Leon Ettingoff

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IN THE ~fatter OF LEON ETTINGOFF ET AL. DOING BUSINESS AS GLOBE :MACHINE CO:MPANY COMPLAINT, DECISION, FINDINGS, AND ORDERS IN REGARD TO THE AL- LEGED VIOLATIOK OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 19-14 Docket 5885. Cmnplaint, June 27, 1951-Deci.sio. , Apr. 4, 1952 \Vhen articles of merchandise, including sewing machines, are exhibited and offered for sale b~r retailers to the purchasing public and such articles are not marked or are not adequately marked showing that they are of foreign origin, or if markings are covered or otherwise concealed, such purchasing public understands and believes such articles to be wholly of domestic origin.

There is among the members of the purchasing public a substantial number who have a decided preference for products originating in the United States over products, including sewing machine heads, originating in whole or in part in foreign countries.

Substantial numbers of the purchasing public prefer to deal with concerns which manufacture the products they sell.

Where three partners engaged in the competitive interstate sale and distribution to distributors and retailers of sewing machine heads imported by them from Japan, and of complete se\ving machines assemblied through attachment a motor to said imported heads, in which process the words "Made in Occupied Japan " or "Japan " became covered- (3) Failed adequately to disclose on said heads that said products were made in Japan, notwithstanding upon the front of some of them there appeared a medallion bearing in small and indistict words the legend "Made in Occupied Japan" or "Japan With the result of placinp: in the hands of dealers a means whereby they might deceive the purchasing public as to their place of origin; and (b) Falsely represented that they owned or controlled a factory or facilities for manufacturing sewing machines or sewing machine heads through use of the word "Manufacturers, as included in the phrase " Manufacturers and Distributors, displayed, along with their trade name, in their advertising ;

With tendency and capacity to lead members of the purchasing public into the mistaken belief that their said product was of domestic origin and was made by them, and thereby induce purchase of sewing machines containing said heads;. and unfairly to divert substantial trade in commerce to them from their competitors;

Held. That such acts and practices, under the circumstances set forth, were all to the prejudice and injury of the public and their competitors, and constituted unfair methods of competition in commerce and unfair and deceptive acts and practices therein.

GLOBE MACHINE CO. 1143 1142 Complaint Before illi'. J a'JrW8 A. Pu't'celt hearing examiner'. jJfl'. lV ilZiilm. L. Tag gaJ't for the Commission. Goff Rubin. of Philadelphia, Pa., 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 Leon Ettingoff, Edward Ettingoff, and Abraham Ettingoff, copartners doing business as Globe ~1machine Company 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. Respondents Leon Ettingoff, Edward Ettingoff, and Abraham Ettingoff, are copartnei's doing business under the name Globe Machine Company, with their principal place of business at 5045 ~larket Street, Philadelphia, Pennsylvania. PAR. 2. Respondents are now, and have been for several years last past, engaged in the sale of sewing machine heads imported by them from Japan, and complete sewing machines of which said imported heads are a part, to distributors and also to retailers who in turn sell to the purchasing public. In the course and conduct of their business respondents cause their said products, when sold, to be transported from their place of business in the State of Pennsylvania to the purchasers thereof located in various other States, and maintain and at all times mentioned herein have maintained a course of trade in said products in commerce among and between the various States of the United States. Their volume of trade in said comemrce has been and is substantial.

PAR. 3. "Then the sewing machine heads are imported by respondents the words "Made in Occupied Japan " or "Japan" appear on the back of the vertical arm. Before the heads are sold to the purchasing public as a part of a complete sewing machine it is necessary to attach a motor to the head in .the process of which the aforesaid words are covered by the motor so that they are not visible. In some instances said heads, when received by respondents, are marked with a medallion placed on the front of the vertical arm upon which the words "Made in Occupied Japan" or "Japan:' appear. These words are however, so small and indistinct that they do not constitute adequate notice to the public that the heads are imported. PAR. 4. "Then articles of mercll'andise, including sewing machines, are exhibited and offered for sale by retailers to the purchasing public and such articles are not marked or are not adequately marked show- Complaint 48 F. T. C.

