Wester Radio Corporatiok

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IN THE :MATTER OF WESTER RADIO CORPORATION ET AL.

ORDER, OPINION , ETC. , 11' REGARD TO THE ALLEGED YIOLATlOX OF THE FEDERAL TIL\DE COJ\DIISSIOX \CT Docket 7468. Complaint, Apr. l,9SP-Decision, Sept, , 1963 Order requiring manufacturers of a "Walkie Talkie" portable radio transmitter in Kearllf';\, Nebr. , to cease representing falsely in llPwSPQper and magazine udwl'using anll othenyise that their saill " "\Vulkie Talkie" tnmsmitteJ' ball a satisfadory opemtiouul range of up to one-lwlf mile fol' u home receiver Hnd 11\) 10 10 miles when transmit/illg from auto to auto; that the device carried a i-year sen-:ce guarantee: ami that operation thereof required no license.

lplc\I::T Pursmmt to t.he provisions of the Federal Trade Commission Act and by virtue of the authority yeste,l in it by said Act, the Federal Trade Commission, having reason to belie\-c that 'Yesle1'n Radio Corporate.ion\ a corporation, anll Paul S. B23hore and 'V. P. Beshore individually and as officers 01 said corpornt.ion hereinafter referred t.o as respondent.s, I-wye violated the pro\-isiollS of said Act and it , ,, , :;

WES'fER::T RADIO CORP. ET AL. 883 Complaint appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its compJah1t stating its charges in that respect as follm'- P ARAGJrAPH 1. Respondent IYestern Hadio Corporation is a corporation, organized, existing and doing business under and by virtue of the la,ys of the State of Nebraska. Its office is located at Kearney, Xebraska. Individual respondents Paul S. Beshore and W. Beshore are offcers of sa.id corporation. They formulate, direct and control the policies of the corporate respondent. The address of the individual respondents is the same as tlHlt of the corporate respondent.

PAR. 2. Respondents are nmy, and for more than one year last past have been, engaged in the manufacture., sale and distrib1160n of various kinds of electronic devjces including portable rflc1io transmitters sold under the names of " i\Tew 2\Iagic IValkie TaJkie Radi- Yox" and "Radio Talkie -\R. 3. In the course and conduct of their business l'e5ponc1ents ship their products from their place of business in :Kebraska IO pur chasers thereof located in yarious other States, and maint ain, and hayc maintained, a substantial COllrse of trade in said products, in commerce, as "commerce" is defined in the Federal Trade Commission Act.

PAR. 4. R.respondents in the eonclnct of their business were, and are" e,ngagec1 in substantial competition in commerce ith corporations, fh'ms and individuals engaged in the sale and distribution of port.able radio transmitters and related electronic products. PAR, 5. R,respondents in the course and conduct of their said business, and for the. purpose of inducing the purchase of their portable radio transmitters, advertise tile same by means of aclyertisements inserted in newspapers and magazines of general circulation and by circulars and other advertising material c1istI'ibuted through tin' mail and otherwise. Among and typical but not all inclusive, of the statements and representations appearing in said ac1yertisements are. the following:

Xew l\lagic 'Y'- alkie 'Tfllkie: Your own pocket size radio Rwtion! Dl'oadcasts to any home 01' CIll' radio without wires or hookups! * * '" ",With this radio t ll;;ie yon can tnlk to your friends up to a block or more away r Talk up to 1 miJe 01' more between two automobiles. Instant operation. .Tust push button to taJk. :\0 license needed"' * * Gnaranteell to work. 1 year sen" ice guarantee. A real transistor Powered Pocket Size Radio Talkie. Sends your ,oice to any 110use or car radio! 1\' 0 connections, wires or electric " plLlg 111 . 'Yorks C\"81';,- \\ , , 884 FEDERAL TRADE CO:\L\lie;SION DECISIO:X, Complaint G3 F.

where-up to mile or more! Xo licen e or permit requirE'l anywhere! One year senice. )loney Back Guarantee! Cse Hacho- Talkie Hacli-Vox in a thousand ways. Talk to anyone radio or to aU 01' any group of radios in nearby locatious. Talk from car to ' ar np to 1-10 miles apart. Any number of cars can be useel! Rct\yeen Hotel nooms-up taLrs Ot' dOlYIl. From car to trailel'. To 11011se. Between buildings np to Ih wile 01' more. Break in regulat' Radio Broadcasts. P..\R. G. By the use of the statements appearing in the aforesaid advertisements, and others of the Same import not herein set forth respondents represented, directly or by implication: 1. That respondents' portable radio transmitter, ,yithollt the use of additional equipment, has a satisfactory operational range of up to one-half mile for every type of home radio receiver located in the home or other buildings.

2. That responclents said device, IVithout the use of additional equipment, has a satisfactory operational range of up to 10 miles hen transmitting from an automobile to any automobile radio receiver in another automobile.

3. That said device carries a 1-year service guarantee. 4. That J10 license is required to operate sflid device. \R. 7. The aforesaid statements, repTE:sentatiol1s and implications arising therefrom, were and are, false, misleading and deceptive. In truth and in fact:

1. Respondents' pOl'Ulble radio transmitter, without the use of addition1al equipment, has a satisfadory operational range of substantially less than up to one-hah mile for home radio receivers located in the home or other buildings.

2. Respondents ' said c1e, ice, without the use of additional €fll1ipment, has a. satisfactory operational range or snhstnntialJy Jess than np to 10 miles when tnmsmitting from one automobile to an automobile radio receiver located in another automobile. 3. The guarantee furnished by respondents in connection with said device is limited in certain respects and requires the payment of $1.50 for postage and handling charges which facts are not c1disclose,d jJl the advertising of the guarantee.

'1. Respondents' said device when used to broadcast in a certain manner set out in the operating instructions, requires a license under the regulations or the Federal Communications Commission. WESTERN RADIO CORP. ET AL. 885 882 Initial Decision PAR. 8. The use by the respondents of the foregoing false and misleading statements, representations and implications has had and now has, the capacity and tendency to mislead and deceive a substantial portion of the purchasing public into the mistaken and erroneous belief that said statements, representations and implications were, and are, true, and to induce a substantial portion of the purchasing public, because of such mistaken and erroneous belief to purchase their said product. As a. result thereof, trade in commerce has been unfairly diverted to the respondents from their competitors and injury has thereby been done to competition in commerce.

PAR. 9. The aforesaid acts and practices of the respondents, as herein alleged, were, and are, all to the prejudice and injury of the public and of respondents' competitors and constituted, and now c.onstituie, unfair and deceptive acts and practices and unfair methods of competition, in commerce, within the intent and meaning of the Federal Trade Commission Act.

Jh. GIn'/and S. Ferguson and llh. John J. McNally for the Commission.

Jh. Oharles H. Rowan Milwaukee, IVis. , and Jir. O. W. Ooll," Los Angeles, Calif., for respondents.

