Marshall Field & Co

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IN Tile MA'ITER OF MAitSHALL FIELD & COMPANY, DOING BUSINESS AS KARASTAN RUG MILLS COMPL.UNT, FINDINGS, AND ORDER IN REGARD TO Tile ALLEGED VIOLATION OF SEC. 1i 0~ A.~ ACT OF CONGRESS AI'l'ROVED SEPT. 26, 1914 Docket .H93. Compla.int, Apr. ~6, 1941-Decision, Mar. ~71 194S Where a corporation, engaged under the name "Karastan Rug Mills" In the manufacture and competitive interstate sale and distribution of rugs which so closely simulated the true Oriental, hand-made product with its knotted threads and other di:>tlnctive features, as to be practically Indistinguishable therefrom, lnl'luuiug as its leading line its "Kurastan" rug for which it useu the advertising slogan "Karastan • • • The Wonder llug of America," more recently also included the term "Maclline Woven U. S. A." and iu connection with which it described the similarity to Oriental rugs aecompli~:;he<l by power loom weaving, and which It further featured in the labeling and advertising of its other rugs through use of the statement "lly the Makers of Karastan"- (a) Represented that certain of Its said rugs were genuine Orientals and made In the Orient by h1tnd, through designation of its said mnehlne mnue products by such coined names as "Karashah," ''Karavere," "Kharol" and "Kara Kh·man" in simulation of the names of such true Orientals as ''Knradagb,'' ''Karabagh,'' and "Karajah" of northern Persia and the southern Caucasus, or t.he well-known Turkish ''Kirman";

(b) Represented that certain of its rugs were "Oriental lleproductlons" or "Authentic Oriental Iteproductlons" through labels firmly attached thereto and plainly discernible In connection with retailers' display of the rugs for sale;

When in tact they were not exact copies or reproduction of true Orientals In structure or method of manufacture, but merely simulated the appearance thereof, and, while ln some instances 1t had £>ndeavored to copy designs of typical Oriental rugs, In others it used designs which it bad created and which were adaptations or combinations of Oriental motifs; With tendency and capacity to mil!lead purchasers into the mistaken belief that Fuch representations and designations were true and that rugs so l.!t•signated were genuine Oriental rugs, thereby Inducing purchase thereof; and with elfect of placing In the hands of retail dealers means of misleading and deceiving tbe purchasing public; with result that trade was diverted unfairly to it from competitor!! who truthfully represent their products: 1lcld, 'that such acts and practices, under the circumstances set forth, were all to the prejudice and injury of the public and competitors, and constituted unfair methods of competition In commerce and unfair and deeeptlve acta nnd practices tl1ereln.

Before Mr. Ja.m..es A. Purcell, trial examiner. Mr. Rarulolph lY. Bra1U'h for the Commission. lV il11on & },/cllt•aine, of Chicago, _Ill., for respondent. 412 FEDERAL TRADE · COMMISSION ·DECISIONS Complaint 36F.T.C.

Complaint Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested in it by said act, the Federal 'Irade Commission, having reason to believe that Marshall Field & Co., a corporation, hereinafter referred to as respondent, has vio· lated the provisions of the said act, and it appearing to the Commis· sion 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, Marshall Field & Co., is a corporation, organized and existing under the laws of the State of Illinois and having an office and principal place of business at 222 North Bank Drive in the city of Chicago, State of Illinois. Respondent also maintains an office at 295 Fifth Avenue, New York City, N.Y., and a manufacturing plant at Leakesville, N. C. PAn. 2. Respondent is now, and has been for more than 3 years last past, engaged in the business of manufacturing, distributing and selling rugs under the name of Karastan Rug Mills. In the course and conduct of its business, respondent sells said rugs to vari· ous wholesale and retail dealers, and causes such rugs, when sold, to be transported from its aforesaid place of business in the States of Illinois, New York, and North Carolina to purchasers thereof located in various other States of the United States and in the District of Columbia. Respondent maintains, and nt all times mentioned herein has maintained, a course of trade in said rugs in commerce among and between the various States of the United States and in the District of Columbia.

