Kidde & Co., Inc., Walter

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IN THE MATTER OF WALTER KIDDE & COMPANY, INC.

, I COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF Sl£C. G Oir AN .ACT OI•' CONGRESS APPROVED SEPT. 26, Hl14 Docket 3866. Complaint, .Auu. 7, 1939-Decision, Mar. 1!9, 19.~3 Where a corporation, engaged In the manufacture and competitive Interstatesale and distribution of its "Lux" carbon dioxide fire-extinguishing apparatus, among other fire-fighting equipment- .<a) E'falsely represented In adverth;Pmcnts and sales promotion literature that it originated and pioneered the carbon dioxide method of fire-extinguishing, that every important development of carbon dioxide equipment and technique bad been accompllshec:l by Its engineers, and that every basic improvement in every fire-extinguisher Involving carbon dioxide on the market was a uevelopment of it; The facts being that while its senior vice-president, as chief engineer, in 1924, conceived two major improvements In the original ''Lux" system, said system involved a 1920 Swedisb patent directed to one of the most difficult problems in the mechanics concerned with the use of carbon di· oxide as a fire extinguisher, right to use of which, along with trade name "Lux" it acquired under license arrangements with Swedish com· pany owner In 1923; and It acquired In 192!> and 1930, following declara· tlons of interference by the Patent Office--and notwltbstanlling earlier work by It or by Its employee, having to do with pressure operatell fiuld release devices, and a discharge to prolluce a denser and wider coverage and concentration, without knowledge, as contended, of competitor's patents. or developments-patent rights and appllcaUons relating thereto through licensing agreements and through acquisition of all the assets and business of a company to which particular invention had been assigned; (b) Repr£>sented that its carbon tJioxhle fire extinguishc·rs had "108 extra values or features" which coulll not be obtained ln its competitors' fire extinguishers, through distributing booklets which contained lllustratlons and representations relative to Its said "Lux" extinguisher, nn<l ou the cover of which appeared the statement "108 Extra Values"; The facts being that by virtue of license agreements with certain competitors, the inventions covered by the patents refert·ed to were used by thein; and the majority of the features rP!erred to In said booklet were not ex· ccptlonal to its proc:J.uct but were to be found also ln those of its competitors ;

(c) Represented, M typical exclusive fpatnres or Its t;nld "Lux" extinguisher, that its cylinders were drawn from plates Instead of blllets so that flow lines of the grain follow the contour of the cylinders; were made with sphet·!cal bottoms and domes, thu~ providing the greatest strength with the least weight; and wet·e subjl'cted to con·trolled beat treatment and tempel'ing to produce uniform strength ;

The facts being that fire-extinguishing apparatus of competitors were alsodrawn from plates and made with ~;pherieal bottom~ and domes, and all manufacturers .subjected such apparatus to controlled beat treatment and f'omplalnt 3GF. T. C.

tempering, to produce cylinders of uniform strength, as required under regulations of the Interstate Commerl'e Commission; (d) Represented that the valves of its extinguishers were fitted with recoil preventers;

The facts being that during the year 1936, and prior thereto, the recoil preventer was being used by its competitors, although covered by reissue patent Issued to it In 1933;

(e) Represented; as aforesaid that all Lux discharge horns used nozzles with orifices of the patented Jones design, which was the only nozzle that operated perfectly under all temperature conditions and permitted lengthly discharge at low temperatures without freezing, and that discharge horus on all Lux portable extinguishers were nonconductors of electricity as the soft rubber grip on the horn covered all metal parts;

The facts being that after March 31, 1936, the nozzle equipment on its apparatus was not of the "Jones" design, but a noz1.le of said design was then and since had been used by Its competitors, and during said year and theretofore, the soft rubber grips were also an accompaniment of the apparatus of a com· petitor;

((} Represented, as aforesaid, that no fire-extinguishing apparatus, device, or equipment other than its own would put out airplane fires both on the ground and during flight, and that Its equipment was the only tire-extinguishing equipment for airplane-engine fires approved by the United States Army and Navy;

The facts being that equipment of a certain competitor had been approved by the Army and Navy since 1935 as apparatus which would extinguish such fires both on the ground and during flight; and (g) Falsely disparaged competitors and the merit of competing products through letters sent to prospective purchasers containing such typical mlsrepresenta· tions as that the fire-extinguishing equipment of a certain competitor had been In existence for only two years, with the result that said competitor was still having difficulty with problems that it, Itself, encountered and overcame eight or ten years before; and that Its competitors did not carry a supply of parts for emergency use In either Chicago or St. Louts; The facts being that competitor referred to had been In existence since 1925, and during the year 193G, and prior thereto, had a direct factory warehouse branch, and salesmen operating under Its Chicago district manager, and Its branch warehouses carried a substantial stock of extinguishers and parts; With etrect of misleading and deceiving prospective purchasers Into the fa~e belier that said representations were true, thereby causing them to purchase said fire-extinguishing apparatus; whereby trade was diverted unfairly to It from competitors so engaged:

Held, 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.