INITIAL DECISION BY LORE H. LAUGHLIN, HEARING Ex.-\:ynl'""R ,JULY 25 , 1962 This is a. proceeding under the Federal Trade Commission Act charging violation of 5 thereof in that respondents have falsely advertised, in interstate commerce, a pocket-size radio transmitter designated by them, and referred to usually in the record herein, as Radi-Vox. There are four distinct charges a.lleged in Paragraphs 5 , and 7 of the complaint, which in substance are that respondents have falsely claimed in advertisements inserted in newspapers and magazines of genera.1 circulation, as well as by circulars and other material distributed through the. mail and otherwise, that their radio transmitting device in question:

1. TIas a satisfactory operational range of up to one- half mile for every type aT home radio receiver located in buildings; 2. lias a satisfactory operational range of np to 10 miles ,yhen transmitting from an automobile to any automobile radio receiver in another auto;

3. Carries a I-year service guarantee; a.nd 4. Requires no license to operate.

7S0- 1S-.69- 886 FEDERAL TRADE CO:vMI5SION DECISIOKS Initial Decision 63 P.

Hespondellts, in substance: deny tJlese charges in their ans\yer. It is fOllnel herein that the marel'ial tdlegatiolls of the complaint either have been admitted by respondents or have been sustained by preponderance of the evidence, and an appropriate order is hereinaftcl' issued.

The complaint 1181'ein \Yas issued April 2, H 59, find the respondellt filed their almyel' on June 19;;:). 'While the record is short, the subsequent histor;y of the litigation is som wllft complicated, and must be stat eel in onlc1' to determine herein the real contentions of respondents. Prior to any hearings, counsel supporting the C011plaint, and respondents' counsel negotiated a consent agreement which was submitted to the hearing examiner Oll October 27 195 It disposed of the first three charges\ but reserved the right to litigate the fourth charge. Reference would not be made herein to any proceedings relating to this consent agreement: since they are nol n part of the oiIcial record, except that respondents, in their proposed findings, insistently contend that the illitial decision of the )1hearing exa,miner accepting said consent agref'ment and issuing' an ordel' ill accordance there,with is final and binding upon the parties as to the first three charges: and limits the issues for trial and decision to the fourth charge. Hespondents aha, as it part of t.their propo als, tender the same order that 'was stipulated in said consent agreement. The hearing examiner issued his initial decision accepting said consent agreement on October 28 1959, and thereafter, upon review\'. the Commi::sion, on December 2, 1959, issued its order vacating snell initial de.rision as "not appropriate in all respects to dispose of thie proceeding, and remanded the ease' to the hearing examiner for further proceedings. It is the respondents' coniention (Proposed Findings, pp. 1- paragraphs 1 and 3) that, the agreement having been duly approved by respondents and by counsel supporting- the complaint and the Bureau of Litigation of the, Commission, and the initial derision accepting said agreement being in strict accord "\with the then Rules of Practice of the Commission, the said agreement became final and binding, and that the first three charges or t11e complaint are not litigable herein becaw::e: 1. S8.ic1 initi8.1 c1eeision was not served upon the, parties until November 14. 1959 and the Commission s order vacating it was improper since it was issued on December 2, 1959, more than fifteen clays thereafter:

2. :\a party had appealed from the initial decision: and 3. There was no sound factual basis Tor its disapproval by the Commission.

WESTERN RADIO CORP. ET AL. 887 882 Initial Decision K 0 such contention had previously been made by respondents throughout. the course of this proceeding since the yacation of said initial decisioll.

Respondent's cOllllsel have erroneollsly attempted in such contention to apply the present rules of the Commission, which are greatly misconstrued by counsel, to a proceeding which was conducted entirely under the Commission s then applicable Iay 1957 Rules of Practice for Adjudicative Proceedings. Under 25 of those Rules and in strict pursuance thereof the initial decision accepting the consent agreement 'vas issuerl and served within 30 days follmying the submission to the hearing examiner of said agreement, and while a joint appeal hy the parties was provided for by such Rules in the event the hearing examiner did not approve the consent agJ'eemcnL the Commission retained its authority and discretion, Hnder 25 (e) thereof, without limitation as to time either to approve 01' reject ally consent agreement accepted by thc hearing examiner ancl his initial decision thereon, and to remancl the case to the hearing- examiner for adjudication in regular course. Furt.hermore, the said initial decision under consideration here, in acconl with such Rules, \Vas in no sense fin ill, expressly providing, ;;The agreement shfdl not become a part. or the record unle s anc1until it becomes a part or the dec.sion of the Commission. ': Also, a consent-order adjudication, under the Commissjon s Rules, always has been and still is a matter of discret.ion to end litigation upon agreement, and is not a determination of any contested factual issues.

Under the Commission s present Hules. hearing examiners are no longer concerned whh consrmt settlements, which are now delegate.d to the Offce of Consent Orders under Part 3 of the Commission Rules of Practice. Procedures and Organization effective June 1 1962 which Part 3 became originally effective .Tuly 21 1961. Counsel for respondents is evidently also confused by the current Rules of Practice for Adjudicative Proceedings, which is Part 4 of the Commission s present Rules of Practice Procedures alld Organization. Section 4. 19 of the Rules of Practice for Adjudicative Ploc.eedings provides tllat a petition for review of an initial decision must be filed within 15 days after serviee of the initial decision, but also provides that the Con;mission hns an additional 15 days within which to place a case on its o'vn docket for review. This rule has no application 1Whatsoever either.r current consent-order procedures or to any consent-order proceeding coming under the former rules. sur, as tlle one under consideration here. Keither of these ronsent-order procedure rnles limits the Commission s time for ('on idf'l'tioll and 888 :FEDERAL TRADE COMMISSION DECISIONS. Initial Decis:n 63 F. disposition of a consent-order agreement. The several contentions of respondents in this respect are therefore wholly without merit and the said abOltive 1959 consent.order proceedings constitute no bar to adjudication in regular course of any issue in this case. Following the remand of this case to the hearing examiner for further proceedings, hearings were held on January 7- , 1960 , in \Vashington, D. , during ",hieh hearings evidence was presented only in support of the fourth charge of the complaint, which in. valved only the issue that respondents had falselv advertised their said Radi- Vox as requiring no license to operate. \.t these hearings counsel supporting the complaint presented evidence in support or that charge only, and respondents likewise presented their defense only as to such charge. No rest \nls taken by either party on any charge of the complaint the matter being left open for further proceedings by both parties.

On February 9 , 1960, counsel supporting the complaint filed a )Iotion To Reopen Hearing As To The Issue Covered By Pam. graph Seven, Subparagraph 4 Of The Complaint", on the ground of surprise arising from the testimony of respondent Paul S. Beshore, who had testified for respondents on .Tallhll'Y 8 , 1960 , in essence that two units of said Radi.Yox which had been submitted to the Federal CommUJ1ications Commission were not of the kind sold to the public, but were experimental units from the respondents laboratory, which had substantially higher field strength.h than the regular production models advertised and sold by respondents, and that the same, in his absence from respondents' factory, were erroneously given to a representative of the Federal Communications Commission by some employee without Beshore s knowledge. Re. spondents strenuously objected to any further hearings on said fourth charge in their "j\femorandum Opposing ::fotion To Heopen Hearing, fied on Fehruary 17, 1960.

Counsel supporting the complaint, according to said motion, desired to take the testimony of one A blowich, a former employee of the Fe,eleral Communications Commission, who, such counsel chimcd v,as available to testify and, if called, would controvert the said testimony of respondent Paul S. Beshore.

