actual selling Price or value of the products referred to. h p ~· 5. The use by respondent of the representations set forth erem has had, and now has, the capacity and tendency to mislead and deceive, and has misled, a substantial portion of the purchasing Public into the erroneous belief that such representations are true and into the purchase of substantial quantities of said respondent's Products as a result of such erroneous belief. There are among the COinpetitors of respondent, as mentioned in paragraph 1 here>of, 7anu£acturers and distributors of perfumes and toilet articles who 0 ( not misrepresent the status or nature of their respective businesses, the origin of their products, or the price at which their prodnets are sold, or otherwise publish claims for their products which are untrue. By the representations aforesaid, trade is unfairly di- "e~ted to respondent from such competitors an<l as a result thereof, ~u ~t.antial injury is being, and has been, done by re~pondent to com-1-'eht ·D . Ion In commerce among and between the various States of the united States and in the District of Columbia. th P ~R: 6. The aforesaid acts and practices of respondent are all to t e Injury and prejudice of the public and of respondent's competi- ' 0.rsl, and constitute unfair methods of competition in commerce ~It. lin the intent and meanino- of Section 5 of an Act of Conrrress,enhn d "An ,., o 1) e Act to create a Federal Trade Commission, to define its 26owers and duties, and for other purposes..,, approw1l September ' 191~ ' Findings 26F. T.O.

REPORT, FINDINGS AS TO THE F Aars, AND OnoER Pursuant to the provisions of the Fed.eral Trade Commission Act, the Fed.eral Trade Commission, on November 1, 1937, issued., and 011 November 3, 1937, served its complaint in this proceeding upon ~-e­ spondent, Dermay Perfumers, Inc., a corporation, charging it with the use of unfair methods of competition in commerce in violati.on of the provisions of said act. After the issuance of said complalllt and the filing of respondent's answer, the Commission, by 01:der entered herein, granted respondent's motion for permission to w~th­ draw said answer and to substitute therefor an answer admittlng all the material allegations of the complaint to be true and waiving the taking of further evidence and all other intervening procedure, which substitute answer was duly filed in the office of the Conli mission. Thereafter, this proceeding regularly came on for fina hearing before the Commission on the said complaint and the substitute answer, briefs having been waived and oral argument 1~ 0t having been requested, and the Commission having duly consld: ered the same and being now fully advised in the premises, fin~~ that this proceeding is in the interest of the public and makes thl~ its findings as to the facts and its conclusion drawn therefrom: FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent, Dermay Perfumers, Inc., is a corporll· tion, organized in 1924 and doing business under the laws of the State of New York. Its principal office and place of business are at 347 Fifth Avenue, New York, N.Y.

Respondent is now, and si~ce the date of incorporation has been, engaged in the sale and distribution of perfumery and toilet article'> to the purchasing and consuming public located in various State: of the United States and in the District of Columbia. Respondell now causes, and since the date of its incorporation has caused, its products, when sold, to be shipped from its place of business in Ne~ York, N. Y., to the purchasers thereof located in the various other States of the United States and in the District of Columbia. 'fhe~e is now, and has been at all times mentioned herein, a course of trll ~ in perfumery and toilet articles, by the respondent, between a~\ among the various States of the United States and in the DistrtC of Columbia. . Respondent is, and since 1924 has been, in substa~tial competit10l~ with other corporations and with partnerships and individuals e~1gaged in the sale and distribution of perfumery and toilet articles tcommerce between and among the various States of the United Sta es and in the District of Columbia.

DERMAY PERFUMERS, INC. 1091 1086 Findings Par. 2. During' the time respondent has been in business as described in parag~aph 1 hereof, it has represented, and still represents, by means of certain printed matter appearing on its letterheads and invoices, and in various other ways, that it is the manufacturer of the products which it offers for sale and sells. On its letterheads and invoices the following appears: Dermay, Inc., PERFUMERS General Offices and Factory 625 West 43rd Street New York, N. Y.

~he respondent does not manufacture or compound the products '~which it offers for sale and sells, nor does it own and operate, or directly and absolutely control a factory or mill wherein its said Prod~cts are manufactured or compounded.

It Is a common belief among the purchasing public that such lllerchandise can be purchased direct from the manufacturer thereof ~t a considerable saving in price and that other advantages can e secured by so purchasing. The representations made by respondent, as alleged herein, have the tendency and capacity to mislead and deceive the purchasers of respondent's products into the erroneo~s belief that when they purchase said products from respondent t ey are dealing with the manufacturer of said products and thereby are saving the middleman's profit and obtaining other advantages. hPAR. 3. In the course and conduct of its business, as aforesaid, t ? respondent has represented and still represents, by means of Pn~ted matter appearing on its letterheads, the labels attached to Its products, and in other ways, that certain of its products origi- ~at? in or are imported from France, and that it has a place of h Usiness in Paris, France. The word "Paris" appears on its lettereads and on the labels affixed to its packaged products. 'I'he respondent's products do not originate in and are not im- ~orted from France nor does it have a place o£ business in Paris, lJr~nce. Its products are manufactured and compounded in the n~ted States of America.

