Pickow Distributing Corporation

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IN THE MATTER OF PICK OW DISTRIBUTING CORPORATION ET AL.

Decisio IX REGAlm TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket 5890. Complaint, June 127, 1951-Decision, Mar. 10, 195.1 Where a corporation and its three offcers engaged in the sale of sewing machine heads imported from Japan-upon which there appeared, on the back of the vertical arm, the words "Made in Occupied Japan " or " Japan, or upon of which the front, tbe word "Japan -and of completed sewing machines said heads were a part, to independent dealers and retailers and, as tbus engaged, in attaching to the back of said beaus, at the only place provided therefor motors marked as " Universal Motor and " Made in U. S. name of the well-known domestic product-and thus effectiveiy coneeaiing such markings- (a) Offered and sold the aforesaid imported sewing machines upon some of which the word Japan, as included with others on the front of the vertical arm, was distinguishable only by more rareful inspection than a purchaser or user would ordinarily bestow and with no adequate marking to show their place of manufacture or foreign origin; (b) Falsely represented that their saiel machines were manufactured by or connected in some way with \\'cll-known firms through displaying in many instances on the horizontal arms of said machines the trade names "Hoover or "Eureka, and through the use of said names in literature distributed by them with the machines they sold, as weU as in price lists auel similar material distributed by them; and thereby also enhanced the erroneous belief on the part of the purchasing public that said machines were of domestic origin; With result of providing dealers with the means for misleading the purchasing public as to the place of origin and manufacture of said machines: Held, That such acts and practices constituted unfair methods of competition in commerce and unfair and deceptive acts and practices therein. Before Mr. Frank lIier hearing examiner. Mr. William L. Taggart for the Commission. Mr. N. RandaZlBassett of New Haven, Conn., for respondents. Mr. E. K. O'ubin of Washington, D. for Hoover Co., intervenor. DECISION OF Tile cOJlfMISSION AND ORDER TO FILE HEPOHT OF cOJlfPLIANcE 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 this proceeding upon the respondents Pickow Distributing Corporation, a corporation, and Louis Pickow Harold Gessner, and Abraham Lippman, individuaUy and as offcers of said corporation, charging them with the use of unfair methods of competition and unfair and deceptive acts and practices in commerce 784 FgDERAL TRADg COMMISSION DECISIONS Findings 50 F. T. C.

After the issuance of said in violation of the provisions of said Act. complaint and the fting of respondents' answer and amendment to their answer, hearings were held at which testimony and other evidence in support of and in opposition to the allegations of the complaint were introduced before a hearing examiner of the Commission theretofore duly designated by it, and said testimony and other evidence were duly recorded and filed in the offce of the Commission. Thereafter the proceeding regularly carne on for final consideration by said hearing examiner upon the complaint, amended answer thereto, testimony and other evidence, and proposed findings as to the facts and conclusions presented by counsel, and said hearing examiner, on May 5 J 953, filed his initial decision herein.

Within the time permitted by the Commission s Rules of Practice counsel supporting the complaint filed with the Commission an appeal from said initial decision. Ilequest was made on behalf of The Hoover Company for leave to intervene in the proceeding and said request was granted to the extent of permitting briefs on the said appeal to be fied. ThereaHer, this proceeding regularly came on for linal consideration by the Commission upon the record, including briefs of counsel supporting the complaint and of special counsel for the intervenor in support of the said appeal and brief of counsel for respondents in opposition thereto (oral argument not having been requested by either counsel supporting the complaint or the respondents) ; and the Commission, having- entered its order granting in part and denying in part the said appeal and being 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 conclusions drawn therefrom and order, the same to be in lieu of the initial decision of the hearing examiner.

FDrIJXGS AS TO TH ; FACTS PAItAGRAPH 1. Respondent Pickow Distributing Corporation is a corporation organized and existing under and by virtue of the laws of the State of Connecticut with its office and principal place of business located at 55 IVhalley Avenue, New Haven, Connecticut. Ilespondents Louis Pickow, Harold Gessner, and Abraham Lippman are, respectively, President and Treasurer, Vice-President, and Secretary of the corporate respondent, and acting as such offcers, formulate direct, and control the policies, acts, and practices of said corporation. The address of the individual respondents is the same as that of corporate respondent.

