Old Colony Knitting Mills, Inc

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IN THE MA'l'TElt OF OLD COLONY KNITTING MILLS, INC., ET AL.

COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. o OF AN ACT OF CONGRESS APPROVED SEPT. 26, 19H Docket 4236. Complaint, Aug. 14, 1940-Decision, Jan. 27, 1942 Where a corporate1Cln engaged in the manufacture and interstate sale and distribution of knitted goods-- (a) Marked and labeled certain men's and women's sweaters as "Made of Imported Scotch-Shetland," etc., and as "• • • real Shetland Wool," relying in case of former upon representations made t(.' it by seller of yarn it used therein, and discontinuing latter label after Q.iscussion with representatives of such concern; and Where a corporate manufacturer of yarns-.

(b) Labeled aforesaid yarns sold by it to knitted goods manufacturer ab(\ve described as "Shetland B" and "Shetland F," and invoiced them to purchasers as "Shetland Blend B," "Shetland B," and "Shetland F"; Notwithstanding the fact such yarns and sweaters made therefrom were composed, in accordance with said letters "B" and "F," of about 75 percent English Hogget wool and 25 percent China Lamb wool, or of about 50 percent English Hogget wool, 40 percent.Au~:~tralian wool and 10 percent Kid Mohair, respectively, and did not contain, as long understood from word "Shetland," WClQl made of, or product made from wool of, that breed known as Shetland sheep grown on Shetland Islands or contiguous mainland of Scotland, which had become well known to purchasing public by reason of certain definite characteristics and for which there had developed a consumer preference Clver products known to be made from the simulated Shetland, which even experts found it very difficult, if not Impossible, to distinguish from the genuine, more CO!iitly, and quite limited Shetland; With effect of misleading and deceiving purchasers and prospective purchasers into the mistaken belief that the products thus labeled were made of genuine Shetland wool, (If which in fact they contained none: Held, That such acts and practices were all to the prejudice of the public, and constituted unfair acts and practices in commerce . .As respects present significance of word "Shetland" applied to wool or wool products, which has long meant the wool of, or made from the wool of, a breed of sheep known as Shetland sheep grown on the Shetland Islands or the contiguous mainland of Scotland, with certain well known characteristics and which has come to enjoy a consumer preference f(lr certain uses: notwithstanding efforfs to induce the wool trade and purchaEOing public to accept the view. that the term signifies only a type of wool <'r wool product having the distinctive characteristics of the real and more expensive Shetland wool, regardless of its source, such significance still represents the understanding and belief of a substantial portion of the trade in quest!Cln and purchasing. publi(!, Defore Mr. Miles J. F'ttrnas and Mr. R(}Jndolph Preston, trial examiners.

466506m--42-vol. 84--37 Complaint 31F. T. C.

Mr. Donovan Divet for the Commission.

f{aplan & Lin8ky and Air. Samuel P. Kaplan, of Boston, Mass., for Old Colony Knitting Mills, Inc.

Root, Clark, Buclcner& Ballantine, of ·washington, D. C., for Maine Spinning Co. • Col\IPLAINT 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 Old Colony Knitting Mills, Inc., a corporation, and Maine Spinning Co., a corporation, hereinafter referred to as the respondents, have violated the provisions of said act, ami 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: PARAGRAPII 1. Respondent, Old Colony Knitting Mills, Inc., is a corporation, organized and existing under and by virtue of the laws of the State of Massachusetts, having its office and principal place of business at 222 North Street, Hingham, Mass. Respondent, Maine Spinning Co., is a corporation, organized and existing under and by virtue of the laws of the State of 1\laine, having its office and principal place of business at Skowhegan, Maine.

PAR. 2. Respondent, Maine Spinning Co., is now, and for several years last past, has been, engaged in the business of manufacturing, selling and distributing yarns. Uespondent, Old Colony Knitting Mills, Inc., is now, and for several years last past has been, engaged in the business of manufacturing, selling, and distributing sweaters. The respondents sell their respective products to members of the purchasing public situated in the various States of the United States and in the District of Columbia, and cause said products, when sold, to be transported from their respective places of business, or from the place of origin of the shipments thereof, to purchasers thereof at their respective points of location in various States of the United States other than the States of Maine and Massachusetts and other than the S~ates of the origin of said shipments. Respondents maintain, and at all times mentioned herein, have maintained, a course of trade in their respective products in commerce among .and between the various States of the United States and in the District of Columbia. PAn. 3. In the course and con<luct of their respective businesses, for the purpose of promoting the sale of their respective products, the re.spondents have each cngage<l in the practice of falsely representing the constituent fiber or material as well as the source of the fiber or material of which their sai<l products are made. Said false represen· OLD COLONY KNITTING MILLS, INC., ET AL. 579 5i7 Complaint tations ate made by respondent, Old Colony Knitting :Mills, Inc., by means of labels attached to its said products. Said false representations are made by respondent, l\Iaine Spinning Co., by means of letters, invoices, and other printed and written material circulated among purchasers.

