Hillman Periodicals Inc.

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IN THE MATTER OF HILLMAN PERIODICALS INC.

ORDER, OPINION , ETC. , IN REGARD TO THE ALLEGED VIOh-\TION OF THE FEERAL TRDE COMMISSION ACT Docket 6038. Complaint, Aug. 1952-Decision, July 22, 1951, 'Vhere a corporate publisher of magazines and books, including its "Confessions magazine, the contents of which consisted almost exclusively of stories and features which had been previously published in other of its magazines- Failed adequately to disclose that the contents of its said magazine consisted of reprinted stories and articles, through a statement in small type (laterenlarged, following conferences with Commission representatives) below the table of contents on the masthead "All stories reprinted by request from Real Story and Real Romances Magazines, and the added statement, at or near the beginning of each story and frequently in connection with the use of a picture ilustration, as "Copyrighted 1943 by Real Story. Inc. Held That such acts and practices were to the prejudice and injury of the puhlic and constituted unfair and deceptive acts and practices. Before Mr. J. Earl Cow hearing examiner. Mr. J. W. Brookfield Jr. for the Commission. Mr. Henry E. SchIlZtz of New York City, for respondent. ORDERS AND DECISION OF THE COl\DnSSION Order denying respondent' s appeal from initial deeision of hearing" examiner and decision of the Commission and order to file report of compliance, Docket 6033, July 22, 1054, follows: This matter having come on to be heard by the Commission upon respondent' s appeal from the initial decision of the hearing examiner"' and briefs of counsel in support of and in opposition thereto, oral argument not having been requested; and The Commission having duly considered said appeal and the record herein and being of the opinion, for the reasons appearing in the accompanying opinion of the Commission, that the appeal should be denied and that the said initial decision is appropriate in all respects to dispose of this proceeding:

It is ordered that respondent's appeal from the initial decision of the hearing examiner be, and it hereby is, denied. It is l"rther OJ'dered that the attached initial decision of the hearing examiner shall, on the 22d day of July 1054, become the decision of the Commission.

IDLLMAN PERIODICALS Findings It is further ordered that the respondent shall, within sixty (60) days after service upon it of this order, file with the Commission a report in writing setting forth in detail the manner and form in which it has complied with the order to cease and desist. Said initial decision, thus adopted by the Commission as its decision follows:

INITIAL DECISION BY J. EARL COX, HEARING EXAMINER Pursuant to the provisions of the Federal Trade Commission Act the Federal Trade Commission on August 22, 1952, issued and subsequently served its complaint in this proceeding upon the respondent Hillman Periodicals, Inc., a corporation, charging it with the use of unfair and clecepti ve acts and -practices in commerce in violation of the provisions of said Act. After the issuance of said complaint and the filing of respondent' s answer thereto, a hearing was held at which testimony and other evidence in support of a,nd in opposition to the allegat.ions of said complaint were introduced before the above-named hearing examiner theretofore duly designated by the Commission, and said testimony and other evidence were duly recorded and filed in the offce of the Commission. Thereafter, the hearing examiner filed his Initial Decision from which the respondent appealed, and after due consideration thereof the Commission, on tT une 17, 1953, entered its order vacating and setting aside the Initial Decision and remanding the case to the hearing examiner for the purpose of taking additional evidence on the issues raised by the pleadings. Thereafter a further hearing was held at which additional testimony and evidence were received in support of and in oppositiou to the allegations of the complaint and said additional testimony and evidence were duly recorded and filed in the offce of the Commission. The proceeding then regularly came on for final consideration by said hearing examiner on the complaint, the answer thereto, the testimony and other evidence, and proposed findings as to the facts and conclusions presented by counsel and said hearing examiner, having duly considered the entire record herein, fiuds that this proceeding is in the interest of the public and makes the following findings as to the facts, conclusions dnnvn ihere from, and order.

FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent, Hillman Periodicals, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of Kew York, with its offce and place of business located at 535 Fifth Avenue in the City of N ew York. , Findings 51 F.