P AI1. 2. Respondents are now and have been for several years last past engaged in the sale of sewing Inachine heads imported from PICKOW DISTRIBUTING CORP. ET AL. 785 783 Jj'indings Japan and completed sewing machines of which said heads are a part to independent dealers or retailers who, in turn, sell them to the purchasing public. In the course and conduct of their business respondents cause their s Lid products, when sold, to be transported from their place of business in the State of Connecticut to the purchasers thereof located in various other States, and maintain, and at aU times mentioned herein have maintained, a course of trade in said products in commerce among and between the various States of the United States. Theil' volume of trade in said commerce has been, and is substantial.

E\R. 3. When the sewing machine heads are received by respondents the words "Made in Occupied Japan" or "Japan" appear on the back of the vertical arm either in gold decalcomania on the black enamel of the arm or else on the tin metal tag affxed by rivets to the front of the vertical arm with the word "Japan " in raised letters. These markings which appear on the back of the vertical arm are from % to % inch above the bed of the machine. These markings are left unchanged by respondents. The machines are designed for electric operation and when a motor is attached at the only place provided for it, the rear of the vertical arm, these markings are effectively concealed from even careful inspection, short of removing the motor or turning the machine into an awkward and unusual position from a user s standpoint; which would spring only from a desire to see that particular spot but which action is entirely unlikely to ensue from ordinary or normal use of the machine. On the sewing machines so marked, there are no other markings indicating country of origin, and there is a preponderance of substantial evidence in the record that purchaser-users never saw tnis concealed marking or suspected the foreign origin of their purchases. The finding is that such marking , for practical purposes, and to the ordinary user or purchaser, completely and effectively concealed.

Some of the sewing machine heads, when received by respondents 01'instead of the markings hereinabove described have on the front the vertical arm facing the user in normal operation a brass or brasscolored medaUion affxed to the vertical arm by side rivets about Olle inc.h above the bed. This meda11on bears the legend "DE LUXE" in raised letters approximately 1h or % inch high, fwd underneath that the words "Finest Family Sewing Machine" in raised letters approximately 1h of an inch high, and underneath that the word approximately 1Is of an inch high. These Japan" in raised letters medallions are in bright gold color in raised letters only, with no background coloring to emphasize the raised letters, so that the word Japan" is indistinct, diffcult to reali, nnemp1msized, and c1istinguish- 403443-- 57- , Findings 50 F. T. C able only by more careful inspection than a purchaser or user would ordinarily bestow.

A number of the sewing machines, marked as hereinabove described All of these machinesare part of the evidence in this proceeding. have attached to them, on the rear of the vertical arm, small motors which provide the power for operation, and in each instance the motor is marked "Universal Motor" and, in addition Made in USA." The Universal Motor is to the public a well-known product of domestic manufacture. In addition to this, many of these machines are marked instances on both sides, with one of the trade names "Hoover" or Eureka. These names are associated by members of the purchasing publjc with well and favorably known domestic concerns. Although there is some conflict in the testimony in the record as to actual deception, the preponderance of substantial, reliable, and probative evidence is that purchaser-users did not see, or seeing did not comprehend, the markings appearing on respondents' sewing machines indicating their foreign origin. The finding, accordingly, is that respondents' imported sewing machines are not adequately marked to show their place of manufacture or origin. PAIL 4. "\Vhen articles of merchandise, including sewing machines are exhibited and offered for sale by retailers to the purchasing public and sllch articles are not marked or are not adequately marked to show 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. PAH. 8. Respondents use the words "Hoover" and "Eureka" as trade or brand names for many of their said sewing machines and sewing machine heads. The sewing machines and sewing machine heads which are sold under the brand or trade name "Hoover" have the said word in gold decalcomania on the black enamel, on both sides of the horizontal arm. The word "Eureka" similarly appears on the sewing machines and sewing machine heads sold under that name. The words Hoover" and "Eureka" also appear in literature distributed by the respondents with the machines they sell, as well as in price lists and similar material distributed by respondents to prospective purchasers. The names "Hoover" and "Eureka" are well-known American brand or trade names. The name "Hoover" has been used for many years by The Hoover Company as a brand name for vacuum cleaners and other products. The Eurelm ,Villiams Company has used the word Eureka" for many years as a brand name for vacuum cleaners. Vacuum cleaners and other products bearing the name "Hoover" have been advertised extensively by The Hoover Company, and the Eureka 'Viliams Company has extensively advertised its products under the PICKOW DISTRIBUTING CORP. ET AL. 787 783 Findings and "Eureka" and thetrade name "Eurek " The names "Hoover" concerns with which the names are identified have become well and favorably known to the purchasing public.