On l\larch 21, 1060, the hearing examiner issued his interlocutory order reopening the hearing as to saiel fourth charge as being in the public. interest, in order that an available evidence pertaining thereto might be fully presented on the record. Follmving tllis ft number of he,arings were held on aij four charges of the complaint, on various dates on and between March 29 , 1960, and April 3, 1961 , in WESTERN RADIO CORP. ET AL. 889 882 Initial Decision Kansas City and St. Louis, Missouri, and Los Angeles, California. At the hearings in St. Louis and Kansas City, evidence was received in connection with the first three charges of the complaint, while the hearing at Los Angeles was devoted exclusively to the testimony of the said witness Ablowich relating solely to the controversial fourth charge of the complaint. After the completion of These hearings respondents presented their evidence in defe1l e at two hearings, one in "Vashington, D. , on October 18, 1961, and one which was finally held in Omaha, Nebraska, on April 2, 1962, after unavoidable debys caused by the removal of one of respondents' expert witnesses and t.he accidentnl death of another just prior to t.he time set for their respective appea.rances to testify.

Respondents' defense having been concluded, counsel supporting the c.complaint was given until 1\1:ay 1, 1962" in which t.o elect to present rebuttal evidence. On that date, such election not h:lTlng been made, and aU evidence ha,ving been presented, the reception of evidence was terminated and .June 15 , 1062 fixecl fls the date for submission by the parties of their proposed findings, conclusions and order, which were duly filed.

On October,1' 16 , 1959, counsel for the parties had agreed upon a stipulation a to certain facts material to the fourth charge or the, complaint and the denial thereof by respondents, rela6ng to the necessity.y for fl. license, for the device in question under the regulations of the. Federal Communications Commission. At. that time it was anticipated that the consent agreement would be accepted by the Commission, and that it would be unnecessary to try the other three. issues 1\which \\-e1'(', covered thereby. Subsequently, as aboy€, statNI t.he Commiss.ion rejected the consent agreement and the case came on for trial on aji issues. On the first day of hearing, tTanllal':T 7 1960, by agreement of parties, the stipulation was received in evidence as Commission s Exhibit 1. In their proposed findings (Paragraph 4, page 3) the respondents for the first time conte.nd that such stipulation, when received in evidence, limited all fut.ure, hearings to consider-ration of the fourth issue alone. A careful stud) of the stipulat.ion reveals that it canta.ins no snchJimitation, and subse nt t.rirti of the case, w11erein an parties contested a.ll issue.s. demonstrates beyond question that respondents did not consider such it limitntion to exist. Respondents' contention that. the stipulation Emits the proceeding to consideration of the fourth charge only is therefore reie.ced as inconsistent with thb facts and wholly untenable. Respondents, in their proposed findings ra.isB only one other qnestion with respect to the procedure followed by the hearing examiner. 890 FEDERAL TRADE COMMISSION DECISIOXS Initial Decision 63 F.

They contend that there is error in the hearing examiner' to permit examination of an investigation report made to thes refusalCommission by the witness Charles T. Snavely, :1n attorney-examiner for the Commission. This witness testified on :?farch 29, 1960, in Kansas City respecting his procurement of a Radi- Vox purchased by the witness John E. i\fair by mail from respondents as a result of one of their published advertisements. Snavely testifiec1 in substance that he intenie,,-ed :'air on September 3, 1958, and that he, jointly with fajr tested the device as to range and the tl'ansmjs jon of any intelligible conversfltion, ,vithout satisfactory resin1ts; that Iair permitted him to take the device 'with him and he then made personal tests on his portnble radio at home: as well as on his car radio. an rdthollt satisfactory operation, although the instruction sheets ,,,which Iair had received Tlith t,1JC radio ",were follmyec1 strictly in a11 tests. SnnveJy then obtrdnec1 a Joan of the device :from )Jair for further tests, and subsequently had it tested by experts. In the course of his direct examination Snavely referred briefly to his final report to the Commission, and on his cros3 examjnat.ion respondents' counsel inquired furtl1cr about suel1 report, Tlhich '''as dated DC/'member 15 1a58 and finally asked to see the report, to which counsel support.ing t.he complaint objected on the ground t.1at it was confidential material. The hearing examiner sustained the objection because the Commission had never delegated any authority to its mnployees or t.o hearing examiners to disclose any such official reports, and st.ated in substance that the Commission itself: within its discretion, would be the only authority capable of ordering t.he production of said report (Tr. 110-113). In its order denying interlocutory appeal issued September 15 1a58 in 810' Oil Oompany, Docket 6834, the Commission granted discretion to its hearing examiners, where there is admit.tedly a prior statement of a witness referring to documents signed by him and conta.ined in the Commission confidential files, to screen such documents, and in the exercise of sound discretion, to permit their llse in the cross exa.minntion of such witness. In that de,cision, however, the Commission adhered strictly to its Rules rehting to the release of confidential information insofar as such related to interview reports by its employees, and did not delegate the aut.hority to require their prodllction under any circumstances, to its he,aring examiners. Since counsel for respondents did not avail themselves of the patent remedy provided by the Commission s said Rules, of requesting the Commission itself to order the production of the requested document, and the hearing examiner had no f\uthorit.y to do so, there is no e1'101' in the hearing examiner refl1snJ to require tlle production i hereof. , WESTERN RADIO CORP. ET AL. 891 882 Initial J)ecision The hearing examiner has carefully and fully analyzed the whole record, taking into consideration his observation of the appearance conduct and demeanor of each of the witnesses who appeared before him. All procedural and evidentiary matters have been thoroughly revimved, and a1l rulings made during the course. of the proceeding are hereby confirmed. All arguments, proposals and briefs of counsel have been carefully stndied and considered in the light of the entire record, a,nel all such proposals not. herein adopted either verbatim or in substance and effect are hereby rejected. Upon the whole record, the hearing exa,miner finds generally that counsel supporting the complaint. have fully sustained the burden of proof incumbent upon them, and have established, by substantial reliable and probative evidence, and the fair and reasonable inferences drawn therefrom, al1 the material allegations of the complaint. The hearing examiner therefore makes the following: FINDINGS AS TO THI FACTS The facts alleged in Paragraph 1 of the complaint. are admitted by the answer, and also stipulatcd. Therefore it is found that respondent 1Vestern Radio Corporation is a corporate.ion organized existing and doing business under and by virtue of the laws of the. State or Nebraska, "Hh its offce located at ICearncy, Nebraska; that individual respondents Paul S. Beshore and IV. P. Beshore are offce.rs of said corporation; that they formn1ate, direct nnd control the policies of the corporate respondent.; and that the address of the individual respondents is the same as that or the corporate respondent.

The facts alleged in Paragraph 2 of the complaint arc. likewise a,lmitted by the answer and also stipulated. It is therefore found that respondents are now, and for more than 1 year last past have bee. , engaged in the manufacture, sale and distribution of various kinds of electronic devices, including portable radio transmitters sold under the names of "New :i\magic 'Walkie Talkie Radi-Vox and "Radio Talkie The facts alleged in Paragraph 3 or the complaint are also a.d.; mitted by the answer and stipulated. It is therefore found that in the course and conduct or their business respondents ship their products from their place of b11si11ess in K ebraska to purchasers thereof located in various other States, and maintain, and have maintained, a substantial course of trade in said products in commerce, as commerce" is defined in the Federal Trade Commission Act. The evidence, moreover, proves the substantial extent of respondents business. Respondent Paul S. Beshore testified that they have a , , , , Initial Decision 63 F.

plant occupying a square block of area in Kearney, Nebraska, of which approximately 40 000 square feet of space is used for manufacturing their various products. The testimony of the witness Ablowich went into considerable detail concerning the various parts of respondents' offces and factory, their machinery, their operations their manufacturing of the Radi-Vox as well as of intercommunieation sets, broadcast receivers, and other related electronic products not involved in this proceeding, and the large number of employees he saw engaged there in their work at the time of his visit in early February 1957.