PAn. 3. In the course and conduct of its said business, respondent is now, and has been at all times mentioned herein, in substantial competition with other corporations, and with firms, partnerships, :md individuals also engaged in the sale and distribution of rugs in commerce among nnd betwcc.n the various States of the United States and in the District of Columbia. Among such competitors are many who do not misrepreso.nt either the place or method of manufacture or nature of their products and who do not furnish their dealer-customers with means or instrumentalities for deceiving the public.

PAR. 4. A substantial portion of the purchasing and consuming public understands, and for many years has understood, Oriental rugs to be rugs made in the Orient, or more particularly in certain parts of southwestern Asia, by hand, of pleasing texture and original and beautiful design and having o. pile of wool or silk and wool, the KARASTAN: RUG MILLS 413 411 Complaint threads of which are individually knotted in a special manner. Such 111gs are usually designated by names which are indicative of the Orient and Oriental origin and manufacture. Oriento.l rugs have been for many years, and still are, held in great public esteem because of their texture, beauty, durability, and other qualities, and by reason thereof there is a substantial demand on the part of many of the purchasing public for such rugs.

PAR. 5. In the course and conduct of its business, and for the purpose of inducing the purchase of certain of its rugs, respondent has engaged in the practice of describing and designating said rugs, which closely resemble true Oriental rugs in appearance, by the names of "Karastan," "Karashah," "Karavere," "Kara Kirman" and Kharol."

There are true Oriental rugs known as "Karabagh," "Karadagh," "Ko.rageuze," "Kara.man,"' "Knrahissar," "Karajah" and "Kirman," and the use by respondent of the designations "Karastan," "Karashah," "Karavere" and "Kara Kirman" has the capacity and ten· dency to create the mistaken and erroneous belief that the rugs so designated are in fact genuine Oriental rugs. The name "Kharol" suggests and connotes the Orient o.nd has the tendency and capacity to induce the mistaken and' erroneous belief that the rugs so designated are in fact genuine Oriental rugs. Respondent. uses said names to designate the said rugs in invoices to dealers and in otherwise referring to the same in the sale thereof to dealers, and in advertisements in magazines of general circula· tion in the rug trade.

To the various rugs designated by respondent us above set forth, it firmly attaches labels upon which the particular name conspicuously appears; in addition to the names, the "Kharol" and "Kara JGrman" labels also bear depictions of Oriental scenes. AU of said labels o.re plainly discernible to members of the purchasing public when said rugs are displayed for sale by retail dealers. In truth and in fact, respondent's rugs hereinabove referred to are woven on power looms in its factory in the United States. They nre not made by hand, and the individual threads are not knotted in the distinctive manner of the true Oriental rug. They do not possess all the characteristics of true Oriental rugs, but do in fact so closely simulate true Oriental rugs in appearance as to be indistinguishable from them by a large portion of the purchasing public, and, in consequence, are readily accepted as being true Oriental rugs. PAn. 6. In the course and conduct of its business and for the purpose of inducing the purchase of certain of its rugs, respondent has engaged in the practice of representing that they are "Oriental reproductions" 414 FEDERAL TRADE CO.MMIBSION DECISIONS Complaint 36F.T.C.

or authentic Oriental reproductions. Such representations are made by means of labels firmly attached by respondent to said rugs, which are plainly discernible. to members of the purchasing public when said rugs are displayed for sale by retail dealers. Among and typical of the statements which appear upon such labels are the following: Kara Sultana Authentic Oriental Reproduction Woven of fl.ne Oriental yarn.

Kara Sultana Authentic Oriental Reproduction All wool face.

Kara Imperial Authentic Oriental Reproduction by The Karastan Rug ~nus.

Kara Imperial Authentic Oriental Rept"Oductlon by Karastan Rug Mills.

Woven of fine Imported wool All wool face.

