Zonite Products Corp

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IN TH~ MATTER OF ZONITE PRODUCTS CORPORATION COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE .\ALLEGED \'VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPHOVED SEPT. 26, HlH Docket 3363. Complaint, Mm·. 22, 1938-Deci.~ion., June 19, Hl-~0 Where a corporation engaged in manufacture of its "Larvex" liquid moth repellent for spraying clothing, upholstered furniture, rugs, and other nonwashable fabrics, along with its "Larvex" powder which, mixed with water as directed, it recommended as rinse for blankets, sweatt>rs,··bathiiJg suits, woolens, and other washable fabrics, and in sale to purchasers in all parts of the United States, including manufacturers and wholesale and retail dealers, for their own use and for resale to public by such whole-Sale and retail dealers, of said preparations, designed to protect articles aforesaid from the ravages of the worms or larvae of flying and other p:wths and to prevent damage occasioned thereby, and in substantial competition with others engaged in sale and distribution to purchasers In various States of various preparations for use in prevention of damage to fabrics and garments by moths and other insects, and including among its competitors manufacturers, compounders, and distributors of like and similar products or those designed and Intended for similar usnge, who do not unfairly disparage competitive goods or articles- Unfairly disparaged many competitors and tht>lr rt>spective products through representing that moth balls, cedar oil, tar, and variom; other products containing pyrethrum, naphthalene, or paradiehlorobenzPne fail to gh·e adequate protection against moth damage, and by means of such statements in advertisements of its said "Larvex" in magazines and other forms of printed matter circulated and distributed among the trade aud public in the several States as, "If you, too, want sure protection against moth damage, dont take chances with moth balls, chests, and other makeshift ways. Too much is at stake." and "WHY OTIIER METHODS FAIL. It is not enough to try with insecticides, bug-killers, moth balls, cedar chests, anl tarbags with obnoxious odors, to drive away or kill the flying moth. When you see the flying moth it is too late-she has alt·poly laid eggs In your woolen things-and old-fnshioned methods don't bathe the hungry moth-worms which hatch from the Pggs"; facts being there are many competitive products, as aforesnid referred to, on the market, such as moth balls, cedar oil, tar, and various other competitive produrts containing pyrethrum, naphthalene, or paradirhlorohenzene, which when properly u~ed, will protect fabrics and other articles agaim;t moth damage caused by moth worms and larvae ;

With capacity and tendency through such statements and representation in its advertisements as above set forth t.o dt•ceive and mislead manufacturers of fabrics and other article-..<~, dealers therein and members of purchasing public into erroneous and mlstak('n belief that sneh disparaging statements and representations made by it were true, and that comrletitive products referred to as above set forth W('re of no value in protecting fabrics and other articles against moth damage caused by moth worms or lanai\ and ZONITE PRODUCTS CORP. 151 150 Complaint to cause prospective purehasers of sucl,l competitive products, because of belief thus t>ngendered, to decline to purchase same and to buy instead its said products, and with result that trade was thereby diverted unfairly to it and dealers in its products from those competitors who do not make statements disparaging products madt>, sold and distributed by their competitors; to injury of competition in commt:>rce: Held, That such acts and practict:>s, under the rircnmstauct•s set forth, were to the prejudice and Injury of the public, and competitors, and constituted unfair methods of competition in commerce.

Before Mr. John lV. Addison and Mr. Miles J. Furnas, trial examiners.

Mr. Joseph C. Fehr for the Commission.

Mr. Horace G. Hitchcock of Chadbourne, "\Vallace, Parke & "\Vhiteside, of New York City, for respondent.

COMPLAINT Pursuant to the provisions of an .Act of Congress approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to dl:'fine its powers and duties, and for other purposes," the Federal Trade Commission having reason to believe that Zonite Products Corporation, a corporation, 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 appearing to said 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 :

PARAGMPH 1. Zonite Products Corporation, hereinafter referred to ns respondent, is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware, having its principal office and place of business located at 405 Lexington Avenue, in the city of New York, in the State of New York. Respondent is now, and for several years has bE-en~ through its Larvex Division, engaged in the business of manufacturing a liquid moth repellent designated as "I.. arvex" for spraying on clothing, upholstered furniture, carpets, rugs, blankets, draperies ami other articles together with a powder designated as ."Lnrvex," which, when mixed with waterl is recommended as a rinse for srtid articles after they have been Fpray«'d with the liquid. Said preparations are designed to protect ii'Uch articles from the ravages of the flying and other moths and to prewnt damage occasioned thereby.