While the fourth paragraph of the complaint, relating to respondents' competition in commerce, was denied by the ans-wer, the facts therein set forth were later stipnJa;ted, and the testimony of respondent Paul S. Beshore further shows that as of January 8 , 1960 respondents had manufactured approximately 20 000 of the Radi- Vox device here in question. It is therefore found that respondents in the c.conduct of their business were, and are, engaged in substantial competition in commerce with corporations, firms and individuals engaged in the sale and distribution of portable radio transmitters and related electronic products.

There were received in evidence, without objection, two advertisements of respondents relating to the Radi-Vox, Commission s Exhibits 11 and 12, which were advertisements published respectively in the January 1957, and July 1958, issues of thc magazine Popular Science Monthly. There was also credible testimony that the same ad appeared in the magazine Meehanix IJlustrated (Tr. 91). These two publications were then, and now are, magazines of general circulation throughout the United States. The respondents also used mail circulars and other advertising material oiIering such device to the public. Commission s Exhibit 13- B is typical of these circulars. This proceeding is premised upon the representations contained in such advertisements.

The evidence relating to the third charge of the complajnt, that respondents' device carries a l-year service guarantee, win be first considered, since it is determinable solely upon the basis of respond ents' said advertising and their instructional sheets (CXs 3and 16- , and RX ll- B). The respondents' said advertisements published in magazines stated in this respect : GUARANTEED TO WORK. 1 YEAR SERVICE GUAR"-,TEE. In their circulars respondents stated in such respect: F'urthel'- Radi-Vox is guaranteed free from defects in workmanship or material for one year from date of purchase.

, , , WESTERN RADIO COHP. ET AL. 893 882 Initial Decision Respondents' sales or Radi- Vox devices we,re made as a result of these advertisements, and delivery was made to the purchasers by the United States mails. In the shipping containers of said devices respondents placed circulars setting forth operating instructions (CXs 3- B and 16- , and RX 11- B). The purchaser upon reading such instructional sheets, learned ror the first time that During the period of one year after purchase, repa.irs will be made ror a charge of $1.50 for postage and handling . In these instructions, also ror the first time so far as the purchaser knew, respondents reserved the right to determine whether such devices "have failed due to improper battery installation, alteration or unusual abuse, and agreed, after such determinat.ion, to repair said devices on an actual cost basis and return collect on delivery for the charges due in addition to the standard handling and postage charge or $1.50". This more specific follow-up guarantee contained in the instruction sheets sent to all purchasers who bought the device by mail during the years preceding the institution of this ease was only changed in a few particulars in the guarantee llsed currently by respondents at the time or the hearings (RX 11- B) . There was an increase in the postage and handling charge from $1.50 to $2. , and a new statement that other actual repair charges "generally will be $3.00 for any reasonable repair Since the magazine advertisements which the public first saw induced the purchase, this first impression on the prospective purchaser is the determining factor upon the question of deception with reference to the guarantee. It is now wen established "that a guarantee per se negatives the idea of a rurther consideration (Parker Pen Co. v. C. (C. A. 7, 1946), 159 F. 2d 509, 511). This case and m.ny cited therein, as well as numerous subsequent cases, have established beyond question the principle that the Commission s duty is to protect the uninformed, casual or negligent reader from deception by false advertising. Therefore information furnished subsequent to the tender of a guarantee, belatedly revealing the true facts to the purchaser concerning all conditions and limitations attached to slich guarantee, does not aneviate the first deception, nor absolve the advertiser from responsibility ror his original false representations. Since the original statement of guarantee was absolute and ,,,it-hout any qualification, it is therefore necessarily round that respondents have falsely and deceptively represented that their Radi-Vox is unconditionally gllanlltecc1 for one ye, , in violation of ;) of the Feclentl Trncle Commission Act, as set forth in the third charge of the complaint.

894 FEDERAL THIADE COMMISSION DECISIO Initial Deision 63 F.

The first and second charges of the complaint may be considered together because the evidence pertaining thereto is linked together in the testimony of the \vitnesses who referred to these matters; and likevdse in respondents' advertisements containing these two types of misrepresentation, they are either expressly stated together, or closely mingled in their arrangement in the text.

Respondents Radi-Vox" is a small radio transmitter which is succinctly and ,yell described by the Federal Communications Commission experts who testified. This description is: The de. ice consists of a small tran.,;mitter unit designed to be held in the h:llll. 21jz 411:2 X 11i! inches in size. The antenna extends 7 G inches ant of the tcl and an exteu,sion is provided to make the antenna extend l(Pf: inches out of the case. * * 0; The transmittel' itself consists of Ii transistor supplied by a (i-Hilt hattel' . The unit is designed to operate in the lower part of the standard broadcast band and is tunable by a slug. A microphone is b11i11 into the face of tbe unit (eX '1, Report of John Knight, 1". 0. Prolect Engineer, F.G.C. Offce of Chief Engineer, Laboratory Division, joined in by E. W. Chnpin, Chief of ;;a Divisi(ln, ann another executive offcial thereof; and ex 19, Report of H. ,Yo Bonrel1, Engineer in Charge of the Kansas City, ::Iissonri. Field Operating Diyi. sian of F.

Under the accompanying instruct.ons, the Rac1i-Vox device is pnt into operation by pullng clown a "Talk S,,'itch" and manipulating a frequency setter but.ton a,nc1 the extension of the antenna as llay be required.

The rat.her small mag-azine advertisements of Radi-Vox, pertinently to these two charges, emphasize the following statement.s largely in capital letters :

BROADCAST TO AKY HOME OR CAR RADIO WITHorT 'VIRES OR HOOKUPS! With this Radio Tnlkie you now CAN TA.LE: TO YQ"CR FRTEXDS UP TO . BLOCK on l\IORE AWAY! Talk up to 1 mile oj' more between 2 antomphilf' IXSTA:'' l' OPERATION! . Tust push button to talk In the circular enclosed with the device when mailed to the purehaser, in bold script type, appears the follmving: Talk to a1l house and car radios e,erywhere! * * * Ko -.vire connections required! These words are followed by large capitalized letters, stating: Normally'ange np to 1/:2 mile followed by the word "Guaranteed". In the small-print footnote to which the star refe-rs, the circular states: 'Ye guarantee RADIO TALKIE wil transmit or send your voice wit.hout extra connectors or \yires while you walk, to any onlimJT ' n'Jdio any\\"here in your local area or building and up to 1f: mile or more w11en UI1el'ateu in accordance wil with simple instructions and precautions. We guarantee that Radi-Yox WESTERN RADIO CORP. ET AL. 895 882 Initial Decision transmit or send your voice on wave bands from 550 to 800 Kilocycles AT WILL by a simple dial adjustment.