Perfumes and certain toilet articles of French origin have for ~any years enjoyed widespread popularity and goodwill and have tleen very much in demand among the trade and consuming public ndoughout the United States. l\Iany persons believe that perfumes an .certain toilet articles manufactured in France are superior in ;uahty and in many other ways to perfumes and toilet articles manu- ~ctured and compounded in the United States and prefer to pure lase perfumes and certain toilet articles of French origin in preference to perfumes and toilet articles manufactured or compounded Findings 26 F. T. C. in the United States. The aforesaid representations of the respondent have the tendency and capacity to mislead and deceive the pu~· chasers into the erroneous belief that when they purchase respondent 5 products they are purchasing products which were, in fact, m~nu· factured or compounded in France and imported into the United States.

PAR. 4. By price marks placed upon certain of its said products, respondent represents to customers and prospective customers t~lat !!aid products have values greatly in excess of the actual retail sE>lhng prices and in excess of the actual values thereof. The price marks placed upon said products, as aforesaid, are greatly in excess of the actual retail selling prices of said products and are in excess of the true and actual values thereof and in no sense represent either the true values or true selling prices of ~ht products so marked but are greatly in excess of the prices at "hJC 1 the same are sold or intended to be sold in the usual course of trade. The public generally understands the custom of marking or stan1P' ing the actual retail price or value on various commodities, anJ has been led to, and does, place its confidence. in the price markings 50 stamped on commodities and the representations thereby made as to the quality of the product to the extent that it purchases a substan· tial volume of merchandise in reliance on this aforesaid custmn. ,!s a result of the respondent's representations, members of the purchasing public are led to erroneously and mistakenly believe that .the actual value and selling price of respondent's products are the prices stamped or marked thereon when, in fact, the prices so stamped. or marked are fictitious and in no sense represent the actual selllllg price or value of the products referred to. 1 PAR. 5. The use by respondent of the representations set .fort l herein has had, and now has, the capacity and tendency to 1nisl~a and deceive and has misled, a substantial portion of the purchasing public into the erroneous belief that such representations are tr~e and into the purchase of substantial quantities of said respondent 5 products as a result of such erroneous belief. . There are among the competitors of respondent, as mentioned 1~ paragraph 1 hereof, manufacturers and distributors of perfumes al: toilet articles who do not misrepresent the status or nature of thel~ respective businesses, the origin of their products, or the price ~ which their products are sold, or otherwise publish claims for their products which are untrue, who likewise advertise, sell and distribute perfumes and toilet articles in commerce among the various States of the United States and in the District of Columbia. By use of .t~e representations aforesaid, trade has been, and is now being, unfair Y diverted to respondent from such competitors. DERl\!AY PERFUl\IERS, INC. 1093 1086 Order CONCLUSION The aforesaid acts and practices of respondent, Dermay •Perfmners, Inc., a corporation, are to the prejudice and injury of the public and of respondent's competitors, and. constitute unfair meth- <Jds of competition in commerce within the intent and meaning of the Federal Trade Commission Act.

ORDER TO CEASE AND DESIST . This proceeding having been heard by the Federal Trade Commis- Sion upon the complaint of the Commission and the answer of res~ondent, in which answer respondent admits all the material allegations of the complaint to be true, and states that it waives hearing <J~ the charges set forth in said complaint and 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 ~d conclusion that said respondent has violated the provisions of t e Federal Trade Commission Act;

1 t i8 ordered, That the respondent, Dermay Perfumers, Inc., a c~rporation, its agents, representatives and employees, in connection W~h the offering for sale, sale and distribution of perfumes and ~t er toilet articles in interstate commerce or in the District of olnmbia, do forthwise cease and desist from: th 1. Representing, through the use of the word "Factory," or through the use of any word or term of similar import and meaning, or rough any other means or device, or in any manner, that said respondent is the manufacturer of the products sold by it, unless andunn . t { It actually owns and operates, or directly and absolutely conbro ~'a manufacturing plant wherein said products are manufactured Y It;

tl 2· Representing, through the use of the word '~Paris," or through ~e. use of any word or term, or through any other means or device,0 1 a ~n any. manner, that it has a place of bnsim'ss in Paris, France, ll~d that Its pe:fumes and other toilet articles compounded, bottled F packaged m the United States are made or compounded in l\ radnce, or in any other foreign country or that they are imported tJl'o nets· ' 'th3· Representing, through the use of fictitious price marks, or l'OUO'h tl f h, ,th t ~ le use o any ot er means or device, or m any manner, \V}~· 1Its1 P~rfumes and toilet articles have retail values or prices lc are m excess of the prices at which said perfumes, and toilet 1094 FEDERAL TRADE. COMMISSION DECISIONS Order 26F.T.0· articles are actually and customarily offered for sale and sold to the ultimate purchaser. · It u further ordered, That the respondent shall, within 60 days after service upon it of this order, file with the Commission a repo~t in writing setting forth in detail the manner and form in which It has complied with this order.

LYNX KNITTING CO. 1095 Syllabus