PAR. 2. During all the times above mentioned and referred to, the respondent has sold its liquid and powdered "Larvex" to purchasers located in various Stutes of the United States other than New York including manufacturers, members of the public and wholesale and 2!lO.i10"' 41-vor.. :H--1:1 152 FEDERAL TRADE COMMISSION JH;CISIONS Complaint 31!<'. T. C. retail dealers for their own use, and also for resale to the public by mid wholesale and retail dealers. The respondent has caused "Larvex," both liquid aml powdered., when so sold by it, to be transported from its plant or place of business in New York, or from the State llf origin of the shipment, to purchasers located in said other States, und has maintained a course of trade in said product in commerce among and between the various States of tlw United States and in the District of Columbia.

P"\R. 3. During all tlw times above mentioned nnd for many years prior thereto, other corporations, firms, partnerships, ami individuals, hereinafter referred. to as sellers, have been engaged in the sale and distribution of various preparations, some in liquid and others iu powder form, for use in the prevention of the ravages of moths and other insects, to purchasers located in the various States of the United States other than the State of the seller or the State, of origin of the shipment. The sellers, respertively, have caused the said preparations when so sold by them, to be t~·ansported from the State of the seller, or from the State of origin of the shipment, to purchasers located in said other States.

PAR. 4. During all the times above mentioned and referred to, the respondent, in the sale of its said liquid and. powdered preparations is, and has been in substantial competition in commerce among and between the various States of the United States and in the District of Columbia with the other corporations, firms, partnerships, and individuals, referred. to in paragraph 3 hereof, as sellers. PAR. 5. In the course and conduct of its business, as above set forth, the respondent, during all the times above mentioned and referred to, has caused and now causes advertisements pertaining to its product "Larvex" to be published in magazines and other forms of printed Jflatter circulated and distributed amongst the trade and the public in the several States of the United States. In such advertisements responde.nt represents through such statements as "One spraying mothproofs a whole year" and "One spraying guards it a whole year" and. others similar thereto that one application of respondent's moth repellent to clothing, upholstered. furniture, carpets, rugs, blankets, draperies and other articles is sufficient to protect said articles from damage due to moths for a period of approximately one year without further applications of said preparation. These claims are true only insofar as they are applied to non-washable fabrics treated with the liquid or spraying form of "Latter." It is necessary that washable fabrics be treated with the pO\nlered or rinsing form of "Larvex" after each washing in order to secure the ZONITE PRODUCTS CORP. 153 150 Complaint protection claimed. The directions, in small type, on and inside the containers of respondent's product, explain the limitations of "Larvex," but do not adequatf'ly convey to the prospf'-Ctive purchaser of ~~aid preparations the limitations thereof. Such explanation as to tlw limitations of said preparations does not appear in respondent's general advettising in magazines and other printed matter. Respondent's statements and representations thus give rise to the impression and beli(:lf on the part of purchasers and prospective purchasers that, regardless of conditions, an article treated with the liquid or spraying form of "Larvex" is mothproof for one year. In truth and in fact the washing of articles after spraying, as directed, destroys the eff(:lctiveness of the liquid "I~arvex" as a one-year mothproof.

PAR. 6. The respondent makes and has made to the trade and the public other unfair, misleading and deceptive statements and representations with reference to the value and merits of its product7 "Larvex," a. portion of which is as follows: If you, too, want surp protPPJion against moth damage, don't take chances with moth ball~ chef'ts, and other makeshift ways. Too much Is at stake. WHY OTHER METHODS FAIL It i;; not euough to try with inl:lt>t•ticides, bug-ldllers, mothballs, cedar chest.;;;. and tar-bags with obnoxious odot·s, to drive away or kill the flying moth. When you see the flying moth it is too lat{'--lthe has already laid eggs In your woolen-n things-and old-fashioned methods don't. baffle the hungry moth-worms which ba tell from the eggs.

The respondent caused and now causes the above statements and other similar statements and representations also to be made to members of the public by others, such as dealers, manufacturers and users of "Larvex."