Mr. R. P. Bellinger for the Commission.

Oolladay, Oolladay & 1Vallace, of Washington, D. C., for respondent. Complaint Pursuant to the provisions of the Feueral Trade Commission Act, and by virtue of the authority vested in it by said net, the Federal WALTER KIDDE & Oo., INC. 433 431 Complaint Trade Commission, having reason to believe that ·walter Kidde & Co., Inc., a corporation, hereinafter referred to as respondent, has violated the provisions of the 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:

PARAGRAPII 1. Respondent, '\Valter Kidde & Co., Inc., is a corporation, doing business under and by virtue of the laws of the State of New York, with its principal place of business located at 140 Cedar Street, in the city of New York of said State, and with a factory located in the city of Bloomfield, State of New Jersey. Said respondent now is, and for several years last past has been, engaged in the business of manufacturing, offering for sale, and selling a line of firefighting and fire-extinguishing equipment, including carbon dioxide fire-extinguishing apparatus having the trade name "Lux," in commerce among and between the various States of the United States and in the District of Columbia and among and between the United States and foreign countries.

In the course and conduct of its aforesaid business respondent now causes, and has caused, saiq products, when sold or ordered, to be shipped and transported from its aforesaid places of business to purchasers located in States other than the States of New York and New Jersey, and to purchasers located in the District of Columbia and in foreign countries. At all times herein mentioned, respondent has maintained a course of trade in said products in said commerce und has been and now is in competition with other corporations, firms, partnerships, and individuals engaged in the business of offering for sale and selling fire-fighting and fire-extinguishing equipment and apparatus in said commerce.

PAR. 2. In the course and conduct of its business as described in paragraph 1 hereof, and in soliciting the sale of and selling its products, more particularly its carbon dioxide fire-extinguishing apparatus, respondent caused certain advertisements and sales promotion literature to be distributed and circulated to and among purchasers and prospective purchasers of said products in and throughout the various States of the United States, and in the District of Columbia and foreign countries, in which there appeared statements and representations, of which the following, among others, are typical. Every important development of carbon dioxide equipment and technique has been accomplished by LUX engineers.

LUX engineers developed carbon dioxide fire extinguishing. They have specialized In fts nppl!catlon tor fifteen years. They are responsible for every worthwhile improvement made in carbon dioxide extinguishers. Complaint 3GF.T.C.

The same engineering ability that conceived and pioneered the carbon dioxide method of fire extinguishment Is still on the job, keeping Lux years ahead of competition. Not only was this method of fighting fires developed by Kidde engineers In the face of stiff competition from our present competitors and licensees, both were then recommending other types as being inferior to gas, but every basic Improvement and every single model (carbon dioxide) now on the market Is a Kidde development. In contrast, the experience ·of our competitors bad been entirely with carbon tetrachloride and foam equipment. For 200 years, carbon dioxide has been known as a fire extinguisher. Walter Kidde & Company developed the secret of success-the secret of getting liqui.fled carbon dioxide out of the cylinder quickly-without freezing. Each LUX fnstallatlou Is designed by the manufacturer who developed carbon dioxide protection.

The mechanical advantages of Lux extinguishers outlined In this book are fully protected by patents, many of whlcn have been successfully litigated. The background of experlrnce Incorporated In Lux extinguisilf'r>~ Is an extlnslve Lux possession that cannot be copied.