This circular further states:

BROADCAST TO AXY HOME OIl CAll RADIO WITHOGT WIRES OR HOOKlJPS OF' y KIND! * * * HAS SENSITIVE VOICE MICROYOLl' AND FREQGENOY SETTER. PGSH TO TALK SWITCH-INSTANT OPERATION.

The circular further emphatically sets out more specific representa.tlons:

\LK TO ANY OXE RADIO OR TO ALL OR ANY GROUP OF RADIOS IN XEARBY LOCA'l'IOXS.

TALK FROM CAR TO CAR l'P TO 10 MILES APART. XY XG3IBER OF' CATIS CAN BE USED! BETWEEN HOTEL HOOMS-UPSTAIRS OR DOW FROJI CAR TO TRAILER-TO BOGSE.

BET\YEEX BCILDINGS UP TO Y:! :'IILE on :.IOHE. BHEAK I:: REGUL.\R ItADIO BHOADCASTS! while elsewhere in this circular reference, is ma.de to instructions , be-which will come with the device "for opera.tion in cars, homes tween buildings-over miles of phone lines ! such langun.ge does not alter the definite st.atements made elsewhere therein. Furthermore in the magazine advertisements there is additional langllflge CO:\IPLETE Iif.ADY TO OPEHATE with instructions and 1111111'cds of \Ta and tricks for broadcast tl!fough any radio ou desire. This language also does not alter the positive representations previously made.

Two consumer -witnesses credibly testified in support of the case-inchier. It does not appea.r that eit.her one or them had complained to the Commission before being interviewed by its representative Snavely. John E. .fail' or I(ansas City, an assemble1' at. General Motors, bought his Radi Vox through an ad in the Popular Science magazine, which ad he l1ad seen in that and several other magazines including :\lechanix Illustrated, for a considerable period of time before he actually bought the device. He received his Radi Vox in August 1958 , and attempted to operate it. lie rend the accOmptlny ing instructions, but certain informotion contained therein, which indicated condltions and areas where trOllble in operating the device would oc-cur had not appeorecl in the ad through "hieh he became interested and purchased the device. He found that the device did HC'\" battcries for it. He triednot seem to work e'iell aftr,r he bought it on several different radios, and could only get a squeak when he t.ouched antennas. It was during the period or his tests that the 896 FEDERAL TRADE COMMISSION DECISIO'\S Initial Decision 63 F.

Commission s attorney-examiner Snavely, who had obtained from respondents a list of Radi Vox buyers' names in the area, came to his home and inquired about his Radi-Vox; and the two of them made several tests together in Mair s home. IHair made no attempt to communicate with respondents, and heard nothing further from them after receiving the device. There was an attempt on crossexamination of this witness to develop that he Jived in an electrically noisy neighborhood, and also that he took the Radi-Yox apart, but the witness, while admitting there was electrical equipment in the neighborhood, stated he was unable at any time to get the device to work, even when all electric lighting and other possible interference was turned off, and also stated he did nothing but install new batteries in the Radi-Vox. Snavely, after fruitless tests in company with Jlhir, as already stated, later borrowed the device and then unsuccessfully tested it himself, both in his own apartment within an RITa free from bnsincss noise and in his auto, find it \vorkcd neither place. He then gave it to the witness Robert ,V. Hester who owns and operates a television and radio service company. ' With Snavely, Hester ran some preliminary checks on the device, accord. ing to its instruction sheet, and they found it would not work except with an additional carrier wire. Hester detailed the indoor checks and then testified that they took it ontdoors, beyond the range of any radiated noise, and after various tests with different receive.rs, were unable to get any reception from the Radi-Vox other than just some noise.

Hester then referred Snavely to the Television Service Engineers, a trade association of which I-Iester was a member, for a. more thorough testing of the device. The said Radi- Vox was finally refe.rred to this oganization s Technica.l Committee, of which one Donald Day was chairman. Day, radio and electronics technician with considerable experience, including teaching in tha.t field, made further tests with the instrument, using recognized standa.rd testing equipment. I-lis tests, on the Hammurlanc1 I-IQ-129 neceiveT in a light commercial business zone, gave intel1jgible voice. receptjon for only about 40 feet. An automobile radio check in the same area resulted in reception at approximately only 20 feet. He then took the Radi-Vox and the testing equipment 20 miles outside of Kansas City, into a sparsely-popnlated area with no obstrnctions, and in that rural territory set up the Hammurland and attached approximately 100 feet of aerial to the receiver. There a barely intelJigible reading of the Radi-Vox without attachments was obtained at about 350 feet distance, under excellent testing conditions. A test "as also made WESTERN RADIO CORP. ET AL. 897 882 Initial Decision with the automobile radio at the same rnral location, with" perceptible radiation of only about 75 feet from the Radi-Vox. 1.se of the Hammurlancl Receiver approximately doubled the distance of reception in the several tests, but, as Day reported it, a Hammurland Receive.r is "normally not in the hands of the average radio listener (E. 122, CX 12-B). After other similar tests, he made a report of his findings in writing, which he gave to Snavely (CX 12- B). His conclusions in the report were that communication between cars up to a mile or more, or between houses a block or mote apart, would be possible only under special conditions, if at all. The second consumer witness called by the Commission was Dr. Paul B. Vatterott, who also purchased a Radi-Vox from the respondents through a magazine ad in Popular Science. His attempts to make it work failed, and he thereupon opened it and found a connection was corroded by a leaking battery, so that he had to replace the battery. He made several attempts to transmit messages from his automobile to another driven by his brother-in-law on a trip they a. their families made to Colorado. The Radj -Vox worked when the cars were about 50 feet apart, bnt when they were one or two blocks apart the Doctor s voice was not auclihJe in the other car. also tested the device in his private offce by attempting to call his nurse out in the reception room, where there was a radio; this attempt worked out so poorly it was finally given up, although the distance between the transmitter and the receiving radio was only about 25 feet. He also tried the Radi- V ox out at home, but it would not work in excess of 50 feet from the receiving radio. The Commission s representative, Snavely, called upon him, as he had upon lIfair earlier, and was permitted to take the Doctor s Radi- Vox for testing and checking in the summer of 1960. The Doctor was quite objective in his testimony, and volnnteered that he did not expect too much for the small amount he had paid for the Radi- Vox, and on cross-examination conceded that he had not followed all of the instructions that came with the device. Repeated inquiries as to whether he had used any additional equipment or bought a coupler to connect the transmitter to the automobile antenna, as set forth in the instruction sheet, were answered by him in the negative. This, of course, was of little importance, since the advertisement its promised practically universal use without reference to additional hookups.

Snavely, in June 1960, delivered this Radi-Vox to the witness Harold VV. BoureD , engineer in charge of the Kansas Cit.y Federa! Communications Offce, an experienced radio engineer. l7pon re 898 FEDERAL TRADE CONL\nS€IO DECISIO -:S Initial Decision 63 F.

ceiving authority from the TVashington offce of that Commission BoureJl, using several standard field intensity meters, checked and reehecked the Radi-Vox for its field-intensity measurements or radiation. He made a complete, detailed report thereof (CX 19), dated August 29, 1960. From his tests he found, among other things, that 6 feet from the Radi- Vox with its antenna fully extended, voice modulation was fairly clear and could be understood, but at 10 feet it was too weak and distorted to be understood, and could not be heard at all beyond 15 feet. H;s tests were made on several1 clays in August 1960, at his home and in an open resident.ial area free from industrial radio noises, and as a result of his test, wherein he used a 'IO- foot antenna, t.he signal strength of 200 microvolts per meter at a distance of 100 feet was far in excess of that authorized without a license from the Federal Comlllunications Commission under Part 15 of its Rules and Regulations. His further conclusions as to respondents device violating such rules are subsequently referred to in connection with the evidence relating to the fourth charge of the complaint.