PAR. 4. The word "Shetland:' when applied to wool or garments, for many years has had, and still has in the minds of the purchasing and consuming public generally, a definite and specific meaning, to wit, Wool which comes from a breed of sheep known as Shetland sheep, raised on the Shetland Islands, and on the contiguous mainland ol Scotland. For many years there has been a preference on the part of a substantial number of the purchasing public for Shetland wool and yarn and fabrics made thereof.

PAn. 5. Among the products sold and distributed by respondent,. Maine Spinning Co., as aforesaid, are certain yarns which it has described as "Shetland Blend B," "Shetland B," "Shetland F," and as ''Shetland type yarns," and which it has represented as being made of stock imported from the British Isles. By the use of said statement:> and representations said respondent has represented and does now represent that said yarns are made of material imported from the British Isles, and are made in whole or in part of genuine Shetland wool. Among those to whom said statements and representations are mada and have been made by said respondent, :Maine Spinning Co., as aforesaid, is respondent, Old Colony Knitting :Mills, Inc. Said statements and representations are and have been made to said respondent in connection with the sale to it by respondent, Maine Spinning Co., of certain yarn which said Old Colony Knitting 1\Iills, Inc., has used and does now use in the manufactttre of the sweaters manufactured, sold, and distributed by it and labeled as hereinafter alleged. Among the products manufactured, sold and distributed by respondent, Old Colony Knitting Mills, Inc., are certain sweaters manufactured by it from yarn purchased from respondent, Maine Spinning Co., which respondent Old Colony Knitting Mills, Inc., has variously !~heled "Made of Imported Scotch-Shetland by Old Colony" anJ Ileal Shetland ·wool," as indicated by respondent, l\faine Spinning Co .. in selling said yarn to respondent, 0111 Colony Knitting l\Iills, 1ne., therpby repre~rnting in the one case that said sweaters are manu- ~acturrd from imported yarns made of a blend of Scotch wool and hetland wool, and in the other case that they are manufactured from hrn made of genuine Shetland wool.

l PAn. 6. The aforesaid representations are false and misleading. An ~ruth and in fact the yarns sold and distributed by respondent, fa1ne Spinning Co., as aforesaid, are not made of material imported Findings 3-!F.T.C.

from the Britibh Isles, and are not maqe £rom genuine Shetland wool either in whole or in part. Said sweaters sold and distributed by respondent, Old Colony Knitting 1\Iills, Inc., are not manufactured from Scotch and Shetland wool, nor do they contain either of saiu wools .

. PAR. 7. The use by the respondents of the aforesaid methods of labeling and representing their respective products has had, and has, the tendency and capacity to, and does, mislead purchasers and prospective purchasers thereof into the erroneous and mistaken belief that such representations are true, and. to induce them to purchase respondents' said products.