PAR. 2. ltespondent is now, and for more than one year last past has been, engaged in the business of publishing, sellng and distributing magazines and books. Respondent causes its said products, when sold to be transported from its place of business in ew York or from the printing plant in K ew .Jersey where its magazines are printed to purchasers thereof at their respective points of location in various other States of the United States and in the District of Columbia, and maintains, and at all times mentioned herein has maintained, a course of trade in said products in commerce between and among the various States of the United States and the District of Columbia. Its volume of trade in said commerce has been and is no\y substantial. PAR. 3. In the course and conduct of its business, respondent since August 1950 has published, sold and distributed as aforesaid a magazine designated "Confessions . The contents of said magazine consist almost exclusively of stories and features which have been previously published in other of respondent's magazines. On the front cover of the magazine, in addition t.o the title "Confessions" and the date of issue, there is printed one or more story tiUes a,nd the ,,-orcls "Complete Navels Plus Short Stories and Features In the early issues of the magazines the only disclosure of the fa, that the stories and features contained in it were reprints was a statement in sma.1l type below the table of contents on the masthead page usually page 4 All stories reprinted by request from Real Story and Real Romances fu.gazines. " Following conferences with representatives of the Federal Trade Commission, respondent has increased the size of the type in which the last above-quoted statement is printed and at or near the beginning of each story, frequently in connection ,with the use of a picture or illustration, has added a statement as to copyright of which the following are typical: " Copyrighted 1943 by Heal Story, Inc." and "Copyrighted 1949 by Heal Homances, Inc. PAll. 4. In the original initial decision in this proceeding the conclusion was nm-ched that the disclosure made on the masthead page and at the beginning of each story is inadequate to inform the purchasing public that the contents of the magazine consist chiefly of stories and articles previously published and an order was issued requiring that such disclosure be made also on the front cover of the lnagazine. This part of the order was contested, the respondent stating in oral argument, wfhe sale point of contention, therefore, before this Commission is whether any disclosure should be made on the cover of the magazine." The Comnlission found that there was insl1ficient evidence in the record upon which to base an informed decision as to the merits of respondent' s appeal and remanded the ease "for the pur- , HILLMAN PERIODICALS, INC.

Findings pose of taking additional evidence on the issues raised by the pleadings. "

Thereafter, counsel in support or the complaint presented evidence consisting of the testimony of nine magazine vendors, 8011e of whom had observed the habits of their customers and testified that purchasers of confession type magazines aTB predominantly female; that some times they look only at the cover, sometimes at the table of contents sometimes glance through the entire magazine, some se€m to know what they want in advance, others buy every available magazine of this type.

During the hearing respondent offered to take the statement now appearing at the bottom of the contents page which states All stories reprinted by request from Real Story and Real Romances J\fagazincs and place it at the top of the contents page under the title of the magazine in conspicuous bold type. This, the respondent urged would be adequate disclosure.

P AR. 5. The offering for sale of a magazine, sllch as "Confessions constitutes an implicit representation, in the absence of an obvious disc1m;ure to the contrary, that the magazine contains new stories and llew articles, not reprints of stories and articles previously published and circulated in other magazines.

In the Matter of The New Amerioan Library of World Literature Inc. Docket No. 5811, the Commission in its decree of .hnual'Y 6, 1953 found that:

lhe offering of a book for sale constitutes an implicit representation that the book contains the entire original text and that the title under which it is offered is the original title. In the absence of a clear and conspicuous disclosure of the fact of abridgement 01' change of title, the offering of an abridged book or of an old book under a new title unquestionably has the capacity and tendency to deceiye and mislead prospective purchasers. The Commission found further in that case that, although on the covers of many of their ahridged books respondents had placed thc words "A Special Edition" 01' in small type words such as "Original 'Title: r-Iorseshoe Combine " there was still inadequate disclosure by respondents of the fact concerning the abridgement and change of title of many of their books, even though "there was almost without exception it further disclosure inside the books on the c.opyright page the 6tle page, in t.he introduction, as a publisher s note or elsewhere, in small type. 'The Commission added that "two poor disclosures do not add up to one good one " and ordered that disclosure be made upon the front cove.r a.nd upon the title page * * * in clear, conspicuous type.

Order 51 F. T. C.

The New American Library case is not on all fours with the instant proceeding hnt the facts are so similar that the principles therein enunciated are clearly applicable.

Upon the basis of all the facts in the instant proceeding, the statement that all stories are reprinted from other magazines, whether made at the bottom or the top of the masthead page even in reasonably conspicuous type, does not const.itute adequate disclosure of the fact that the contents of respondent's magazine "Confessions" consist of reprinted stories and articles, and such statement even in conjunction with the copyright notice at the beginlling of each story or article is still inadequate. The offering for sale of respondent' s magazine with such inadequate disclosure has the capacity and tendency to mislead and deceive a substantial portion of the purchasing public into the erroneous belief that such magazine contains new stories and new articles, not reprints and to induce the purchase of said magazine by the public because of such erroneous and mistaken belief. There can be no doubt that purchasers are first attracted to a magazine by its cover and title. Such further examination as is made varies widely. Some purchasers examine the table of contents, others look through the entire magazine. Hence, any disclosure to be adequate to avert deception of the public must be made on the front cover of rcspondenes magazine, on the table of contents or masthead page and at the beginning of each article.

CONCLUSION The acts and practices of respondent as hereinabove found were and are 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 Feeleral Trade Commission Act.