Respondent Paul S. Bcshore manifestly is greatly interested in the outcome of this proceeding. 'Vhile he has had extensive experience in radio, in attempting to exphin away the results of the several tests made by the foregoing witnesses his testimony must be rejected as purely his professional1 opinion, based on the hypotheses of what the record showed had occurred during such tests. The results of the various tests made by Beshore also must be rejected, in view of his general lack of credibility, as herem after discussed. Certain tests "ere made for respondents hy the only other witness called by them onc Peter D. Young. He is also of I\:earney, Nebraska, a YOlmg electrical engineer student who holds television and radio-telephone license from the Federal Communications Commission and is the chief engineer of a television station in Kearney. He admitted that all his tests were made by him operating the receiver, ",hi)e Richard Beshore, the son of respondent Pan1 S. Beshore, operated the transmitter. These tests were made on J\larch 28 and 29 , IDG2, with two transmitters which Paul S. Beshore testified were production models. The tests for transmission distance or operational range ,;were made both in and between buildings in Kearney, and also between automobiles in rural areas ne,arby. The tests in 1(:ea1'11ey were made in locfltions llaving overheRc1 electric or telephone. wires. The. automobile tests, as made, required ac1ditionall1ookups and equipment, such as a coupler and a hookup of tile transmitter with the car radio antenna. In the auto roa,cl tests, it is also notcc1 Y Dung ah,nys operated the radio receiver, which he, a,s an expert, had specially tuned in for the reception of the transmiUer signals from the other ear. These tests WESTERX RADIO CORP. ET AL. 899 882 Initial Decision as well as tests made by him to determine field strength, have but little value.

Therefore, upon the weight and credibility of all the evidence, it is found that respondents' portable radio transmitter, the Radi- Vox in question, without the use of additional eqni pment thereon, or special local conditions such as electric wiring' in houses or wires along the highway, has a satisfactory operational range, for use with radio receivers located in the home or other building, of not more than 50 feet in city, town, or commercial areas, or 75 feet in rural areas; and such device, without additional equipment, has a satisfactory operational range of no more than two city blocks when transmitting from one automobile to a radio receiver located in another auto. It is accordingly found that the first and second charges of the complaint have been sustained, and that, by the use of the statements contained in their advertismnents, respondents have falsely and deceptively represented, directly or by implication, that their said portable radio trrD1smitter, the Badi-Vox device, without tl1c use of additionoJ equipment, has a satisfactory operational range of up to one-half mile for every type of home radio receiver located in the home or other buildings, and that their said device, without the use of additional equipment, has a satisfactory operational range oT up to 10 miles when tra.nsmitting from an automobile to any automobile radio receiver in another automobile.

\t the time counsel supporting the complaint filed their proposed findings, they also submitted an extensive brief on the law and evidence relating thereto, in ,vhieh, among other things, they pointed out with great particularity the numeTOUS ina.ccuracies and weaknesses of respondents' evidence on the contested issues involving the first second and fourth charges. Especially, they detailed the testimony of the witness Dayid Ablowich, and ably analyzed it in contrast to t.he testimony of respondent Paul S. Beshore relating to the fourth charge, to which it was diametrically opposed. As already stated when Beshore testified in Washington, D.C., on January 8, 1960, he stated (Tr. 54-55) that:

\. My l1H!erstrmding of the sitnution was that a )11'. Ablo,itch (sic) whe is fln ellplo ee at the FCC :\loJlitol'ing Station at Granel Island, came in to the TJlmn, and 1 WfiS not there. one of the employees ga, e ::I!'. Ablovitch (sic) t\yO l1!lists. Bl1the made the statement that he dicln t know what he ,yunted to m::e them for. . ., '" They apparently were expel'mentnlllnits that were in our labol'flt()1' . nt the time ::11'. Abso,itch (sic) from HIe FCC came ill. :; " * TIle \Y;l explninecl to me, was that there \were no production units available to gi,e tu h:ll.

Q. Y0l1 Jwve stated that O!ese prodllction models had a 10.000 micro farad (s':c) 811t('nn:1 cOlJpler; whereas, your reg-ular sets have a 2500 micro farad? (sic) A. That's right; "i' s micro micro farad. (sic) 900 FEDERAL T1MDE CQ::VLMISSIO:: DECISIO Initial Decision 63 F.

Q. .\ntCII1;, cO,iplel' ' . TIFlt'S right.

Q. "\Vhat dilIerencc in field stte1lp:ths wuu1d result from a transmitter having 000 m;cro farad nntenna col1plel'? A. It ,vou1c1 he sl1bstantial1y higher. * * , He also testified that the units respondents received back from the. Federal Communications Commission after tests made by its experts Knight and Chapin, at Laurel, Maryland, "had 10 000 micro farad , made in January 1D57 of the Radi-couplers" and that his field tests Yox that has been advertised and sold by respondent.s, still obtain since there has been no change in the device itself since that time although occasionally a field t€st is made of a model from the production line, the results of which do not vary from those of the tests Inade in Ja,nuary 1957.