PAR. 8. The aforesaid acts and practices of the respondents as herein alleged are all to the prejudice of the public and constitute unfair and deceptive acts and practices in commerce within the intent and mean~ ing o£ the Federal Trad·e 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 August 14, 1940, issued and subse~ quently served its complaint upon respondents, Old Colony Knitting ~fills, Inc., a corporation, and Maine Spinning Co., a corporation, charging them with violation of the provisions of said act. After the issuance of said complaint and the filing of respondents' answers, testimony and other evidence in support of and in opposition to the allegations of said complaint were introduced before an examiner of the Commission theretofore duly designated by it, and said testimony and other evidence were duly recorde9. and filed in the office of the Commission. Thereafter the proceeding regularly came on for final hearing before the Commission on the said complaint, the answers thereto, testimony and other evidence, report of the trial examiner and exceptions thereto, briefs in support of the complaint and in opposition thereto, and oral argument by counsel; 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: FINDINGS AS TO THE FAC'I'S PARAGRAPH 1. Respondent, Old Colony Knitting Mills, Inc., is ll corporation, organized and existing under and by virtue of the laws of the State of Massachusetts, having its principal place of business at 222 North Street, Hingham, Mass. It is engaged in the manufacture, OLD COLONY KNITTING MILLS, INC., ET AL. 581 577 Findings.. sale, and distributiOilt of knitted goods, including men's and women's knitted sweaters. · Respondent, :Maine Spinning Co., is a corporation, having its office and principal place of business at Skowhegan, Maine. It is engaged in the manufacture, sale, and distribution of yarn. PAR. 2. In the course and conduct of their aforesaid businesses respondents sell their respective products to purchasers situated in 'Various States of the United States and cause said products, when sold, to be transported from their respective places of business, or from the place of origin of the shipments thereof, to purchasers in various States of the United States other than the States of Maine and Massachusetts and other than the States of origin of said shipments. Respondents maintain, and at all times mentioned herein have maintained, a course of trade in their respective products in commerce among and between the various States of the United States and in the District of Columbia.

PAR. 3. Among the products sold and distributed by respondent, Maine Spinning Co., as aforesaid, are certain yarns which it has labeled as "Shetland ll" and "Shetland F" and which it has invoiced to purchasers as "Shetland Blend B," "Shetland B," and "Shetland F." The letters "ll" and "F" are used as private marks by respondent, Maine Spinning Co., to indicate the composition of the particular yarn. "Shetland Blend B" and "Shetland ll" are identical in composition and consist of about 75 percent English Hogget wool and 25 percent China lamb wool. "Shetland F" consists of about 50 percent English Hogget wool, 40 percent Australian wool, and 10 percent kid mohair. These yarns did not, and do not, contain any wool from Shetland sl1eep grown on the Shetland Islands or the contiguous mainland of Scotland. Respondent, Old Colony Knitting Mills, Inc., purchased from respondent, Maine Spinning Co., yarns marked and invoiced as aforesaid, and used such yarns in the manufacture of sweaters which it sold and distributed. The sweaters so manufactured were marked and labeled by respond.ent, Old Colony Knitting Mills; Inc., as: Made of Imported SCOTCH-SHETLAND by Old Colony nnd ns "Colony Cluh Sweater Real Shetland Wool Made Expressly tor SAKS at 34th Street Respondent, Old Colony Knitting Mills, Inc., relied upon representations made by respondent, Maine Spinning Co., as to the nature of the Findlngl'! 34F.T.C.

yarn in question in labeling certt~in of its proc~tcts made from such . yarn as "l\Iade of Imported Scotch Shetland," but after discussion with representatives of the l\Iaine Spinning Co. discontinued the use of its labeling of "Real Shetland 1Vool."

PAR. 4. The word "Shetland," when applied to wool or wool products, has for a great many years meant the wool of, or made from the wool of, a breed of sheep known as Shetland sheep, gr9wn on the Shetland Islands or the contiguous mainland of Scotland. This wool and products made therefrom, because of certain definite characteristics of the wool, became well known to the purchasing public, and for certain uses a consumer preference therefor developed. The amount of Shetland wool available annually has been, and is, quite limited. It can, however, be so closely simulated by mixtures of wools grown in other portions of the world that even experts in the wool trade find it very difficult, if not impossible, to distinguish such mixtures simulating Shetland wool from genuine Shf'tland wool.

·wool products made from Shetland wool, as well as products made from simulated Shetland wool, have been, and are being, sold and distributed in the United States. Wool products made from Shetland wool command a higher price than similar products which are known to be made from simulated Shetland wool, and there is a preference on the part of members of the purchasing public for products made of genuine Shetland wool. It is usual in the trade, when there is doubt as to the kind of yarn contained in a sweater or other knitted product, to call upon the knitter for invoices of the yarn used in making the sweater or other knitted product.