PAH. 6. The evidence in the record establishes, as the hearing examiner found in his initial decision, that respondents' use of the said brand or trade names for their sewing machines and sewing machine heads causes confusion in the minds of many members of the purchasing public. For example, one witness testified that if she saw a sewing machine with the name "Hoover" on it, she would think the machine was made by the manufacturer of Hoover vacuum cleaners. Another witness testified that if he heard advertisements for Hoover sewing machines on the radio, he would assume the machines were manufactured by the Hoover Company. Still another witness testified that he would imagine a sewing machine bearing the name Hoover" was made in the United States maybe by a "company connected with the Hoover vacuum." The testimony in the record with respect to the name "Eureka" is similar to that with respect to the name "Hoover." There is also in the record a stipulation between opposing counsel to the effect that respondents could call several witnesses who would testify th:lt they purchased sewing machines bearing the name "Hoover" or "Eureka " lwd that these names did not to their minds indicate that the machines had any connection whatsoever with either The Hoover Company or the Eureka ,Villiams Company. The Commission is of the opinion, and therefore finds, that respondents, by us,ng the words "Hoover" and "Eureka" as trade or brand names for their sewing machines and sewing machine heads in the manner hereinabove found, have represented, contrary to the fact that their said products are manufactured by, or connected in some way with, the well-known firms with which said names have long been associated. Respondents' use of these words has also enhanced the erroneous and mistaken belief on the part of the purchasing public that respondents' sewing machines are of domestic origin. PAR. 7. The complaint in this proceeding also alleges that the respondents, by using the word "Mercury" as a brand or trade name for their sewing machines and sewing machine heads, have represented contrary to fact, that said products are manufactured by well-known American firms with which the name "11ercury" has long been associated. The Commission is of the opinion, and finds, that such allegation has not been sustained by the evidence. PAn. 8. There are among members of the purchasing public a substantial number having a decided preference for products manufactured in the United States over products manufactured in whole or in part in foreign countries, including sewing machine heads. There Conclusion 50 F. 'l' arc also many members of the purchasing public who prefer to purchase products, including sewing machines, which arc manufactured by, or connected in some way with, well and favorably known American firms, rather than products manufactured by a firm or firms not well known to the purchasing public.

PAn. 9. Respondents, by placing in the hands of dealers their sewing machine heads and completed sewing machines inadequately marked as to place of origin, as hereinabove described, and by using the trade or brand names "Hoover" and "Eureka " provide said dealers with the means and instrumentality whereby they may mislead and deceive the purchasing public as to the place of origin of said machines and the manufacturer thereof.

PAR. 10. Respondents, in the course and conduct of their business arc in substantial competition in commerce with makers and sellers of domestic-made sewing machines and also with sellers of imported sewing machines.

