Mulkey, John H

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IN THE :MATTER OF .JOHN H. MULKEY, TRADING AS WESTERN NOVELTY COMPANY ~COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 4082. Complaint, Apr. 4, 19-10-Decisio-n., July 16, 1940 Where an individual engaged in offering for sale novelty jewelry, including finger rings with setting of hematite or certain nonprecious crystal, to dealer purchasers in various States and in the Territory of Alaska, and in substantial competition as thus engaged with others engaged in sale of novelty jewelry anu gf'm jewelry, including rings as aforesaid, and including some who sell rings set with nouprecious crystals, including hematite, and who do not in any manner misrepresent th~ir products or origin thereof- Represented and implied that hematite settings in his said rings were diamonds or gem or jewel stones at. dark or unusual color produced in Alaska, through such typiral statements, etc., in advertisements circulutPd among prospective purrhasers, 11s "Alaska Black Diamond" and "Genuine Laska Black Diamond" and through lllttet· words aiRo on metal t11g customarily attached to such rings, and through statPmeuts on plaearus circulated by him among tourists journeying to Alaska and au'\'ertising his said prouucts as "sold at all t•ellable curio ami jewelry stores in AJa;:ka-Watch for this label (meaning tag above referred to auu depleted in advertisement) -There are lmita tions on the market";

Fact being none of his said rings were set with diamonds or gem or jewel settings but, as Indicated, with gt·ouud, shaped, polished settings of hematite crystals, substance of which is not precious stone or gem, but is an ore of iron and culled also in ct·ystal form "Specular Iron'' and constitutes nonpt·edous crystal of variable dark colors;

With result that purehasiug public was deceh·ed and erroneously lnl to believe and understand that his said riugs were in fact l;('t with diamonds or jewels or gems of dark anu unusual color, produceu in Alnska, and with consequence, ns result of such belief, that number of pureh,aslng public bought his said rings and trade was thereby divet·ted unfairly to him from his competitors in commerce between and among the '\'arious States and with said Territory; to their injury and that of public:

Held, That such acts and practices, under the circumstances slt fot·th, were all to the prejudice and injury of the public and competitors, and constituted unfair methods of competition in commerce, and unfair aud deceptive act:t and practices therein.

Mr. Wm. T. Ohantland for the Commission.

COl\! PLAINT Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it by said act., the Federal Trade Commission, having reason to believe that .John II. Mulkey, an individual, trading as ·western Novelty Co., has violated the pro- Complaint 31F.T.C.

visions of said act, and it appearing to the 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: PARAGRAPH 1. Respondent, John II. Mulkey, an individual, trading as ·western Novelty Co., with his office and principal place of business at 305 Southwest Third Avenue, Portland, Oreg., is now and for several years last past has been, engaged in the business of offering for sale and selling novelty jewelry, including finger rings with settings of hematite, a nonprecious crystal, to dealer purchasers in various States of the United States and in the Territory of Alaska, and in so offering said wares for sale, and when so sold to dealer purchasers outside of the State of Oregon, respondent has caused said wares to be transported from his principal place of business in Oregon to said dealer purchasers in nrious States of the United States and the Territory of Alaska.

PAR. 2. In the course and conduct of his said business, respondent is now, and for .more than 2 years last past has been, in substantial competition with corporations and with individuals, firms, and partnerships engaged in the business of selling novelty jewelry and gem jewelry, including finger rings, in commerce among and between the various States of the United States and with the Territory of Alaska. Among said competitors are many who sell rings set with nonprecious crystals, including hematite, ancl who do not in any manner misrepn'sent their products or the origin thereof. PAR. 3. In the course and conduct of his business in said commerce as aforesaid and to induce the purchase of his said rings, respondent has circulated among prospective purchasers of such rings advertisements containing statements and representations with reference to said rings and with reference to the material of which the ring sets are composed. Among and typical of the statements and representations so made and circulated by the respondent are the following: Alaska Black Diamond and Genuine Laska Black Diamond On a metal tag customarily attached to said rings appears the statement-"Genuine Laska Black Diamond." In circulars circulated among prospective purchasers, and more particularly among tourists journeying to the Territory of Alaska, the respondent has and does circulate placards adwrtising said rings, upon which appears the following statement:

Sold at all reliable curio and jewelry stores in Alaska. Watch for this label. There are imitations on the market.