ORDER It i8 ordered that respondent, lIil1man Periodicals, Inc., a corpora- , directly ortion, its offcers, representatives, agents and employees through any corporate or other device, in connection with the offering for sale, sale or distribution in commerce, as "commerce" is defined in or the Federal Trade Commission Act, of its magazine "Confessions" any other publication or periodical consisting entirely or substantially of reprints of previously published stories, articles or other materials selling or dis- do forthwith cease and desist from offering for sale, tributing such magazine or other publication, unless the fact that the stories, article.s or other materials contained therein are reprints is clearly disclosed on the front cover and on the masthead page thereof and at the beginning of each reprinted story, article, or other material. HILLMAN PERIODICALS , INC.

Opinion OPINION OF THE COl\MISSION BY MEA, COMMISSIONER This matter is before the Commission upon respondent' s appeal from the hearing examiner s initial decision. Oral arguent on the appeal was not requested.

Respondent publishes and sells magazines, including a magazine designated "Confession." The stories and features which appear in respondent' s "Confession" magazine are reprints or stories and fea tures which previously have been published in other of respondent' magazines. Formerly, the only disclosure of the fact that the stories and features in the magazine were reprints was a statement in small type below the table of contents on the masthead page that "All stories reprinted by request from Ileal Story and Heal Ilomances Magazines. After conferences with representatives of the Commission, respondent enlarged the size of the type in which the quoted statement is printed on the masthead page, and in addition, at or near the beginning of each story, frequently in connection with the use of a picture or illustration, added a statement such as "Copyrighted 1943 by Ileal Story, Inc." or "Copyrighted 1949 by Heal Homances, Inc. The hearing examiner found that respondent does not disclose adeqnately the fact that the stories and articles in the magazine are reprints and his order would require that this fact be clearly disclosed on the front cover, on the masthead page, and at the beginning of each story, article or other material.

Respondent contended before the hearing examiner that the evidence does not support a finding that respondent's present disclosures are inadequate, and that, therefore, an order requiring further disclosure js not warranted. Respondent has requested that its memorandum filed with the hearing examiner in support of its proposed findings, conclusion and order be considered as its appeal brief, and it has been so considered.

There is no contention that there should be no disclosure made of the iact that the stories and articles appearing in respondent's "Confession" magazine are reprints. As already indicated, respondent has always made some disclosure. Our problem is to determine whether respondent' s present disclosure is adequate and, if not, what disdosure should be made.

The record conta.ins the testimony of a number of magazine vendors some of whom had observed the buying habits of their customers. appears from this testimony that many purchasers of the type of magazine here involved look only at the cover of the magazine. Others examine the table of contents or glance through the entire magazine. The, hearing examiner correctly found that the offering for sale of a FEDERAL TRADE C02\f:-rSSIOX DECISIONS Opinion 51 F. T. C.

Inagazine, such as respondent' s "Confession" magazine, constitutes an impEcit representation, in the apsence of obvious disclosure to the contrary, that the stories and articles hl the magazine are new, not reprints of stories and articles prcviously published in other magazines. Clearly, any disclosure, to prevent such representation, must be made at a place where it is likely to be seen. In the case of a purchaser who looks only at the cover, this would be on the cover itself. Any disclosure, no matter how clearly stated, made only on the inside of the magazine would be wholly ineffective. It is immaterial that the record contains no evidence that any individual has actually purchased one of the magazines believing that it contained new staries and article,s rather tha.ll reprints of stories and articles previously published in other magazines. It is suffcient that there is evidence to support a finding that there is a fair probability that the purchasers of respondent's magazine may be misled and deceived into the erroneous belief that the stories and articles appearing therein are new and not reprints. (Oharles of the Ritz Dist. Oorp. v. F. T. 0. 143 F. 2d 676 1944; Herzfeld, et al. v. F. T. 0., 140 F. 2d 207 1944.

respondent vigorously contended before the hearing examiner that n order whjch would require it to make cHsclosure on the outside cover of its magazine that the stories and articles therein are reprint.s should not be entered. Among other arguments, respondent said that the cover of the magazine is the only place a publisher has to advertise his product and that to impose the obligation that there be an explanatory statement on the cover to the effect that the stories and articles therein are reprints would be an unnecessary and burdensome restriction.

The hearing examiner was not persuaded by respondent's arguments and neither are we. As we have already said, the evidence clearly shor\s that many purcha,sers and prospective purchasers look only at the cover of the magazine. They make their decision on whether or not to purchase the rnagaz1ne on the basis of the information and pictures appearing on the cover. 'Ve a,gree with the hearing examiner that any disclosure to be adequate to avert deception of the purchasing public must be made on the front cover of the magazine as weJJ as on the masthead page and at the beginning of each story or article.

'Ve are of the opinion that the hearing examiner s initial decision is adequate and appropriate in all respects to dispose of this proceeding and that respondent's appeal should be denied. BELL DIRECTORY' PUBLISHERS, INC., ET AL.

Decision