Kara-Furn Oriental Reproduction Woven of fine Oriental yarn.

Kara-Furn Oriental Reproduction All wool face.

In truth and in fact, said rugs are not exact copies, or reproductions of true Orientals in structure or method of manufacture, but merely simulate them in appearance. While in some instances respondent has endeavored to copy the designs of particular Oriental rugs, in others it has used designs which it has created and which are adaptations or combinations of Oriental motifs.

PAR. 7. The use by respondent of the designations, depictions and representations as set forth herein in connection with the offering for sale and sale of its said rugs has had, and now has, the tendency and capacity to mislead purchasers and prospective purchasers thereof into the erroneous and mistaken belief that such representations and designations are true and correct, and to induce them to purchase said rugs on account thereof. Respondent's said acts and practices have the eflect of placing in the hands of retail dealers who purchase said rugs and resell the same to the purchasing public, means and instrumentalities for misleading and deceiving' the public in the particulars aforesaid. · · j KA.RASTAN RUG'' ~ITLLS . ' . 415 411 Findings I As a result of respondent's said acts and practices, trade has bee-n unfairly diverted to respondent from its competitors engaged in the sale in commerce between and among the various States of the United States and in the District of Columbia of rugs of various kinds, including both genuine Oriental and domestic rugs, who truthfully represent ' their products as set forth in paragraph 3 hereof. In consequence thereof, injury has been, and is now being, done by respondent to competition in commerce among and between the various States of the United States and in the District of Columbia; PAR. 8. The aforesaid acts and practices of respondent as herein alleged are all to the prejudice and injury 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, FINDINOS AS TO THE FACTS, AND ORDER . Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission on April 26, 1941, issued and subsequently served its complaint in this proceeding upon the respondent, Marshall Field & Co., a corporation, trading and doing business under the name Karastan Rug Mills, charging it with the use of unfair methods of competition in commerce and 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, testimony and other evidence in support of and in opposition to the allegations of said complaint were introduced before James A. Purcell, a trial examiner of the Commission theretofore duly designated by it, and said testimor..y and other evidence were duly recorded and filed in the office of the Commission. Thereafter, this proceeding. regularly came on for final hearing before the Commission on said complaint, answer. thereto, testimony, and other evidence, report of the trial examiner upon the evidence and exceptions filed thereto, briefs in support of the complaint and in opposi~ tion thereto, and oral argument of 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.

FINDINOS AS TO THE FACTS PARAGRAPH 1: Respondent, Marshall Field & Co., is a corporation, organized and existing under the laws of the State of Illinois and having nn office and principal place of business at 222 North Dank Findings 313F. T.C. Drive in the City of Chicago, State of Illinois. Respondent also maintains an office at 295 Fifth Avenue, New York, N. Y., and a manufacturing plant at Leaksville, N. C.

PAR. 2. Respondent is now, and for several years last past has been, engaged in the business of manufacturing, distributing, and selling rugs under the name of Karastan Rug Mills. In the course ' and conduct of its business, respondent sells said rugs to various wholesale and retail dealers and causes such rugs, when sold, to be transported from its aforesaid places of business in the States of Illinois, New York, and North Carolina to purchasers thereof loca.ted in various other States of the United States and in the District of Columbia. Respondent maintains, and at all times mentioned herein has maintained, a course of trade in said rugs in commerce among and between the various States of the United States and in the District of Columbia.

PAR. 3. In the course and conduct of its busines~, respondent is now, and at all times mentioned herein has been, in substantial com· petition with other corporations and with firms, partnerships, and individuals also engaged in the sale and distribution of rugs in commerce among and between the various States of the United States and in the District of Columbia.

PAR. 4. A substantial portion of the purchasing artd consuming pub- He understands, and for many years has understood, Oriental rugs to bo rugs made in the Orient or, more particularly, in certain parts of southwest Asia, by hand, of pleasing texture and original and beautiful design and having a pile of wool or silk and wool, the threads of which arc individually knotted in a special manner. Such rugs are usually designated by n:.unes which are indicative of the Orient and Oriental origin nnd manufacture. Oriental rugs have been for many years, and still are, held in great public esteem because of their tex· ture, beauty, durability, and other qualities, and by reason thereof there is a substantial demand on the part of many of the purchasing public for such rugs.

