Windsor Pen Corporation

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. IN THE MA'ITER OF WINDSOR PEN CORPORATION ET AL.

COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 5829. Complaint, Dec. 1, 1950-Decisio' , Feb. , 1952 By virtue of the established custom of imprinting and otherwise labeling or marking products of foreign origin and their containers with the name of their country of origin in legible English words, in a conspicuous place a substantial portion of the buying and consuming public has come to rely, and now relies, upon such imprinting, labeling or marking, and is infiuenced thereby to distinguish and discriminate between competing products of foreign-made 01' imported mechanical pencils. When products composed in whole or in substantial part of imported articles are offered for sale and sold in the channels of trade in commerce, they are purchased and accepted as and for, and taken to be, products wholly~y of domestic manufacture and origin unless they are imprinted, labeled, or marked in a manner which informs purchasers that the said products, or parts thereof, are of foreign origin.

'l' here is now and has been among the members of the buying and consuming public, including purchasers and users of mechanical pencils, in and throughout the United States, a substantial and subsisting preference for products which are wholly of domestic manufacture or origin, as distinguished from products of foreign manufacture or origin and from products which are in substantial part made of materials or parts of foreign manufacture or origin.

Where a C'orpora tion and its president, engaged in the assembling of fountain pens and mechanical pencils find in the intel'state sale and distribution thereof to jobbers and retailers for sale to the general public, purchasing mechanisms for their pencils imported from Japan in bulk in containers plainly stamped with the country of origin, which contained on the spiral end the words Made in Japan" in such small print as to require magnification to read;

(a) Sold pencils which they assembled by press fitting said mechanisms into the pencil barrels so that the words "Made in Japan" were completely C'oncealed, without disclosing otherwise on said pencils or on their containers, that any part of the product was of foreign origin; and (b) Affixed clips bearing the words "Windsor USA" to certain brands of their said pencils, usually shipped in sets with fountain pens in cartons plainly marl~ed with respondent's corporate name and the words "New York, N. Y. With tendency -and capacity to mislead members of the consuming public into the erroneous belief that said pencils were wholly of domestic origin, and into the purchase thereof in reliance upon such belief; and (c) Furnished, on request of their jobbers and dealers, price tags or stickers ranging from $3. 50 to $22.50 for use on said sets; Complaint 48 F. T. C.

The facts being that said boxed sets, which included said pencils and one or more fountain pens sold as units, were sold by respondents at prices ranging to- from $2.80 to $5.00 per dozen, and, together with other articles, up $12.00 per dozen;

With the effect of providing their distributors and dealers with a means or instrumentality for grossly deceiving the buying public as to the usual and customary prices of said pen and pendl sets, and of inducing the purchase thereof in reliance upon such belief:

Held That said acts and practices were all to the prejudice of the public and constituted unfair and deceptive acts and practices in commerce. Before !lf1' . Clyde M. Hadley, healing examiner. MI'. Morton 1\,7esrnith and M F. TV illiam L. P encke for the Commission~ TVolf&: Buprell or New York City, for respondents. 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 Trade Commission having reason to believe that ",Vindsor Pen Corporation, a corporation, and l\'lorris Fink and Sady Fink, individually and as officers of said corporation, hereinafter referred to as respondents, have violated the provisions 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 ",Vindsor Pen Corporation is a corporation organized and doing business under the laws of the State of New York with its office and principal place of business at 352 Fourth Avenue, New York 10, New York.

Respondents ~rorris Fink and Sady Fink are President and Secretary-Treasurer, respectively, or said corporation with their office and principal place of business at the same address as corporate respondent. Said individuals formulate, direct and control the policies and practices of corporate respondent.

PAR. 2. The respondents are now and have been lor several years last past engaged in the business, among other things, of assembling fountain pens and meehanieal peneils~ and selling and distributing said products.

PAR. 3. The respondents cause said products when sold to be shipped from their place of business in the State of New York to jobbers and dealers located in various other States of the United States and in the District of Columbia. Said jobbers and retailers in turn sell said products to the general public. Respondents maintain, and at all times mentioned herein have maintained, a course or trade in said WINDSOR PEN CORPORATION ET AL. 813 811 Complaint products in commerce between and among the various States of the United States and in the District of Columbia. Their volume of business in such commerce is substantial.