ing that they are of foreign origin or if marked and the markings covered or otherwise concealed, such purchasing public understands and believes such articles to be wholly of domestic origin. There is among the members of the purchasing public a substantial number who have a decided preference for products originating in the United States over products originating in whole or in part in foreign countries, including sewing machine heads. PAR. 5. Respondents, in their advertising, make such statements as the following :

Globe Machine Company, Manufacturers and Distributors. Through the use of the word "manufacturers" respondents represent that their sewing machine heads and complete sewing machines were manufactured in a factory owned and controlled by them. In truth and in fact, respondents do not own or control a factory or facilities for manufacturing sewing machines or sewing machine heads. Substantial numbers or the purchasing public prerer to deal with concerns who manuracture the products sold by them. PAR. 6. Respondents, by placing in the hands or dealers their said sewing machine heads, and complete sewing machines in which imported heads are a part, provide said dealers a means and instrumentality whereby they may mislead and deceive the purchasing public as to the place of origin of said sewing machine heads. PAR. 7. Respondents, in the course and conduct of their business, are in substantial competition in commerce with the makers and sellers or domestic sewing machines and also sellers of imported sewing machines, some of whom disclose to the public that their machines or parts the.reor are of foreign origin.

PAR. 8. The railure of respondents to adequately disclose on the sewing machine heads that they are manufactured in Japan and the use or the word "manuracturers" has the tendency and capacity to lead members or the purchasing public into the erroneous and mistaken belier that their said product is or domestic origin, and is manufactured by respondents, and to induce members of the purchasing public purchase sewing machines containing said heads because of such erroneous and mistaken belief. As a. result, substantial trade in commerce has been unfairly diverted to respondents from their competitors and substantial injury has been and is being done to competition in commerce.

PAR. 9. The aforesaid acts and practices of respondents, as herein alleged, are all to the prejudice and injury of the public and of respondents' competitors and constitute unrair methods or competition ana unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. GLOBE l\.iachine CO. 1145 1142 Findings DECISION OF THE COl\BHSSION Pursuant to Rule XXII of the Commission s Rules of Practice and as set forth in the Commission s "Decision of the Commission and Order to File Report of Compliance, dated April 4, 1952, the initial decision in the instant matter of hearing examiner James A. Purcell, as set out as follows, became on that date the decision of the Commission.

INITIAL DECISION BY J ~UIES A. PURCELL, HEARING EXAMINER Pursuant to the provisions of the Federal Trade Commission Act the Federal Trade Commission on June 27, 1951, issued and subsequently served its complaint in the above-entitled proceeding upon respondents Leon Ettingoff, Edward Ettingoff and Abraham Settingoff, individually and as co-partners doing business as Globe ~fachine Company, charging thenl with unfair and deceptive acts and practices in commerce in violation of said Act. On August 31, 1951, respondents filed their answer to the complaint. Thereafter, at a hearing held in Philadelphia, Pe.nnsylvania, October 16, 1951, respondents Inoved the Hearing Examiner for leave to withdraw the aforesaid answer and to file in substitution thereof an answer admitting all of the material allegations of fact set forth in the complaint, which motion was granted on the record and confirmed by formal order filed herein on October 18, 1951. Such substituted answer reserved to respondents the right and privilege to submit Proposed Findings Conclusions and Order, as provided by Rule XXI of the Commission Rules of Practice, and also certain other reservations to respondents not necessary to be here set forth. Thereafter the proceeding regularly came on for final consideration by the above-named Hearing Examiner, theretofore duly designated by the Commission, upon said complaint and substitute answer thereto, proposed findings and conclusions not having been submitted on behalf of any party to the proceeding; and said Hearing Examiner, having duly considered the record herein, finds that this proceeding is in the interest of the public. and makes the following findings as to the facts, conclusion drawn therefrom, and order:

FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondents Leon Ettingoff, Edward Ettingoff, and Abraham Ettingoff, are copartners doing business under the name Globe Machine Company, with their principal place of business at 5045 NIarket Street, Philadelphia, Pennsylvania. . .

Findings 48 F. T. C.