The aforesaid statements and representations of the respondent unfairly disparage a number of competitive products on the market which, if properly used, will proved fabrics and other articles against moth damage. Further, said statements and representations are misleading and deceptive insofar as they serve to represent or imply that "Lnrvex" in either liquid or powdered form is not an insecticide and that it is noninjurious. In truth and in fact respondent's product, "LatTex." in powdered form contains a high percentage of sodium silica fluoride nnd aluminum fluoride which is of sufficient strength to cauee n skin rash when the article treated with said powdered ''Lnrwx" conta<"ts the human body. In truth and in fact respondent's product in both liquid and powdered forms is an insecticide. 154 FEDERAL TRADE COl\11\fiSSION DECISIONS Finding-s :HI<'. T.C. PAR. 7. There are among the competitors of the respondent in commerce as herein set out, manufacturers, compounders, and distributors of like and similar products, or other products designed and intended for similar usage, who truthfully adrert.ise and represent the nature, merit, and value of their respective products, who do not advertise and otherwise represent that such products have merit or value which they do not have and who do not unfairly disparage the competitive products of others.

PAR. 8. The statements and representations made by the respondent inl its advertisf'ments as above set forth had, and now have, the capacity and tendency to deceive and mislead manufacturers of fabrics and other articles, dealers therein and members of the public, purchasing such article or purchasing respondent's preparations, into the erroneous and mistaken belief that said statements and repre- Mntat.ions so made and caused to be made by the respondent were and ftre true, and into the purchase of respondf'nt's "Larvex," in both liquid and powdered forms, in reliance upon such belief. As a result thereof trade has been diverted unfairly to respondent and dealers in jts products from those competitors -who do not misrepresent their respective product6. As a consequence thereof injury has been done by respondent to competition in commerce among and between the various States of the United States and in the District of Columbia. PAR. 9. The above and foregoing acts, practices and representa~ tions of the respondent have been, and are, all to the prejudice of the public and respondent's competitors as aforesaid, and have been, and are, unfair methods of competition within the meaning and intent of Section 5 of an Act of Congress a.approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes." HEP<nrr, FINDINGS As TO THE F Ac-rs, AND Onder l 1ursuant to the provisions of the Federal Trade Commission Act, 1 he Federal Trade Commission, on March 22, 1938, issued and served its complaint in this proceeding upon respondent, Zonite Products Corporation, a corporation, charging it with the use of unfair meth~ {)(ls of competition in commerce in violation of the provisions of said net. After the issuance of said complaint and the filing of respondent's answer thereto, testimony and other evidence in support of the allegations of the said complaint were introduced by Joseph C. Fehr, attorney for the Commission, and in opposition to the allegations of the complaint by Horace G. Hitchcock, attorney for the re- .spondent, before John "\V. Addison and Miles J. Furnas, examiners of ZONITE PRODUCTS CORP. 155 150 Flmlings the Commissioil theretofore duly designated by it, and said testimony and other evitlence were duly recorded and filed in the office of the Conm1ission. Thereafter, the proceeding regularly came on for final hearing before the Commission on the said complaint, the answer thereto, testimony and other evidence, briefs in support of the complaint and in opposition thereto, and the oral arguments of counsel aforesaid; and the Commission, having duly considered the matter and being now fully advised 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. Fl~DIKGS AS TO THE J,'ACTS PAUAORAPH 1. Respondent, Zonite Products Corporation, is a corporation organized and existing under and by virtue of the laws of the State of Delaware, with its principal office and place of business located in the Chrysler Building in New York City, N. Y. Its manufacturing plant is located in the city of New Brunswick, N.J. Respondent is now, and for several years last past ha.s been, through its Larvex Division, engaged in the business of manufacturing a liquid moth repellent, designated as "Larvex," for spraying on clothing, upholstered furniture, rugs and other nonwashable fabrics, together with a powder also designated a,s "Larvex," which, when mixed with water as directed, is recommended as a rinse for blankets, sweaters, bathing suits, woolens, and other washable fabrics. Said preparations are de,signed to protect such articles from the ravages of the worms or larvae of flying and other moths and to prevent damage occasioned thereby.

P,An. 2. During all the times referred to herein the respondent has sold and shipped its liquid and pow~ered "Larvex" to purchasers located in all parts of the United States, including manufacturers and wholesale and retail dealers, for their own use, and also for re,sale to the public by said wholesale and retail dealers. Respondent has maintained a course of trade in said product, in both its liquid and powdered forms, in commerce among and between the various States of the United States and in the District of Columbia. PAR. 3. During all the times mentioned herein and for many years prior thereto, other corporations, firms, partnerships and individuals, hereinafter referred to as sellers, have been engaged in the pale and distribution to purchasers located in the various States of the United States other than the State of the seller or the State of origin of the shipment, of various preparations for use in the pre,·ention of damage to fabrics and .(!arments bv moths and other inserts. The 156 FEDERAL TRADE COMl\HSSJON DECISIONS Findings 31F.T.C.