The aforesaid statements and representations were and are false and. misleading and an unfair disparagement of respondent's competitors and their products in that the same imply and represent that the engineering and technical staff of respondent alone were and are responsible for the invention and successful adaptation of carbon dioxide to the extinguishment of fires and for every important <level· opment and improvement in carbon dioxide equipment for the extinguishment of fires, and that all the products of such development are the exclusive possessions of respondent, whereas such are not the facts. The successful adaptation of carbon dioxide to the extinguish· ment of fires and the invention of equipment therefor was first accomplished by engineers, inventors, patentees, and persons at no time in the employ of respondent and having no connection with respondent. Numerous inventions, developments, and important im· provements of such type of equipment have been made and patented by others than respondent and by others not in the employ of respondent, and a substantial number of such inventions and improve· ments have been and are used by respondent by virtue of licenses from competitors and others not otherwise connected with respondent. The said implications and representations were and are further false and misleading for the reason that a substantial number of the inven· tions and mechanical advantages of respondent's Lux fire extinguishers were and are used and open to use by competitors under licenses therefor granted by respondent. . · PAR. 3. Among the advertising and sales promotion literature used and circulated by respondent, as aforesaid, certain undated catalogs -or booklets containing illustrations, statements, and representations '! ' ' ' WALTEU KIDDE & GO., INC. 435 431 Complaint I I'.

relative to respondent's carbon dioxide fire extinguisher, designated as ''Lux," carried on the cover thereof the statement, "108 EXTRA VALUES." Of the 108 separate value items therein listed and re- .ferred to, many are further stated and represented to be "An Exclusive LUX feature," the said statement being printed after an asterisk at ihe bottom of each page of said catalogs or booklets. Typical of said values referred to and represented as "extra values" and as "exclusive LUX features" are the following, among others: . ' . Lux cylinders are drawn from plates Instead of billets. Every Lux cylinder Is hydraulically tested at 3000 lbs. pressure. Lux cylin.· ·ders not only meet, but exceed,' I. C. C. requirements . . Locking pins,- having a spring tension, hold Lux valves shut against vibration. Lux valves are fitted with a patented recoil preveuter. The Lux recoil preventer .bas no moving parts, does not restrict the gas tl.ow, -and cannot be accidentally removed.

Soft rubber grip on the horn covers all metal parts. Each Lux cylinder Is equipped with a rotary cutter valve • • • The cutter valve cuts out the sealing disc completely so that there Is no ·obstruction left in the path of the gas to restrict its fiow and cause freezing. Lux screening nozzles are used to prevent entrainment of wear through doors -and windows that cannot be closed. They produce the only effective gas curtain. Special Lux electrically driven carbon dioxide recharging units. ' The foregoing statements imply and represent that the items or 'Values listed as "extra values" are each and all values which are . peculiar and limited to respondent's product and not available in the products of respondent's competitors, and that said values are "extra" and not normally to be had in carbon dioxide fire extinguishers. The said implication and representation is not offset by specific reference to certain items or values as "exclusive Lux· features," but insofar as reference is made to certain items or values us being "exclusive Lux features," the said statements imply and represent that all the items or values so referred to are peculiar and limited to respondent's prod- ·Uct only, that none of them are available in the products of respondent's competitors, and that the snme are "extra" and not normally to be had in carbon dioxide fire extinguishers. The said implications and representations are false and misleading in that most of the items or values referred to in said catalogs or booklets are essential to and normally to be found in carbon dioxide fire extinguishers and are not ".extra," and most of said items or values are not peculiar or limited to respondent's product as distinguished from the products of certain competitors. There are, and were at the time said statements were made, and during the time the S<tid catalogs or booklets were in use, ·competitors of respondent who made and offered for sale and sold ·carbon dioxide fire extinguishers having the items or values listed .and re,ferred to in said catalogs or booklets. . • 436 FEDERAL 'XRADE COMMISSION DECISIONS Complaint 36F.T.C.

Other statements made in said catalogs or booklets falsely and misleadingly representing items or values to be "EXTRA VALUES" and "exclusive Lux features," were and are as follows: The new oval·sbaped born. on Lux extinguishers gives a dlsch11rge having 10 to 15% longer range than the old-fashioned round horn. All Lux discharge horns use nozzles with orifices of the :patented Jones design * • • It operates at 30 degrees lower temperature than any other type o! nozzle.

The aforesaid statements and representations are false and misleading for the reason that the Lux extinguisher's oval-shaped horn referred to, at the time said statements and representations were made and in use, did not give a 10 percent to 15 percent, longer range than a round horn, and the Jones design nozzle did not operate at 30 degrees lower temperature thim any or all other types of nozzle. Further items or values, among others, referred to and falsely and misleadingly represented in said catalogs or booklets as "exclusive Lux features," are the following:

One pull on the control ot the Lux airplane fire extinguisher puts out the most . severe fire that can occur about the engine ot an airplane. No other device puts out fires both on the ground and during flight. The Lux airplane fire extinguisher is the only device of any type approved by the Underwriters' Laboratories tor protection against airplane engine fires. The Lux extinguisher Is the only extinguisher tor airplane engine fires approved by the U. S. Navy and Army.