This particular part of Beshore s testimony was basically the reason for counsel supporting the complaint insisting upon taking the test.imony of Mr. Ablowich, because if the Racli-Yox models tested by the Federal Communications Commission s experts were not regular production models, but were experimental models wit.h four times the field strength of such regular production models, t.he results of those tests, as testified to by such experts, would be inapplicable herein and would not tend to establish the fourth charge of thc complaint that respondents: device was pmverful enough to require a license from that Commission. Respondents' emphatic opposition to the taking of Ablmvich's testimony strongly indicates that respondent Paul S. Beshore knew that Ablowich would positively contradict him, as he later did, and reveal the fact that Beshore himself had been prescnt at the factory when Ablowich visited it on February 6 1D57 and had delivered to Ablowich two regular production models of Radi-Yox taken from a regular shipping case (Tr. 239 241) for testing by the Federal Communications Commission. This is exactly what was shown by the testimony of Ablowich when it was fialJy taken. Ablowich further testified that Beshore sketched for him a rough circuit diagram of the device in question (CX 22). This diagram was referred to by Beshore in his letter (CX 23) hereinafter discussed. In Beshore s testimony he attempts to explain this " correct.diagram, stating it is not exact, but is "basically Ablowich, an experienced electronics engineer, now with the Meteorology Department of the Unirod States Kavy, on February 7 1957, was assista.nt engineer in charge. of the Fede;ral Communications ebraska, not farCommission Monitoring Station at Grand Island from respondents' place of business at Kearney. Over many years he had frequently met and associated with respondent Paul S. WESTERN RADIO CORP. ET AL. 901 SS2 Initial ned ion Beshore in "ham" radio and various professional group activities. Commssion s Exhibits 5 and 6 are photographs taken at such" meeting, which show both Ablowitch and Beshore standing near or next to each other. They were on more than friendly terms, and it is not " " Mr. Ablowich, as stated by Beshore, but the :Il' AbJowich whom he knew intimately, and only reluctantly admitted knowing when recalled to the witness-stand in the course of the defense, after Ablowich had testified. This clearly demonstrates that respondent Beshore s claim or inference that he did not know Ir. Ablowich, or knew him only slightly, is completely false. Furthermore, Beshore sworn statement that he was not present 'When Ablmyich obtained the two devices alleged to be special experimental models was utterly incorrect, because a few days after Ablowich had visited respondents plant, Beshore wrote a letter to Arthur A. Jolmson, engineer in charge of the Federal Communications Commission Monitoring Station at Grand Island (CX 23), dftted February 15, 1957, stating that he was transmi ttin g three ac1ditional sets of instruction sheets t11:1t we furnish with the Radi-Vox Radio- Tall;:ie Device. We furnished two of tllese units to Mr. Dave Ablowich ,,-hen he called on 11S February 6t11, and also cliscussecl the technical information with him. We also furnished a circuit diagmm of the device for your information. * ,. * As I outlined to .:1r. Ahlowich, we use a Ferris instrument. '" .. .. lr. Ablowhich left a copy of Document 9288 , which we did not have * * A true copy of this letter of Beshore s was received into t.he s orderrecord by stipulation (CX 2;-) upon the hearing examiner of July 26, 1961, and, as already Etated, Commission s Exhibit 22 is the "circuit diagram of the device" which Beshore mentioned in said letter, and which was produced at the hearing in Los Ange.les by witness Ablowich. Beshore, in his testilnony given subsequently 011on October 18 , 1961, while conceding that he had always been friendly terms with Ablowich, denied the transaction of ea,rJy Febwa,s hesitant andruary 1957, as testified to by Ablowich. But he if so, when, he gave Ablowich thewas not clear as to whether or, schema,tic diagram of the Radi-Vox (CX 22). And Beshore never 1961, a,nd hisdid expla,in awa,y, in his said testimony of October 18, 1957 )a,ter testimony of April 2, 1962, this letter of February 15, (CX 23), wherein he refened beyond question to his own personal dealing with Ablowich on Febnlltry 6, 1957. Beshore testified that the two instruments which had been delivered to the Federal Comand claimed that when hemunications Commission were returned, eontllinec1 interior couplers, which were " 000received thmn they micro micro fOTflrr' (sic) coupleTs. This is certainly inconsistent with his said letter, which stated he had furnished " a circuit dia- 7S0-Q,8- , . , 902 FEDERAL TRADE COMMrSSION DECISIONS Initial Decision 63 F.

gram of the device, Certainly Beshore would not transmit special units to the Federal Communications Commission for testiuo- and at the same time give Ablowich his own hand-drafted rough circuit diagram of a regular production model of the device. Counsel supporting the complaint, in their said brief, have pointed out numerous other contradictions and weaknesses in respondent Beshore s testimony, which are ullneces-sary to detail here. Beshore testimony is unreliahle insofar as contradicted by the credible evidence of witnesses testifying in support of the complaint, and the reasonable and fair inferences drawn therefrom, as wen as from his own letter (CX 23), and must certainly be rejected. It is therefore clear, upon the weight and credibility of all the evidence, that the tests made at Laurel, )laryJand, by the Federal Communications Commission s experts John E. Knight and Edward V. Chapin were made on regular production models or the Racli- Vox device which Beshore himself had delivered to Ablowich at respondents' own plant, and not upon any "experimental" models much higher in field .trength. Without extensively detailing the technical aspects of the tests made, it is suffcient to quote from the summary of these experts' offcial report, as follows: Laboratory tests indicate that the unit is in compliance with Part 15 if operated with the Silall antenna provided with the unit, but that it is Dot in compliance when used with large antennae as outlined in the operating instructions furnished with the unit.

In this connection unquestionably a regular stock model or Rac1i- Vox sold t.o Dr. Yatterott, when tested by the witness Bourell engineer in charge of the Kansas City Federal Communications Commission Ionitoring Station in A l1gmt. 1060, was also round to be in violation of that Commission s rules. Bourell testified that he found that its radiation limit i;. far in excess of that penDitted ill Pint 15 of the Commission s rules, whUe the unit tate that co,erage up to several ill ttnctions furnished with the Rarli-Vox 1)locks may be obtained by connecting the antenna of the TImJi-Vox to a 'wirc antenna of 50 to 100 feet; and on the reverse side of the instruction sheet, in the last paragraph, it is stated, in spite of an these suggested hookups, the power radiated does Bot exceerllegal requirements (CX 19). In all of his tests Bourell used a frequency of 650 kilocycles, and round that when a 70-foot antenna was used, the device showed fl signa.l strength measurement of 200 microvoHs at a distance of 100 feet.

Respondents' advertisjng contains only the bald statements LICEXSE OR PERYrIT HEQUIRED AXYWHERE " or " o license needed" (CXs 6 and 7). Part 15 of the Federal Communications Commission s cur. , , , ""ESTERN RADIO CORP. ET AL. 903 882 Initial Decision rent Rules, July 1958, is in evidence (RX 7-C). Section 15.208 thereof clearly requires a station license from that Commission for the operation of any low-pO\ver communication device which was manufactured after December 31 , 1957, if such device exceeds the authorized radiation limit set forth in said Rules. The evidence shows that said Commssion s Rules provide the following radiation limits: for 650 kilocycles of 36.9 microvolts per meter at 100 feet; 15 microvolts per meter at 190 feet; and for 950 kilocycles, 15 microvolts per meter at 165 feet. The evidence further shows that such limits were greatly exceeded by respondents' two devices when they were tested by the said two Federal Communications Commission experts during April 1957, and by respondents' device tested by another such expert in August 1960. There is substantial identity, insofar as the mininmm field intcnsity requirement is concerned, between 15.211 of said July 1958 rules and the pertinent section of Part 15 of the Rules of that Commission which were in force \"hen the tests of 1957 at Laurel Maryland, were made by that Commission s experts Knight and Chapin. Respondents' device, when an extended wire antenna is used therewith, exceeds this minimum field intensity, and therefore requires a station license issued by the Federal Communications Commission in oreler to be operated legally.

From the great preponderance of the evidence, it must therefore be found that the fourth charge of the complaint has been amply sustained, and that respondents have falsely represented that their Radi- V ox device may be operated, under all conditions and circumstances, without a license.