.sellers thereof, respectively, have caused the said preparations when so sold by them, to be transported from the State of the seller, or from the State of origin of the shipment, to purchasers located in said other States.

PAR. 4. In the course and conduct of its aforesaid business, the respondent is now and has been during all times mentioned herein in substantial competition in commerce among and between the various States of the United States and in the District of Columbia with the other corporations, firms, partnerships, and individuals, referred to in paragraph 3 hereof, as sellers.

PAR. 5. In the course and conduct of its businessl a,., above set forth, the respondent, during all the times above mentioned awl referred to, has caused and now causes ad\'ertisements pertaining to its product "Larvex" to be published in magazines and in other forms of printed matter circulated and distributed among the trade and the public in the several States of the United States. In such advertisements respondent, among other statements, has made the following representations:

If you, too, want sur·e prote<"tion again~t moth damage, don't take chanees with moth bnll~. chests, and other makeshift ways. Too much is at stake. WHY OTHEH METHODS FAIL It Is not enough to try with insecticides, bug-killers, moth balls, cedar chests, and tarbags with obnoxious odors, to drive away or kill the flying moth. When you see the flying moth it is too late-she has already laid eggs in your woolen things--and old-fashioned mt>tbo<ls don't bathe the hungry moth-worms which hatch from the eggs.

By means of the aforesaid statements and representations the respondent represents that moth balls, cedar oil, tar and various other competitive products containing pyrethrum, naphthalene or paradichlorobenzene fail to give adequate protection against moth damage and thereby unfairly disparages many of respondent's competitors and their respective products. The Commission finds that such representations are false, misleading and deceptive, for there are many such competitive products on the market such as moth balls, cedar oil, tar an,d various other competitive produG'ts containing pyrethrum, naphthalene, or paradichlorobenzene, which, when properly used, will protect fabrics and other articles against moth damage caused by moth worms and larvae.

PAR. 6. There are among the competitors of the respondent in commerce a::; herein set out, manufacturers, compounders and distributors of like and similar products, or other products designed and inte~ded for similar usage, who do not unfairly disparage competitive products. ZONITE PRODUCTS CORP. 157 150 Order PAR. 7, The statements and representations made by the respondent in its advertisements as above set forth have had the capacity and tell;dency to deceive and mislead manufacturers of fabrics and other articles, dealt>rS therein, and members of the purchasing public into the erroneous and mi~taken belief that said disparaging stat{'ments and representations so made by the respondent are true, and that the competitive products referred to in Paragraph Five hereof are o:f no value in protecting fabrics and other artic.les against moth damage caused by moth worms or larvae; and the capacity an,d tendency to cause prospertive purchasers of said competitive products, be~cause of the belief so engendered, to decline to purchase such competitive products and to purchase instead respondent's products. As a result thereof, trade has been diverted unfairly to respondent and dealers in its products from those competitors who do not use statements disparaging the products made, sold and distributed by their competitors. As a consequence thereof, injury has been done by respondent to competition in commerce among and between the various States of the United States and in the District o£ Columbia. CONCLUSION The aforesaid acts and practices of the respondent, Zonitt:> Products Corporation, a corporation, as herein found, are to the prejudice and injury of the public and of respondent's competitors and constitute unfair methods of competition in commerce within the intent and meaning o£ the provisions o:f the Federal Trade Commission Act. ORDER TO CEA~E AXD DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission, the answer o£ respondent, testimony and other evitlence taken before John ,Y. Addison and Miles J. Furnas, examiners of the Commission theretofore duly designated by it, in support o£ the allegations of said complaint and in opposition thereto, briefs filed herein, and oral arguments by Joseph C. Fehr, counsel for the Commission, ami by Horace G. Hitcheock, counsel :for the respondent, and the Conunission having made its findings as to the facts and its conclusion that said respondent has violated the provisions of the Federal Trade Commission Act. It is ordel'rd, That the respondent, Zonite Products Corporation, its officers, representatives, agents, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale and distribution o£ its product now sold and distributed under the name "Larwx" or any other product, whether sold under that nalllf\ Onl~>l' 311<'.T.C. or some other name, sold as a moth repellent or mothproofing agent in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing that moth balls, cedar oil, tar, and other competitive products containing pyrethrum, naphthalene or paradichlorobenzene will not protect fabrics and garments from damage by moth worms or larvae. It is furtne1' <Yrde1•ed, That the respondent shall, within 60 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 orde,r.

GARDNER REMEDIES, INC. 159 Syllabus