PAn. 5. In the course and conduct of its business and for the purpose of inducing the purchase of certain of its rugs, respondent has engag<'d in the practice of describing and designating said rugs, which closely resemble true Oriental rugs in appearance, by the names of "Knrastan," "Karashah," "Karavere," "Kara Kirman," and "KharoL" The Karastan rug is respondent's leading or more expensive line of domestic rugs and is further featured in the labeling and advertising of its various other dome.stic rugs through the use of the statement "Dy the makers of Ko.rnstan." The rugs so designated by the respond- KARASTAN' RUG MILLS 417 411 ·Findings ent are woven on power looms in its factory in the United States. They are not made by hand, and the individual threads are not knotted in the distinctive manner of the true Oriental rug. The wool used in the manufacture of said rugs is in part imported from various foreign countries, and a substantial part of the wool so imported nnd used is of South American and European origin. The dyes used in the manufacture of such rugs nre commercial coal-tar dyes of American manufacture. In the weaving of respondent's Karastan and Karashah rugs, the design is woven through to the back, which is a characteristic of Oriental rugs. The designs, motifs, and figures used in the weaving of respondent's rugs are obtained by tracings from Qriginal Orientals, and the color is simulated as closely as possible. Tho rugs, after manufacture, are chemically washed, thereby chlorinating the wool, which is the same general process used on genuine Oriental rugs for the purpose of enhancing the beauty, luster, and shee:ri and to soften the color. Respondent's rugs so closely simulate true Oriental rugs in appearance as to be indistinguishable from them by a large portion of the purchasing public. There are no true Oriental ru(l's0 known as "Karastan", "Karashah"' "Karavere"' "Y).. ara. Kirman,'' and "Kharol," and said words are not names of true Oriental rugs or of any district, place, or tribe in the Orient but are coined names originated by the respondent. The respondent has discon· tinued the use of the terms "Kara Kirman," "Karaverc," and "Kharol" in designating its rugs.

PAn. 6. In earlier labeling of respondent's ,rugs the respondent a.tta.ched thereto labels containing such designated names without further designating or describing the place of origin or manufncturo of such rugs. In its later and more recent labeling the respondent has pla<'ed on its labels the terms "l\Iachinc Woven in U.S. A." In addition thert>to, in connection with the advertising of its Karastan rugs, tho re!';pondent has used the slogan ''Karnstan • • • The Wonder Rug of America," which advertisements also usually carry the term ".Machine Woven U. S. A." and the context of such advertisements usually describes the similarity to Oriental rugs, which has been accomplished by power·loom weaving. Such advertising is issued by the respondent and supplied to dealers for use by them in advertising said rugs.

PAn. 7. The use by the _respondent of the word "Karashnh" to designate or describe certain of its rugs is a simulation of the names of true Oriental rugs known as "Kara.dagh," "Karabagh," and "Karajah," Which· are produced in northern Persia and the southern Caucasus, and further constitutes a representation that the rugs so designated Findings 36F. T. C.