The aforesaid statements and representations are false and misleading for the reason that a similar airplane fire-extinguishing system that puts out fires both on the ground and during flight was and is ofiered for sale by a competitor, and competing fire extinguishers were and nre approved by the Underwriters' Laboratories, and by the United States Navy and the United States Army for protection against airplane engine fires, PAn. 4. In the further course and conduct of respondent's aforesaid business, by means of letters written and sent through the mails to prospective purchasers, respondent has falsely, misleadingly, and' unfairly represented and disparaged competitors and the merit of competing products. Demonstrative of said representations and disparagement by respondent are the following statements: The C·O-Two units have been in existence..only about.two.years, with the result that they are still having difficulty overcoming problems that Kidde encountered and overcame 8 or 10 years ago.

Neither ot our competitors have a local engineer available, nor do they carry a supply of parts tor emergency use either 1n Chicago or St. Louis. The aforesaid representations were nnd are false and misleading and an unfair disparagement of respondent's competitors and competing WALTER KIDDE & CO., INC. 437 Findings products, particularly the product of the C-O-Two Company, in that the C-0-Two product }?.ad been in existence more than two years, said competitor was having no difficulties which respondent had pretiously overcome, and the said competitor had a direct factory warehouse branch and was equipped for emergency purposes at warehouses in the city of Chicago, Ill.

PAR. 5. The use by respondent of the aforesaid false, misleading and disparaging statements and representations has had and now has the capacity and tendency to mislead and deceive purchasers and prospective purchasers of fire-extinguishing equipment and apparatus into the false and erroneous belief that said statements and representations were and are true, and to cause them to purchase said products in reliance upon such erroneous belief.

PAR. 6. The aforesaid "acts and practices of respondent, as herein alleged, are all to the prejudice of the public and respondent's competitors and constitute unfair methods of competition in commerce within the intent and meaning o·f 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 Aug. 7, 1939, issued and subsequently served its complaint in this proceeding upon the respondent, Walter Kidde & Co., Inc., a corporation, charging it with the uso of unfair methods of competition in commerce in violation of the provisions of said act. After the issuanc~ 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 Golladay, Golladay & 1Vallace, counsel for the respondent, nnd Richard P. Whiteley, assistant 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 the charges stated in the complaint or in opposition thereto, and that the said Commission may proceed upon a-aid statement, of facts to ma1re its report stating its findings as to the facts and its conclusion based thereon and enter its order disposing of the proceeding without presentation of argument or the filing of briefs. Thereafter, this proceeding regularly came on for tinal hearing before the Commission on said complaint, answer, and stipulation, said stipulation having been approved, acc~pted, 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 this its findings as to the facts· and its conclusion dr:awn therefrom. 438 FEDERAL TRADE COMMISSION· DECISIONS Findings 36F. T. 0..

FINDINGS AS TO THE FACTS ' PARAGRAPH 1. Respondent, "!alter Kidde & Co., Inc.,.is a corpora- ~ion, doing business under and by virtue of the laws of the State of .New York, with its principal place of business located at 140 Cedar Street in the city of New York, Stu te of New York, and with a factory located in the city of Bloomfield, State of New "Jersey. Said. respondent is now, and for several years last past has been, engageu in the business of manufacturing, offering for sale, and selling a line of fire-fighting and fire-extinguishing equipment, including carbondioxide fire-extinguishing apparatus having the trade name "Lux," in commerce 1Jetween and among the various States of the United States and in the District of Columbia.

ILAR, 2. Respondent has been continuously in business since its organization in 1917 and is a general contractor, as well as a. manu- !acturer and seller of fire:extinguishing apparatus. Its carbon dioxide fire-extinguishing apparatuses are umnufactun•J by respond- (mt at its factory in Bloomfield, N.J.

In the course and conduct of its uforesaiJ business, respondent causes said products, when sold, to be shipped from its aforesaid places of business in the States of New York and New Jersey to purchasers thereof ]ocated in various other States of the United States. Uespondent maintains, and at all times mentioned herein has maintained, a course> of trade in said products in commerce among and between tho various States of the United States and in the District of Columbia. 1 PAn. 3. RPspondcnt is now, and nt all times mentioned herein has b<>C'n1 in sub:::t:mtinl compe-tition with other corporations and with firms, partnerships, nn<l individuals also e>ngaged in the sale and distribution of fire-extinguishing equipment and npparatus in commerce among and between the various States of the United States and in the District of Columbia.