PAR. 4. In the course and conduct of their business, respondents purchase mechanisms, actions or movements for their pencils which have been imported from Japan in bulk quantities. These mechanisms, actions or movements are received by theHi in packages, boxes or wrapping plainly stamped with the country of origin and with the words "NIade in J apan stamped on the spiral end of said meehanisms actions, or movements. Respondents assemble mechanieal peneils by press fitting these mechanisms, actions or movements into pencil barrels and by adding caps or erasers and pocket clips thereto. In this process of press fitting, the words ":Made in Japan" appearing on the mechanisms, actions or movements are completely concealed. At no place on these pencils, or on the boxes in which they are packed, is the fact disclosed that any part thereof is of foreign origin. On the contrary, the clips which are affixed to these mechanical pencils are stamped or imprinted with the letters "D. S. A." and said pen and peneil sets are shipped in eartons plainly marked "VVindsor Pen Corporation, New Y or1\:, N. Y.

with one or The meehanieal peneils are in some eases boxed in sets more fountain pens and sold as units. These boxed sets are sold by respondents at prices ranging from $2. 80 per dozen to $5.00 per as $12.00 a dozen.dozen, and together with other articles, as high jobbers or dealers, price tagsRespondents furnish, on request of its 50 $7. , $10.or stiekers of various denominations, such as $3. , $6. $17. , and $22.50.

PAR. 5. By virtue of the practice, heretofore and now established of imprinting and otherwise labeling or marking products of foreign origin, and their containers, with the name of the country of their origin, in legible English words, ill a conspicuous place, a substantial portion of the buying and consuming public has c.ome to rely, and now relies, upon suc.h imprinting, labeling or marking, and is influenc.ed thereby to distinguish and c1isc.riminate between competing produc.ts of foreign and domestie origin, including foreign-made or c.composed in wholeimported mec.hanical penc.ils. "'\Vhen pro duets or substantial part of imported articles are offered for sale and sold in the channels of trade in commerce throughout the United States and the Distric.t of Columbia, they are purc.based and accepted as and for, and taken to be, procluc.ts wholly of domestic. manufacture and origin unless the same are imprinted, labeled, or marked in a or partsmanner which informs purehasers that the said pro duets, thereof, are of foreign origin.

, , Complaint 48 F. T. C.

At all times material to this cOluplaint, there has been, and now is among said members of the buying and consuming public, including purchasers and users of mechanical pencils, in and throughout the United States and in the District of Columbia, a substantial and subsisting preference for products which are 'wholly of domestic Inanuproducts of foreign manu-facture or origin, as distinguished from facture or origin and from products which are in substantial part made of materials or parts of foreign manufacture or origin. PAR. 6. The pen and pencil sets solei by respondents are rarely if ever sold to the purchasing public for $3. ~ $6. , $7. , $10. $17. , or $22.50. Respondents ~ practice of supplying price tags or stickers in these various denominations 'i\which may be and are affixed to boxes containing said sets provides a nleans and instrumentality by and through which dealers may and do grossly misrepresent the usual and customary prices of said sets. m. 7. The practice of respondents as aforesaid in affixing metal pocket clips, upon which, are imprinted the letters U. S. A. " to the mechanical pencils manufactured or assembled by them, which pencils contain Japanese mechanisms, actions or movements~ has had and now has the tendency and capacity to mislead and deceive purchasers and members of the buying and consuming public into the false and erroneous belief that said mechanical pencils are wholly of dOlnestic manufacture and origin and into the purchase thereof in reliance upon such erroneous belief.

The further practice of respondents as aforesaid in offering for sale, selling, and distributing mechanical pencils, the mechanisms actions, or movements of which are of foreign origin without any imprinting, labeling, or conspicuous marking on the pencils or on the individual cartons in which they are packed to indicate to purchasers that the mechanisms, actions or movements of said pencils are of Japanese origin, has had, and now has the tendency and capacity to mislead and deceive purchasers and members of the buying and consuming public into the false and erroneous belief that said mechanical pencils are wholly of domestic manufacture and origin and into the purchase thereof in reliance upon such erroneous belief. The further practice of respondents as aforesaid in supplying its custOlners with price tags, or stickers with amounts thereon greatly in excess and disproportionate to the customary or usual selling price for s~id articles, has the te,ndency and capacity to mislead and deceive purchasers into the erroneous and mistaken belief that tho said fictitious prices are the customary and usual prices at which said articles are normally sold :md induces a substantial amount WINDSOR PEN CORPORATION ET AL. 815 811 Decision the purchasing public to purchase said products as a result of such erroneous and mistaken belief.