PAR. 11. The failure of respondents Lo adequately disclose on the sewing machine heads that they arc manufaeLured in .J apan and the use of the brand or trade names "IJoover" and "Eureka " have the tendency and capacity to lead members of the purchasing public into the CIToneous and mistaken belief that rcspOlH1ents' said products are of domestic origin and are manufa.cured by, or cOlllected in some way with, well and fa vorably known domestic manufacturers, and inte! the purchase of sewing machines of which said hrads arc a part because of such erroneous and mistaken belief. As a result thereof, trade in commerce has been unfairly di verted to respondents from their competitors, and injury has been and is being done to competition in commerce.

CO""GLGSION Respondents selJ completed sewing m tchines of which imported heads arc a part and imported sewing machine heads without adequately disclosiug the country of origin of the sewing machine heads. The. respondents use the words "Hoovel' '' anll " Eureka" as brand or trade names for some of their sewing lnachines ami sewing machine hea.ds. These words arc placed on the se,,'ing machine heads and art) also used in respondents' advertising literature. As a result of the failure to adequately disclose on Lhe sewing nlachine heads that they arc importeel from .Japan aml the use of the Wt1H'S " Hoover" and Enreka " purch:tsprs and prosppctin purchasers are led to belicvc that respomlpnts' sewing mach inps :lld s('wing machinc heads an' "I' domestic. origin and arc nmnufal'tureel by, 01' c0l1lccted in some \\oJ,\ PICKOW DISTRIBUTING CORP. ET AL. 789 783 Order domestic manufacturers. 1:nywith, well and favorably known members of the purchasing public have a decided preference for sewing machines manufactured in the l united States over sewing machines manufactured in whole or in part in .Japan. There are also many persons who prefer to purchase sewing machines manufactured by, or connected in some way with, well and favorably known American firms, rather than sewing machines manufactured by a firm or firms not well known to the purchasing public.

The fact, if it be so, that respondents' imported sewing machine heads were inspected and passed by United States Customs offcers at the port of entry as being properly or adequately marked is immaterial and no defense (L. IleUer Son, Inc. v. Federal Trade Commission 191 F. 2d 954). Also, whether or not the Siuger Sewing Machine Company or The Hoover Company or any other concern or individual imports into this country articles of foreign manufacture which are not marked, or are inadequately marked, as to place of origin is immaterial and no defense to this proceeding (Independent Directory Corp. v. Federall'mde Commission 188 F. 2d 468; Ford Motor Co. v. Fedeml Tmde Commission 120 F. 2d 175).

The fact that respondents sell only to dealers, many or all of whom arc aware of the origin of the sewing machine heads or are informed thereof by respondents, is no defense to the charge of inadequate or concealed marking, since the sewing machines of which the imported heads are a part are obviously intended for ultimate consumer purchase and respondents as sellers have placed into the hands of the dealers the means and instrumentality whereby the ultimate purchaser may be misled and deceived. The sewing qualities, effciency, and performance of respondents' sewing machines as compared with sewing machines of domestic manufacture or other makes or designs of imported sewing machines are not in issue in this proceeding. The Commission, therefore, concludes that the acts and practices of the respondents as hereinabove found are alj to the injury and prejudice of the public and of respondents' 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.

ORDER It is ordered That the respondents, Pickow Distributing Corporation, a corporation, and its offcers, and Louis Pickow, Harold Gessner and Abraham Lippman as o/Icers of said corporation, and said respondents' representatives, agents, and employees, directly or through 790 EDERAL TRADE COMMISSION DECISIONS Order 50F.

any corporate or other device, in connection with the offering for sale sale, or distribution of sewing machine heads or sewing machines in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Offering for sale, selling, or distributing foreign-made sewing machine heads or sewing machines of which foreign-made heads are a part, without clearly and conspicuously disclosing on the heads in such a manner that it win not be hidden or obliterated, the country of origin thereof.

2. Using the words "Hoover" or "Eureka " or any simulations thereof, as brand or trade names to designate, describe, or refer to their sewing machines or sewing machine heads; or representing through the use of any other words or in any other manner that their sewing machines or sewing machine heads are made by anyone other that the actual manufacturers.

It is further ordered That respondents 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 the order to cease and desist. :

AR. WINARlCK, INC., ET AL. 791 Decision