PAn. 4. In the course and conduct of its business and in soliciting the sale of and selling its products, particularly its carbon dioxide fire-extinguishing nppnratus, respon<lent at various times and intervals from 1934 to 1!>37, inclusi,·e, cnns<>d c<>rtain n.dwrtisements and sales promotion lit(>rupture to he distributed and circulated to and among purchasers and prospccti,·e purehasHs of said products in and throughout the various States of tho United States, in which there app~ared various false, misleading, and dec(>ptivc statements and representations, of which the following, among others, ar" typical:

'WALTER KIDDE & CO., INC. 439 431 Findings · 1. That the respondent originated anfl pimwered the carbon dioxide method of fire extinguishing and that every Important de\'"elopmcnt of cat·bon dioxide l;'qulpment and technique has been accomplished by respondent's engineers. 2. That e\'"ery basic Improvement ami every fire extinguisher Involving car· bon dioxide now on the market Is a development or· the respondent. }lan. 5. Among the advertising nnd sales promotion literature used and. circulated by rrspondent as aforesaid were certain undated catalogs or booklets containing illustrations, statements, and representations r<>lative to respondent's carbon-dioxide fire extinguishers designated as "Lux," which booklets carried on the cover thereof the statement "108 EXTRA VALUES." The booklet so designated contains 108 numbered paragraphs describing various features of respondent's Lux extingnislwrs. By this m<>ans the respondent has representf'd that its carbon-1lioxide fire extinguishers have 108 extra values or features which cannot be obtained in fire extinguishers sold and distributed by its competitors. In addition to this representation, the respondrnt has de:-:ignatcd certain of these items as being exclusive features uf the Lux fire extinguisher. Typical o! some of the items referred t.o us such exclusive feature~ are the following: 1. That respondPnt's cylintlers urP umwn !•·om plates Instead ot billets so that tlow lines of the grain toUow the coutour ot tlle cylinders. 2. That respondent's cylindei'S are made with t:ph£>rlcal bottoms and domrs, 'Which shape provides the greatest strength with the least weight. 3.' That re~>pondent's cylinders are subjected to controlled beat treatment and tempering to produce uniform strength.

4. That 'the valves o! rt>spondent's extingulshet·s are fitted with recoil preventers.

5. That all Lux discharge horns use nozzles with orifices ot the patented Jones design, which Is the only nozzle that operates perfectly under all temperatm·e contlitlons and permits lengthy discharge at low temperatures without fre<>zlng.

6. That discharge horm~ on all Lux portable extlnguishPrs are nonconductors ot electricity as the soft rubber grip on th!' hom covers all metal parts. 7. That no fit·e-extlngulr-;hlrig appnratn!;l, dPvlrt:>, or equipment other than the respondent's will put out airplane fires both on the ground and during flight. 8. That respondent's equipment Is the only fire-extinguishing equi11ment for alrplane-Pnglne fires approyed by the Unlte<l States Army and Nny. l)an. G. In Ulhlition to the above ial::;e and de<X>ptive statements and repre:;rntations, the respondent has also, by means of letters written and sent through the mails to prospective purchasers, falsely, misleadingly, and unfairly misrepresented and disparaged competitors and the merit of competing products. Typical of such disparagiug btatcnwnts and repres~ntations nre the following: 1. That the flre-extlngnisblng eqnlpnwnt of th!' C·O·Two Fire Equlpmeut Company, one ot Its COllllletitors, has hl'Pil In exll'ltt>nre tor only two years. With the twmlt that It Is still having dll!\•'nlty ovPrcomlug problems that thert>!<pond~'nt encountered and O\'ercnme eight or tt>n years ago. Findings 36F.T.O.

2. That respondent's competitors do not carry a supply of parts for emer· gency use ln either Chicago or St. Louis.

PAn. 7. The respondent discontinued practically all the advertising representations hereinabove referred to after its attention was directed to the objectionable features by the ·investigation of the case by the Federal Trade Commission and are not now being used by the respondent.