PAR. 2. Respondents are now, and have been for several years last past, engaged in the sale of sewing machine heads imported by them from Japan, and complete sewing machines of which said imported heads are a part, to distributors and also to retailers who in turn sell to the purchasing public. In the course and conduct of their business respondents cause their said products, when sold, to be transported from their place of business in the State of Pennsylvania to the purchasers thereof located in various other States, and maintain and at all times mentioned herein have maintained a course of trade in said products in conllnerce among and between the various States of the Unitedand States.isTheirsubstantial.volume of trade in said commerce has been PAR. 3. \Vhen the sewing machine heads are imported by respondents the words "~iade in Occupied Japa.n" or "Japan" appeared on the back of the vertical arm. Before the heads were sold to the purchasing public as a part of a complete sewing machine it was necessary to attach a motor to the head in the process of which the aforesa.id words were covered by the motor so that they were not visible. In some instances said heads, when received by respondents were marked with a medallion placed on the front of the ver6cal arm upon which the words "~iade in Occupied Japan" or "Japan" appeared. These words were, however, so small and indistinct that they did not constitute adequate notice to the public that the heads are imported.

PAR. 4. When articles of merchandise, including sewing machines are exhibited and offered for sale by retailers to the purchasing public and such articles are not marked or are not adequately marked showing that they are of foreign origin or if marked and the markings are covered or otherwise concealed, such purchasing public understands and believes such articles to be wholly of domestic origin. There is among the members of the purchasing public a substantial number who have a decided preference for products originating in the United States over produc.ts originating .in whole or in part in foreign countries, including sewing machine heads. PAR. 5. Respondents, in their advertising, make such statements as the following:

Globe Machine Company, Manufacturers and Distributors. Through the use of the word "manufacturers" respondents represent that their sewing machine heads and complete sewing machines were manufactured in a factory owned and controlled by them. In truth and in fact, respondents do not own or control a factory or facilities for manufacturing sewing machines or sewing machine heads. Sub- \.

GLOBE MACHINE CO. 1147 1142 Order staritial numbers or the purchasing public prerer to deal with concerns who manuracture the products sold by them. PAR. 6. Respondents, by placing in the hands of dealers their said sewing machine heads, and completed sewing machines or which imported heads are a part, provided said dealers a means and instru- 111entality whereby they might mislead and deceive the purchasing public as to the place or origin or said heads. PAR. 7. Respondents, in the course and conduct or their business were in substantial competition in commerce ,with the makers and sellers or domestic sewing machines and also sellers or importeel sewing machines, some or whom disclose to the public that their machines or parts thereor are or roreign origin.

PAR. 8. The railure or respondents to adequately disclose on the sewing machine heads that they "'ere manuractured in Japan, and the use or the word "manuractured " has the tendency and capacity to lead members or the purchasing public into the erroneous and mistaken belief. that their said product was or domestic origin, and was, manuractured by respondents, and do induce members or the purchasing public to purchase sewing nlachines containing said heads because of such erroneous and mistaken belief. As a result, substantial trade in commerce has been unrairly diverted to respondents from their eompetitors and substantial injury has been and is being done to competition in commerce.

CONCLUSION The aroresaid acts and practices of respondents, as herein found were all to the prejudice and in~jury or the public and or respondents competitors and constituted unrair methods or competition and unrail' and deceptive acts and practices in commerce within the intent and meaning or the Federal Trade Commission Act. ORDER It is oT'de'J'ed That the respondents, Leon Ettingoff, Edward Settingoff and Abraham Ettingoff, individually and as co-partners doing business as Globe ~lachine Company, or trading under any other name, and their representatives, agents and mnployees, directly or through any corporate or other device, in connection with the offering ror sale, sale or distribution or sewing machine heads or sewing machines in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist rrom: 1. Offering for sale, selling or distributing roreign made sewing machine heads, or sewing machines of which foreign made heads are Order 48 F. T. C.

a. part, without clearly and conspicuously disclosing on the heads, in such a manner that it will not be hidden or obliterated, the country of origin thereof.

2. Representing, through the use in advertising of the word "manufacturer" or "manufacturers " or any other word or term of similar import or meaning, or in any other manner, that said respondents are the manufacturers of the sewing machine heads or sewing machines sold by them, unless and until such respondents actually own and operate, or directly and absolutely control, a manufacturing plant wherein said products are manufactured by them. ORDER TO FILE REPORT OF COMPLIANCE It is o'pde'ped That the respondents herein 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 which they have complied with the order to cease and desist (as required by said declaratory decision and order of April 4, 1952). NATIONAL COLLEGE OF AUDIOMETRY ET AL. 1149 Syllabus