PAR. 8. The aforesaid acts and practices of respondents as herein alleged, are all to the prejudice and injury of the public and constitute unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. DECISION OF THE COMMISSION AND ORDER TO FILE REPORT OF COMPLIANCE Pursuant to the provisions of the Federal Trade Commission Act the Federal Trade Commission, on December 1, 1950, issued and subsequently served its complaint upon the respondents named in the caption hereof, charging them with the use of unfair and deceptive acts and practices in commerce in violation of the provisions of that Act. Hearings were held in this matter before a hearing examiner duly designated by the Commission. Respondents' answer to the complaint was read into the record by their counsel at the initial hearing herein. At a subsequent hearing, counsel supporting the complaint and counsel for the respondents stipulated and agreed that a statement of facts thereupon read by them into the record might be talmn as the facts in this proceeding and in lieu of evidence in support of the complaint and in opposition to the charges stated therein, and that such statement of facts might serve as the basis for findings as to the facts conclusion and order disposing of the proceeding. Thereafter, the proceeding regularly came on for final consideration by said hearing examiner upon the complaint, the answer thereto, the stipulated facts proposed findings and conclusions presented by counsel for respondents, and oral argument by counsel, and said hearing examiner filed his initial decision herein on July 12, 1951. Counsel for the respondents Windsor Pen Corporation and Morris Fink, on August 9, 1951, filed with the Commission an appeal frolll said initial decision. Thereafter, this proceeding having regularly come on for final hearing by the COlmnission upon said appeal, ineluding the brief in support thereof, memorandum of authorities filed in opposition thereto and oral argument of counsel, the Commission issued its order denying said appeal.

The Commission is of the opinion, however, that the order contained in the hearing examiner s initial decision is ambiguous in certain respects. Therefore, the Commission, being now fully advised in the premises, finds that this proceeding is in the interest of the public and makes the follm-ving findings as to the facts, conelusion drawn therefrom and order, the same to be in lien of the initial decision of the hearing examiner.

213840-54- 816 FEDERAL TRADE COMJ\nSSION DECISIONS Findings 48 F. T. C. FINDINGS AS TO THE FACTS P AR..'\.GRAPH 1. Respondent "'\Vindsor Pen Corporation is anew York corporation with its office and principal place of business at 352 Fourth Avenue, New York 10, New York. Respondent :Morris Fink is the president of said corporation with his office and principal place of business at the same address as corporate respondent. Said individual respondent :Morris Fink formulates, directs and controls the policies and practices of corporate respondent. The allegations of the complaint as to respondent Sady Fink are not supported by the evidence of record, and, therefore, she is not included in the term "respondents" as used hereinafter. PAR. 2. The respondents are now and have been for several years last past engaged in the business, among other things, of assembling fountain pens and mechanical pencils, and selling and distributing said products, in commerce between and among the various States of the United States, to jobbers and retailers who in turn sell said products to the general public. Their volume of business in such commerce is substantial.

PAR. 3. In the course and conduct of their business, respondents have purchased mechanisms, actions or movements for their pencils which have been imported from Japan in bulk quantity. These mechanisms, actions or movements were received by the respondents in packages, boxes or wrappings plainly stamped with the country of origin, namely, Japan. "'\Vhen received by the respondents, said mechanisms, actions or movements, on the spiral end thereof, are imprinted with the words "J\Iade in Japan" in such small print as to require magnification to read legibly.

PAR. 4. Respondents assemble mechanical pencils by press fitting these mechanisms, actions or movements into the pencil barrels so that in the process of such press fitting the words "J\Iade in Japan as described aforesaid, are completely eoncealed. At no place on these pencils, except as aforesaid, nor on the boxes in IV which they are packed for shipment to jobbers or retailers, is the fact disclosed that any part of such pencils is of foreign origin. Respondents have furthermore affixed clips to certain brands of theh' mechanical pencils, containing Japanese mechanisms, on ,,-which were stamped or imprinted the words ",Vinclsor USA" ; said pencils being then usually shipped in sets- with fountain pens in cartons plainly marked ",Vindsor Pen Corporation, New York, N. Y. . The use of said inscription ",Vinc1sor USA" was diseontinuecl by respondents as of January 1, 1951, since which date, such imprint has been the single word "vVinclsor. , .