PAn. 8. The foregoing statements and representations appearing in respondent's various advertising, its booklets, and various correspondence as hereinbefore described are grossly exaggerated, false, and misleading. Respondent has not originated or pioneered the carbon-dioxide method of fire extinguishing and has not developed every important improvement in carbon-dioxide equipment and technique. Carbon dioxide fire-extinguishing apparatuses are filled with carbon-dioxide gas and liquid carbon dioxide. A pipe extends from the release valve into the cylinder containing the gas and liquid. When the valve is opened the pressure of the gas in the cylinder or container forces the liquid carbon dioxide through this piping. At tlfe time the liquid enters the discharge nozzle and contacts the air, it expands, and as it reaches the end of the nozzle, refrigeration commences and the liquid expands into the air in the form of carbon dioxide "snow." This snow absorbs heat rapidly and in so doing reduces the oxygen content of the air to such an extent that there is not enough oxygen to support combustion. The result, .in effect, is suffocation and extinguishment of the fire to which the snow is applied.

PAR. 9. The practical development and use of carbon dioxide as a fire extinguisher involved problems in mechanics. The first and most difficult of these problems was to secure discharge from the container without freezing at the point of discharge with its consequent preventtion of further discharge. The invention of Franz J ohan Henrik Rustige, a Swedish engineer, was designed to accomplish this result. At that time Rustige was chief engineer of Aktiebolaget Lux Company of Stockholm, Sweden, and Patent No. 1,33~,394, covering said invention, was issued to said company on March 30, 1920. The said inventor has never been in the employment of the respondent herein; but in 1923 license arrangements were consummated with the aforesaid Swedish company, whereby· respondent acquired the right to use the aforesaid patent and invention. Since that time respondent has used said invention and the word "Lux" as a trade name for its carbon dioxide fire extinguishers. RPspondent has at no time acquired the assets and busin£"Ss of the aforesaid SwediF~h Lux Co. nor become successor thereto. Respondent, however, did acquire the Swedjsh Lux W,A.L1'ER KID<DE & QO., INQ. 441 I ·''" , ;; ;. ·; ~ .• 431 Findings H ~ tj.

Co.'s entire right, title, and interest in the use of the name "Lux" in cop.nection with all business (excepting qnly Norwegian), relating to the employment of carbonic acid in the extinguishing of fires. The Lux System as marketed by Aktiebolaget Lux Co. was very primitive by comparison with the present product of respondent, and had only a limited application in extinguishing fires. In January and February, 1924, respondent's chief engineer (now its senior vice presi· dent), through the exercise of inventive faculties, conceived two major improvements in the original Lux System, namely, a means for dis· rharging c:;trbon dioxide in large quantities without danger of freezing and a method of gang releasing a plurality of containers of carbon dioxide for rapid and simultaneous discharge. These two inventions greatly expanded the use of the original Lux System of carbon-dioxide fire extinguishing, and form, to a large extent, the basis of present day carbon dioxide fire-extinguishing methods. ' PAR.10. Respondent began its develop:Jillent work on pressure oper· ated fluid release devices in 1925 and 1926. Respondent contends that it had no lplowled.ge of any pate~ts of C-O-Two Fire Equipment Co. relating to pressure operation of fluid release devices until declamtions of interference~s by the Patent Office on April 18, 1930, and July 3, 1930, but in order to continue its use of pressure operated apparatus, respondent, on December 12, 1930, entered into a licensing agreement with C-O-Two Fire Equipment Co., a California corporation and competitor of respondent, )Vhereby respondent was licensed to, and did, employ and use said inventions and p~tent rights and applications for patents owned by C-O-Two Fire Equipment Co. The patents and applications for patents referred to in said licensing agree~en~ relate to the art of fire extinguishing with the use of carbon dioxide and include important inventions relating to fluid pressure~ control of carbon-dioxide cylinders and 11ppurtenances for use in connection therewith.

On December 12, 1930, a settle:Jillent agr:eement was entered into by and between C-O~Two Fire Equipment Co., a California corpqration, ~ompctitor of r~spondent, and Wp.later Kidde & Co., Inc., re~pondent herein, whereby there was settled in favor of said C-0-Two Fire Equipment Co. certain ,jmportant U. S. Patent Office if!terfe~ences between applications of c.O-Two Fire Extinguishing C?. covering important features of the C-O-Two fire Extinguishing C?.'s carbon· dioxide sy&tems, p.nd under which:}l tpe respondent sought and obtained a license under the agreement of December 12, 1930, above referred to. PAn. 11. Another important problem in the development of carbon· dioxide fire ~~tjnguishers was s.olved by the invention of a dis~bar~e horn or nozzle which produc.e~ a d~l}.ser JlPd wider c9verage and fO?c,e?· l'i28713-43-vol. 36--31 :Findings 36F.T.C.