There have been efforts to induce the wool trade and the purchasing public to accept the view that the term "Shetland" signifies only a type of wool or wool product having the distinctive characteristics of real Shetland wool regardless of the source or origin of the wool. For example, a large manufacturer of yarn advertised in a trade journal under date of September 23, 1938, in the form of "An open letter to the industry about Shetlands" in part as follows: There are some facti'! about Shetlands which you should know If you are using this yarn or contemplate using It. Unlike Cashmeres and .Angoras, Shetland is not clipped nor pluckf'd from an animal bearing the name of Shetland. Instead Shetland is a blend of fibres deriving its name from sweaters knitted by women O'I"Pr u quarter of a century ago on the Shetland Isles. It Is the charncterlstlcs of Shetland ratht>r than an animal that gives Shetland yarn its name. • • • • • • • P. S. Years of patient experimentation are back of our sneces~ful Shetland. We made our fit•st sample on October 30th, 193G. OLD COLONY K...~•HTTING MILLS, INC., ET AL. ( 517 Findings The president of the company, which published the above advertisement, testified that some of his customers believed that Shetland yarn was made of wool from Shetland sheep and he wanted to be sure that none of his customers would think that the yarn which he was selling Was made from the wool of Shetland sheep.

In October 1939, the Associated Wool Industries, having its office jn New York City, published a glossary of wool and wool fabric terms intended as a guide for retail clerks and others. The statement as to the term "Shetland" contained in this publication is: Originally fabric woven from the wool of the sheep in the Shetland Islands <listinguished for its hairy nature, and fine but strong fiber. The term is now 1lpplied to fabrics made of wool of like characteristics. Shetlands are soft and 11 bit "mushy." The herringbone wave is common in shetland fabrics but the term "~hetland" described the type of wool and not the weave. P.\R, 5. Some members of the wool trade assert that the word "Shetland," as applied to wool or products made therefrom, no longer signifies any specific geographic origin or definite source of the wool, but merely means that the ·wool is of a type having the appearance and characteristics of real Shetland wool. Similarly, to some members of the purchasing public the term "Shetland" signifies merely wool or wool products having the appearance and characteristics which they nssociate with the "term "Shetland," and does not indicate any special geographic or other source or origin of the wool. On the contrary, some members of the wool trade and of the purchasing public understand and believe the term "Shetland" when applied to wool or wool products means the wool of, or made from the wool of, sheep grown on the Shetland Islands or the contiguous mainland of Scotland. From a consideration of the entire record the Commission concludes that the original meaning of the term "Shetland" as applied to .wool a.nd wool products has continued, and that it is the present understanding and belief of a substantial part of the wool trade and of the pur- ~hasing public that the term "Shetland" as applied to wool or wool products means the wool of, or made from the wool of, Shetland sheep grown on the Shetland Islands or the adjacent mainland of Scotland. PAR. 6. The use by the respondents of the aforesaid marks, labels, nnd other rrpresentations concerning their respective products has had, and has, the capacity and trndency to, and does, mislrad and deceive purchasers and prospective purchasers into the erroneous and mistaken l5<'lief that the products so marked, labeled, or represented are made of wool of Shetland ~beep grown on the Shetland Islands or the contiguous mainland of Scotland, when in truth and in fact said products contain no wool taken from Shetland sheep. Order 34F.T. C.

CONCLUSION The aforesaid acts and practices of the respondents are all to the prejudice of the public and constitute unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

ORDER TO OEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission, the answers of respondents, testimony and other evidence in support of the allegations of .said· complaint and in opposition thereto taken before an ~examiner of the Commission theretofore duly designated by it, report of the trial e•aminer and exceptions thereto, briefs in support of the complaint and in opposition thereto, and oral arguments of counsel, and the Commission having made its findings as to the facts and its conclusion that said respondents have violated the provisions of the Federal Trade Commission Act: . It is ordered, That respondent, Old Colony Knitting Mills, Inc., a corporation, and respondent, Maine Spinning Co., a corporation, their respective officers, representatives, agents, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale, and distribution in commerce, as "commerce" is defined in the Federal Trade Commission Act, of any yarn, garment, or fabric made of wool or simulating wool, do forthwith cease and desist from using the word "Shetland," either alone or in conjunction with any other word or words, to designate or describe any such yarn, garment, or fabric which is not the wool of, or made from the wool of, Shetland sheep grown on the Shetland Islands or the contiguous mainland of Scotland.

It is further ordered, That respondents shall, within 60 days after the service upon them of this order, file with the Commission a report in writing setting forth in detail the manner and form in which they have complied with this order.

It i,q further ordered, That the motion of respondent, Maine Spinning Co., to dismiss the complaint herein, or in the alternative to dismiss the complaint as to it, which motion was denied without prejudice to respondent's right to renew the same at the time of final argument and which motion was duly renewed, be, and the same hereby is, denied. · DO-RAY LAMP CO., INC. · 585 Complaint