The warning in such statement to watch for "this label" refers to the metal tag above mentioned which is depicted in said advertisement. WESTERN NOVELTY CO. 621 61!) Findings PAR. 4. By the mans and in the manner afor!'saill, respondent represents that the sets in said rings are diamonds, or stones or jewels produced in Alaska and known as Alaska Black Diamond, and through the use of the aforesaid statement warning prospective purchasers that "there are imitations on the market" imports and implies that rings manufactured by competitors and offered for sale and sold to the public containing sets of hematite, as do respondent's rings, are J.mitations and that respondent's rings contain the "genuine" stone or jewel. In truth and in fact the sets in said rings are not diamonds, or a stone or jewel produced in Alaska known as Alaska Black Diamonds, but are composed of a nonprecious crystal hematite, as hereinabove alleged.

PAR. 5. The acts and practices of the respondent, as aforesaid, in designating, describing, and referring to said hematite sets as "Alaska Black Diamond" and "Genuine Laska Black Diamond" and warning the public to beware of imitations, have the capacity and tendency to and do mislead and deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that said rings are set with diamonds, or with stones or jewels produced in Alaska and known -as Alaska Black Diamonds. As a result of said erroneous and mistaken belief, members of the purchasing public have purchased a substantial volume of respondent's said hematite rings, thereby unfairly diverting trade to respondent from its competitors in said commerce to their injury and to the injury of the public. PAR. 6. The aforesaid acts and practices of the respondent are to the prejudice and injury of the public and of respondent's competitors and constitute unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

REPORT, FINDINGS AS TO THE FACTS, AND ORDER Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission on .April 4, 19-:1:0, issued and thereafter caused its complaint to be served in this proceeding upon respondent John H. Mulkey, an individual trading as ·western Novelty Co., charging him with the use of unfair methods of competition in commerce and with t,he use of unfair and deceptive acts and practices in commerce in violation of the provisions of said act. After the issuance of said complaint and the filing of respondent's answer thereto, a stipulation was entered into whereby it was stipulated and agreed that a statement of facts signed and executed by the respondent and ,V, T. Kelley, chief counsel for the Federal Trade Commission, subject to the approval of the Commission, may be taken as the facts in this proceeding and in lieu of testimony in support of DECISIO~S622 FEDERAL TRADE COMMISSION Findings 311!'. 'L'. c. the charges stated in the complaint. or in opposition thereto, and that the Commission may proceed upon such statement of facts to make its report stating its findings as to the facts and its conclusion based thereon and enter its order disposing of the proceeding without further presentation of argument or the filing of briefs. Thereafter this proceeding regularly came on for final hearing before the Commission on said complaint, the answer and stipulation, said stipulation having been approved, accepted and filed, and the Commission having duly considered the same and being now fully advised in the premises finds that this proceeding is in the interest of the public and makes its findings as to the facts and its conclusion drawn therefrom.

FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent, John H. Mulkey, is an individual, trading as 1Vestern Novelty Co., with his office and principal place of business at 305 Southwest Third Avenue, Portland, Oreg., ~nd is now and for several years last past has be€n, engaged in the business of offering for sale and selling novelty jewelry, including finger rings with settings of hematite, a nonprecious crystal, to dealer purchasers in various States of the United States and in the Territory of Alaska, and in so offering said wares for sale, and when so sold to dealer purchasers outside of the State of Oregon, respondent has caused said wares to be transported £rom his principal place of business in Oregon to said dealer purchasers in various States of the United States and in the Territory of Alaska. PAR. 2. In the course and conduct of his said business, respondent is now, and for more than 2 years last past has been, in substantial competition with corporations, individuals, firms, and partnerships engaged in the business of selling novelty jewelry and gem jewelry, including finger rings, in commerce among and between the various States of the United States and with the Territory of Alaska. Among said competitors are some who sell rings set with nonprecious crystals, including hematite, and who do not in any manner misrepresent their products or the origin thereof. PAR. 3. In the course and conduct of his business in said commerce as aforesaid and to induce the purchase of his said rings, respondent has circulated among prospective purchasers'of such rings advertise· ments containing statements and representations with reference to said rings and with reference to the material of which the ring sets are composed. Among and typienJ of the statements and represen· tat ions so made and circulated by the respondent are the following: Alaska Black Diamond and Genuine Laska Dlnck Diamond WESTERN NOYELTY CO. 623 G19 Conclusion · On a inetal tag customarily attached to said rings appears the statement-"Genuine Laska Black Diamond." In circulars circulated among prospective purchasers, and more particularly among tourists journeying to the Territory of Alaska, the respondent has and does circulate placards advertising said rings, upon which app€ars the following statement :

Sold at all reliable curio and jewelry stores in Alaska. Watch for this label. There are imitations on the market. The warning in such statement to watch for "This label" refers to the metal tag above mentioned which is depicted in said advertise· ment.

None of respondent's said finger rings transported and sold under the advertising and representations stated above, are set with diamonds or gem or jewel settings, but are, in fact, set with ground, ~haped, polished settings of hematite crystals. Hematite is not a precious stone or gem, but is an ore of iron, and in crystal form is also called "Specular Iron," a nonprecious crystal of variable dark colors.

By the means and in the manner above described, respondent imphed and represented that the settings in his said rings were dia· monds or gem or jewel stones of dark and unusual color produced in Alaska, when such are, not the facts.

PAR. 4. As a result of the above stated acts and practices of respondent in making the aforesaid representations with regard to said hematite set finger rings, the purchasing public has been and is being deceived and erroneously led to believe and understand that 'respondent's said rings are, in fact, set with diamonds, or jewels or gems of dark and unusual color produced in the Territory of Alaska, and as a result of this mistaken and erroneous belief a number of the purchasing public have purchased respondent's said rings and as a consequence trade has been unfairly diverted to the respondent from his competitors in commerce between and among the various States of the United States and with the Territory of .Alaska to their injury and the injury of the public.

CONCLUSION The acts and practices of the respondent as herein found are all to the prejudice and injury of the public and competitors of the respondent and constitute unfair methods of competition in commerce and unfair and deceptive acts and practices within the intent and meaning of the Federal Trade Commission Act.

Order 311~. T. C. ORDER TO CEASE AND DESIST This proceeding having been heard and considered by the Federal Trade Commission upon the complaint of the Commission, the answer of respondent, and a stipulation as to the facts entered into by and between ,V, T. Kelley, chief counsel for the Commission, and John H. Mulkey, respondent, which has been duly approved by the Commission, and the Commission having made its findings as to the facts and its conclusion that respondent John H. Mulkey, trading as 'Vestern Novelty Co., has violated the provisions of the Federal Trade Commission Act.

It is ordered, That respondent John H. Mulkey, individually, or trading as 'Vestern Novelty Co., or under any other trade or through any corporate or other device, his agents, representatives and employees in connection with the offering for sale, sale and distribution of rings in commerce between and among the various States of the United States and within the Territory of Alaska, do forthwith cease and desist from :

Representing, directly or by implication, that rings set with hematite, or any nonprecious crystal or stone, are set with diamonds, "Alaska lllack Diamonds," or "Genuine Laska lllack Diamonds"; or that such rings are set with any precious or semiprecious stones; or that the sets in said rings are produced in tQ.e Territory of Alaska. It is further ordered, 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 order.

ATLANTIC COMMISSION CO. 625 Syllabus