·· .. 'I·, tration of the snow at the ewl of the discharged 1-'tream. The inventor, Henry R. 1\Iinor, was never in respondent's employ, but, at the ·time of said invention, was an engineer and employee of General Carbonic Co., a manufacture of carbonic acid gas, which was cooperating with respondent in 1923 and 1924 by permitting respondent to conduct experiments at General Carbonic Co.'s plant in Long Island City, ,-.,ith the idl:'a of increasi~g its sales of gas. The record shows that 1\Iinor applil:'d for n patent on his invention on Sept. 26, 1925, that he assigned his invention to General Carbonic Co., and ·that the latter company assigned the inv~ntion to Fyrc-Frcez Cor- . poration in 1927. On or about July 1, 1920, respondent by purchase ·acquired all of the assets and business of the said Fyre-Freez Cor- . poration, including the ownership of the said Minor application. Patent No. 1,760,274, based on said 1\linor application, was issued to respondent in 1930.

The Minor U. S. Patent 1,760,274 was acquir~d following an interference declared between the application of l\Iino1· nnl an application of one of responuent's employees, George Crosby Hiss. tu whom U. S. Patent 1,7C0,3tJD wns issued. The work of Hiss began in the spring of 1923, while Minor's work had started about 6 months earlier, and, it is respondent\; contention that l\finor's developments and achievement wrre wholly unknown to His:> until the aforesaid interference proceedings in l\Iay 1!)29. Hcspondent's development of the form of portable extinguislwr discharge horn, which is still in use, wns completed about 1 year before the interference was filed in May 1!)29.

PAR. 12. During the year 1936, and for approximately 5 years prior thereto, and at present, the inventions covered by the aforesaid Patents No. 1,:13;),394 nncl No. 1,7G0.2i4 have het•n awl lire used by rPspcmdent's competitors C-O-Two Fi1·c Equipnwnt Co. and Amt>ri- <·an LaFrance & Foamite Corporation by virttw of license agreements between respondent and said competitors.

PAR. 13. The World "extra'' as used by respondent in its advertising booklets bearing the statement "108 EXTRA VALUES," both by tlictionnry definition and as t1111lerstood by the purchasing public, means and sif,Yflifies something beyo111l that which is due, usual, necessary, or to be upectt•d. The stat<>ment ''108 EXTRA VALUES" . has the tendency und capacity to indure in the minds of prospective purchast>rs of carbon-dioxide fire extinguishers the erroneous belief that the values or features referred to were nnd are extra and in addition to or beyond those which were or are <.lue, usual, necessary, or to be expected or found in carbon-dioxide fire-extinguishing apparatus. As a matter of fact, ns of the time said booklets wet·e in • r · • WALTER KID'DE & CO.,. L"\"C. 443 431 Findings circulation, the majority of the vulues or features referred to were ·and are usual or necessary accompaniments of carbon-dioxide fir~­ extinguishing apparatus, and the same were and are not exceptional to respondent's product, but were and nre to be found in the products of respondent's competitors.

PAR. 14. The exclusive features claimed by the respondent for its carbon-dioxide fire extinguishers as l1ereinbefore set out, were not in fact peculiar to respondent's apparatus but, instead, appear in extinguishers sold by respondent's competitors. The cylinders of the carbon dioxide fire-extinguishing apparatus of respondent's competitor C-O-Two Fire Equipment Co. were also drawn from plates instead of billets. The fire-extinguishing apparatus of respondent's compet- . itor American LaFrance ..'b Fonmite Corporation was made with sphericnl bottoms and domf's. 1,100 cylinders of this type were sold by said competitor to the United States Navy Department on or about SPpt. 16, 1936. All manufactul'f'rs of carbon dioxide fire-extinguishing apparatus subjected their cylinders to controlled heat treatment and tempering producing cylinders of uniform strength and as required under regulations of the Interstate Commerce Commission. During. the year 19aG, and prior thereto, the "recoil preventer" was being used by re~ponJent's competitors, although covered by reissue Patent No. ·18,839, issued to respondent May 23, 1033. From and after Mar. 31, 1036, the nozzle equipment on respondent's apparatus Was not of the "Jones df'sign," but a nozzle of said design was then, and since has been, used by respondent's competitors. During said ·year, and theretofore, the soft rubber grips on the discharge horn covlring metal parts was also an nccompaniment of the apparatus of · rrspondcnt's comp<'titor C-O-Two Fire Equipment Co. ReRpondent's · fit·e-cxtingui:.;hing equipment is not the only equipment which will · put out airplane firps both on the ground and during flight, and respondent's equipment. is not the only fire-extinguishing equipment for nirphme firms npprovf'd by tlt(' United States Army awl Navy. In fact, tim fire-extinguishing apparatus of rpspondents competitor Air Cruisers, Inc., has l1t>cn approved by the Unitl•d States Nn.vy and Army since July 17, 1935, as fire-extinguishing .apparatus which will extinguish airplane-engine firps both on thp g-round and during flight. PAR. 15. Respondent's compt>titor· C-O-Two Fire Equipment Co. has be{'Jl in existence since the )'fnr 102:>. During the y{'ar 19367 and prior therl'to, said competitor had a direct factory warehouse branch · and salt>smt•n otwrating under its Chicago district manager, an<l at its said bran<;h wnrehouses carried a substantial stock of extinguishers and part.~. · Order 36F.T.O.