WINDSOR PEN COHPORATION ET AL. 817 811 Findings PAR. 5. By virtue of the established custom of inlprinting and otherwise labeling or marking products of foreign origin, and their containers, with the name of their country of origin in legible English words, in a conspicuous place, a substantial portion of the buying and consuming public has come to rely, and now relies, upon such imprinting, labeling or marking, and is influenced thereby- to distinguish and discriminate between competing products of foreign and domestic origin, including foreign-made or imported mechanical pencils. When products composed in ,yhC'~e or in substantial part of imported articles are offered for sale and sold in the channels of trade in commerce throughout the United States and in the District of Columbia, they are purchased and accepted as and for, and taken to be, products wholly of domestic manufacture and origin unless the same are imprinted, labeled, or marked in a manner which informs purchasers that the said products, or parts thereof, are of foreign orlgu1.

There is now and has been among the members of the buying and consuming public, including purehasers and users of mechanical pencils, in and throughout the United States and in the District of Columbia, H substantial and subsisting preference for products which are wholly of domestic manufacture or origin, as distinguished from products of foreign manufacture or origin and from products which are in substantial part lllade of materials or parts of foreign manufacture or origin.

PAR. 6. The aforesaid mechanical pencils have in some cases been boxed in sets with one or more fountain pens and sold as units. These boxed sets are sold by the respondents at prices ranging from $2. to $5.00 per dozen, and together with other articles, as high as $12. per dozen. Respondents have furnished on request of their jobbers and dealers price tags or stickers, to be used on said sets, of various denominations-$3. , $6. , $7. , $10. , $17.20 and $22. , which are greatly in excess of and disproportionate to the customary or usual selling prices for said articles. Said pen and pencil sets have rarely if ever solei to the purchasing public for the prices indicated by the labels thus supplied. This practice was discontinued by the respondents on February 1 , 1951, and since then no price tags or stickers of any denomination have been furnished by them to their jobbers and dealers.

PAR. 7. Such practice of respondents in offering for sale, selling, and distributing mechanical pencils, the mechanisms, actions or movements of which are of foreign origin without imprint, label or conspicuous mark on the pencils, or on the individual cartons in which they are packed, to indicate to purchasers that said mechanisms, ac- , .

Ord er 48 F. T. C.

tions or movements are of Japanese origin, has had and now has the tendency and capacity to mislead and deceive n1members of the buying and consuming public into the false and erroneous belief that the same are wholly of domestic manufacture and origin, and into the purchase thereof in reliance upon such erroneous belief. The practice of respondents in affixing metal pocket clips, imprinted with the letters "USA " to said mechanical pencils so equipped with Japanese mechanisms, actions or movements, has had the tendency . and capacity to mislead and deceive members of the buying and consU111ing public into the false and erroneous belief that the said pencils are wholly of domestic manufacture and origin, and into the purchase thereof in reliance upon such erroneous belief. Respondents' further practice of supplying their distributors and dealers with price tags or stickers containing highly exaggerated, disproportionate and fictitious" figures has provided said dealers with a means or instrumentality for grossly deceiving the buying public to the usual and customary prices of said pen and pencil sets, and to induce the purchase thereof in reliance upon such 111isrepresentation. CONCLUSION The aforesaid acts and practices of respondents as herein found 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 It is ordel' That respondent \Vindsor Pen Corporation, a corporation, and its officers, and respondent :JIorris Fink, individually and as an officer thereof, and their respective agents, representatives and employees, directly or through any corporate or other device, in connection with the offering for sale, sale and distribution of mechanical pencils or fountain pens in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from: 1. Offering for sale or selling mechanical pelicils, the mechanisms actions or movements of which are of foreign origin, without affirmatively and clearly disclosing on or in immediate connection with said pencils, the country of origin of such mechanisms, actions or movements.

2. Representing, directly or by implication, that mechanical pencils containing mechanisms, actions or .movements of foreign origin, are wholly of domestic origin.

'VINDSOR PEN CORPORATION ET AL. 819 811 Order 3. Supplying customers or purchasers of fountain pens or mechanic.al penc.ils with pric.e tags or stic.kers therefor bearing amounts which are in exc.ess of the prices at which.h suc.h articles are usually or customarily sold to the purchasing public.; or otherwise representing that such articles are sold for amounts in excess of their usual and customary selling prices to the purchasing public.. it is further ordered That the complaint be, and- the same hereby is dismissed as to the respondent Sady I t is I~trther ordered That respondentsFink.Windsor Pen Corporation and l\forris Fink shall, within sixty (60) days after 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.

Commissioner Mason not participating.

Syllabus 48 F. T. C.