are true Oriental rugs in all respects, made in the Orient by hand. The use of the words "Kara Kirman" to designate or describe certain other of its rugs is a simulation of the name of a true Oriental rug known as "Kirman,'' which is produced in Turkey and is well known in the United States, and further constitut~s a representation that the rugs so designated are true Oriental rugs in all respects, made in the Orient by hand. In like manner the use of the words ''Karavere" and "Kharol," together with the manner in which said rugs were labeled by the respondent, has a capacity and tendency to cause the purchasing public to beiieve that such rugs are in fact true Oriental rugs in all respects, made in the Orient by hand. PAR. 8. In the course and conduct of its business and for the purpose of inducing the purchase of certain of its rugs, respondent has en- ·gaged in the practice of representing that its rugs are "Oriental reproductions" or "authentic Oriental reproductions." Such repre$entations are made by means of labels firmly attached by respondent to said rugs and which are plainly discernible to members of the purchasing public when said rugs are displayed for sale by retail dealers. In truth and in fact said rugs are not exact copies or reproductions of true Orientals in structure or method of manufacture but merely simulate them in appearance. While in some instances respondent has endeavored to copy the designs of typical, particular Oriental rugs, in others it has used designs which it has created and which arc adaptations or combinations of Oriental motifs. PAR. 9. The use by the respondent of the designations and repre· sentations as set forth herein in connection with the offering for sale, sa.Je, and distribution of its rugs has had, and now has, the tendency and capacity to confuse and mislead pur~hasers and prospective purchasers thereof into the erroneous and mistaken belief that such representations and designations are true and correct and that the rugs so designated and represented are true or genuine Oriental rugs and to induce them to purchase said rugs on account thereof. The aforesaid acts and practices of the respondent have the effect of placing in the hands of retail dealers who purchase said rugs and resell them to the purchasing public, means and instrumentalities whereby they may mislead and deceive the purchasing public in the particulars aforesaid.

As a result of said acts and practices, trade has been unfairly diverted to the respondent from its competitors engaged in the sale in oommerce between and among the various States of the United, States and in the District of Columbia of rugs of various kinds, including both gf'nuine Oriental nnd domestic rugs; who truthfully represent their products.

Pc·~''',- l') 'X:A.RASTAN: RUG MILLS • 419 411 'Order ,conclusion The aforesaid acts and practices of the respondent as herein found are all 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 practice.s 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 Commission on the complaint of the Commission, answer of the respondent, testimony, and other evidence in support of and in opposition to the allegations of the complaint taken before a trial examiner of 'the Commission theretofore duly designated by it, report of the trial examiner upon the evide.'~Ce and exceptions filed thereto, briefs filed in support of the complaint and in opposition thereto, and oral argument of counsel; and the Commission having made its findings ns to the facts and its conclusion that said respondent has violated the provisions of the Federal Trade Commission Act. It is ordered, That the respon~ent, Marshall Field & Co., a corporation, trading and doing business under the name Karastan Rug Mills, and its officers, representatives, agents, and employees, directly or through any corporate or other device in connection with the offering for sale, sale, and distribution of rugs in commerce as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from :

1. Using the word "Karashah," "Kara Kirman," "Karavere," or "Kharol," or any other word or combination of words or syllables, coined or otherwise, which ure indicative of the Orient, to designate or describe rugs which are not in fact made in the Orient and which do not possess all the essential characteristics and structure of Oriental r11gs.

2. Using the word "IGrman" or any other name of any genuine Oriental rug in combination with other words or syllables, coined or otherwise, to designate or describe rugs which are not in fact made in the Orient and which do not possess all the essential characteristics nnd structure of the particular Oriental rugs indicated by the use of buch name.

3. Using the word "Karashah" or any other word or combination of words or syllables the spelling, sound, or written appearance of which closely simulates or suggests the name of a genuine Oriental rug, to designate or describe rugs which are not in fact made in the Orient Order 36F.T. 0.

and which do not possess all the essential characteristics and structure of the particular Oriental rugs indicated by the use of such name. 4. Using the word "reproduction" or any other word of similarimport or meaning to designate.or describe rugs which are •not in fact .. reproductions of genuine Oriental rugs in all respects, including structure, method of manufacture, and material. 1t is further ordered, That no provision of this order to cease and desist shall be construed as prohibiting the respondent from using the term ''Karastnn" to designate or describe its rugs, provided there is used in immediate connection or conjunction therewith a statement which clearly and conspicuously states in appropriate terms that the rugs so designated and described are woven· on power looms in the United States.

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.

ERDLEY HATCHERIES, ET AL. 421 Syllabus