PAn. 16. The use by the respondent of the aforesaid false, misleading, :md disparaging statements and representations had the capacity and tendency to, and did, mislead and deceive purchasers and prospective purchasers of fire-extinguishing equipment and apparatus into the false and erroneous belief that said representations were true, and caused them to purchase respondent's products, thereby unfairly diverting trade to respondent from its competitors who are also engaged in the sale and distribution of fire-extinguishing equipment in commerce among and between the various States of the United States.

CONCLUSION The aforesaid acts and practices of the respondent as herein found 1re all to the prejudice and injury of the public and of respondent's competitors, and constitute unfair methods of competition in com· merce within the intent and meaning of the Federal Trade Commis· sion Act.

ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission, the answer of the re· ~pondent, and a stipulation as to the facts entered into between tho respondent herein by its counsel, Colladay, Colladay & 'Vallace, and Uichnrd P. Whiteley, assistant chief counsel for the Federal Trade Commission, which provides, among other things, that the Commis· sion may proceed upon said 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 pro~eding without the presentation of argument or the filing of briefs; and the Commission having made its findings as to the facts and conclusion that said respondent bas violated the provisions of the Federal Trade Commission Act. It is ordered, That the respondent, 'Vulter lGdde & Co., Inc., a. corporation, and its officers, representatives, agents, nnd employees, di· rectly or through any corporate or other device in connection with the offering for sale, sale, and distribution of fire-extinguishing E-quipment in commerce as "commerce" is .Uefincd in the Federal Trade Commis· sion Act, do forthwith cease and desist from: 1. Representing directly or by implication that the respondent orig· innted or pioneered the carbon-dioxide method of fire extinguishing or that respondent has developed every important improvement in carbon-dioxide equipment nnd technique.

2. Representing directly or bY. implication that all fire-extinguish· ing equipment involving carbon dioxide and every basic improvement WALT~R lUDDE & C0.1 IN'C. 445 431 Order thereof are developments of the respondent or that any extinguishing equipment or improvement thereof not originated and designed solely by the respondent is a development of the respondent. 3. Representing directly or by implication that any feature or value of respondent's fire-extinguishing equipment is an exceptional or exclusive feature of respondent's fire-extinguishing equipment either through the use of the term "extra values" or any other term of similar import or meaning to designate such features, or in any other manner, when such features so .claimed to be exceptional or exclusive are in fact. found in, and form a part of, fire-extinguishing equipment other than that sold by the respondent.

4. Representing directly or by implication that no fire-extinguishing apparatus, device, or equipment other than respondent's will put out airplane fires both on the ground and in flight. 5. Representing directly or by implication that respondent's equipment is the only fire-extinguishing apparatus approved by the United States Army or Navy as equipment for use in extinguishing airplane fires both on the ground and in flight.

G. 1\Iaking or causing to Le made in any form or manner any false or disparaging statements with reference to the length of time that any competitor has been in business or the length of time that any competitive equipment has been on the market. 7. Making or causing to be made in any form or manner any false or disparaging statements with reference to the ability of any competitor to supply parts for emcrgmcy use or representing that any competitor does not have warehouse facilities for supplying parts for emergency usc when such warehouse facilities arc in fact in existence. It isfurther ordered, That the respondent shall, within GO uays after Rervicc upon it of this orucr, file with the Commission a report in writing, setting forth in detail the manner and form in which it has complied with this order.

446 FEDERAL TRADE COl\imission DECISIONS Syllabus 3GF.T.C.