Respondents' instruction sheet for the Radi- Vox (RX 11- B), which sheet is entitled "Radio Talkie Broadcaster, had been used for about two or two and one-half years before April 2, 1962: that , at most, since late 1959. It has been changed from the one used by respondents before that time, according to Beshore s testimony wherein he stated (There area very little (differences in the wording of the texts. * * * It is basically the same as it has always been. 'Ve have had to change it somewhat because of the change in rules of the Federal Communications Commission since the beginning . (Tr. 365. Vhile the product is the same, the name of the device is changed to only "Hadio Talkie, which had been used somewhat in respondents' advertising as well as tlle name "Radi- V ox" to describe the instrument. In this later instruct.ion sheet empha,sis is laid on the clevice s operation "IN CONFORMANCE WITH PAHT 15 of the FCC rules, etc., to support the preceding statement LICENSE OF ANY KIND IS REQ"CTRED FOR THJ OPERATJOX OF THE RADIO 904 FEDERAL TRADE CO MISSION DECISIONS 63 F. Initial Dedsion TALKIE." There follow other statements that the Federal Communications Commission s rules specifically permit a small transmitter of the type of respondents' device to "be operated with an antenna, including lead-m, not to exceed 10 feet in length", and that their device has a shorter antenna "even when used in a car, a, , after emphaticady warning the buyer to disregard information from anyone contrary to the foregoing statements, specifically tells the buyer: Jlixtl'a ,vires or extra antennas rCST NOT be connected to the Rac1io T;llkie antenna. ANY ATTEMPT TO COX:,'mct EXTR\ WIHES TO THE RADIO TALKIE AKTEj\ NA WILL HESULT IX THE DEVICE BEING CO:\1- PLETELY IXOPERATIVE OR RESGLT IN INEFFJ1CTIVg SHORT RA.1\GE OPERATJOX.

These statements are not slight differences in the text from that of the earlier instruction sheet, as claimed by Beshore, but differ basically therefrom. As counsel supporting the complaint urge this change unquestionably demonstrates that respondents knew that their former recommended use of long antennas and extra hookups did violate the Federal Communications Commission rules requiring a license for the device, when so operated. Hespondents have tacitly admitted such violation by this abrupt and radical change from their earlier instruction sheet, which was full of JJegal "tricks, to use the word with which respondents beguiled the innocent public in their magazine advertisements. 'WhiJe, respondents do not clearly or specifically contend that they have entirely abandoned all the practices complained of by so changing their instruction sheet, since it was adopted not ea.rlicr thfln the latter part of 1959, long after the complaint herein issued, and for other good reasons, the respondents have in no manner established a valid defense of abandonment of any of the practices charged and found herein to violate the Federal Trade Commission Act. Upon the foregoing evidence the hearing examiner therefore makes the following CONCLUSIONS OF LAW 1. The Commission has jurisdiction of the respondents and of the subject matter of this proceeding.

2. This proceeding is in the public interest. 3. The aforesaid practices of respondents, as herein found, were and now are, unfair and deceptive acts and practices and unfair methods of competition in commerce, within the intent and meaning of the Federal Trade Commission Act.

Respondents have tendered a proposed order covering the first three charges of the complaint, which is identical to that contained , WESTERN RADIO CORP. ET AL. 905 882 Initial Decision in t.he previous vacated initial decision based on a consent agreement which was rejected by the Commission. Since this proposed order, insofar as it relates to the first three charges, is based upon respondents' untenable theory that these three charges were not properly in litigation herein, it must be rejected, as must also that portion thereof dismissing the complaint as to the fourth charge. The proposed order submitted by counsel supporting the complaint is somewhat vague and repetitious, and therefore the hearing examiner, while accepting t.he basic principles thereof, has adopted it only in part and in substance. Accordingly, ORDER It is ordered That respondents ' Western Radio Corporation, a corporation, and its offcers, and Paul S. Beshore and ,V. P. Beshore individually and as offcers of said corporation, and respondents agents, representatives and employees, directly or through any corporate or other device, in connection with the offering for sale, sale and distribution of their portable radio transmiUer designated as ew 1:magic Walkie Talkie Radi-Vox" and "Radio Talkie, or any other portable radio transmitter with the same or substantially the same transmitting power, or any other similar product, whether designated under said name or na-mes, or any other name, in comme.rce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing, directly or by implication:

1. That said portable radio transmitter, without the use of additional equipment, has a satisfactory operational range of up to one-half mile for reception by home radio receivers, or that said device without additional equipment has an operational range of any specified distance in excess of fifty feet in city, town or commercial areas or seventy.five feet in aountry or rural areas;

2. That said portable radio transmitter, without the use of additional equipment, has a satisfactory operational range of from one to ten miles when transmitting from an automobile or other moving vehicle to a radio receiver in another vehicle or representing directly or by implication that said device, so used has a rano"e of anv' distance in excess of two city blocks; 3. That any product is guaranteed unless the terms and CQnditions of such guarantee and the manner and form in which the guarantor wil perform are clearly and conspicuously set forth, including the, amount of any servjce or other charge which is imposed;

906 FEDERAL TR\AIDE COivLvHSSTOX DECISIO!- Opinion 63 F.

4. That no license or permit is required for any operational use of said device, unless the specific conditions under ,,,hieh such license or permit would be required are clearly and can. spicuously set forth in immediate conjunction tllcrewith. OPINION OF THE CO!lDIISSIOX .JUNE 12 , 1963 By l\1ACINTIlil Oommusio-ner:

This case is before us on respondents' exceptions to the initial decision and order to cease and desist entered by the hearing examiner. The complaint charges that respondents violated Section 5 of thc Federal Trade Commission Act by misrepresenting the effectlYc range, without additional eqllipment of their pocket-sized portable radio tnmsmitter and the gunrantee. attaching to the product, fmcl by falsely claiming that no Federal Communications Commission license was required to operate the dcyice. Respondent ,Vestern R.adio Corporation of Kearney, Keb. and the individual respondents are' engaged in the manufacture and distribution of nlriol1S plectronic clevjces including intercommunic.ations sets and broadcast receivers, as well as the porbbJe radio rranf:mitter which is the subject of this proceeding. The rcsponc1ents adverti::e in magazines of national circulation and l1nintaln a. substantial course of trade between Kebn.ska. and other states. Respon(lents transmitter. which Jws been sole1nncler the name Rac1i-Vox :'ew' Magic ,Yalkie Tallrie and "Radio Talkie " ,THS sold for hn:lve to thirteen dollars in the period 1957-19.18, The Radi-Vox, which operates in the lower part of the standard broadcast band, is a smail unit designed to be helel in the hand. It consists or a transistor supplied by a six-volt battery. An flntpnna provided 'with the transmitter has a length of sixteen and one-hah inches when fully extended.

Respondents take exception to the. examiner s disposition of the proceeding on the ground t.hat certain crucial findings are not Slipported by substantial evidence and that conseqnently the provisions of the order based thereon cannot be justified. Respondents abo contend they were denied a fair hearing b ' the examjner s refusal to permit them to inspect and possibly nsp in cross-examination the Final Report, dated September 15 , J058. of Charles T. Snayeh- , a Commission attorney examiner who test.ified in this proceeding-, Berore examining the contentions of the parties and the findings of tlle examine.r in detail it is worth noting that respondents counsel "\VESTER),T RADIO CORP. ET AL. 90i 882 Opinion does not except to the order entered below in its entirety. On oral argument respondents' attorney stated that respondents objected to t.he requirement that they refrain from representing that their device, without additional equipment, has an operational range in excess of fifty feet in cities, towns and commercial areas, and seventy-five feet in country or rural areas, or that the operational range of the device from one moving vehicle to another is a distance in excess of two city blocks without the use of additional equipment. Responc1cnts' counsel conceded on oral argument that he did not quarrel with the order s prohibitions against the representation that the portable radio transmiUer in question had a satisfactory operationa,l range of up to one-half mile ,rithout additional equipment and the claim that the device without additional equipment had a satisfactory operabonal range from one, to ten miles when transmitting from a moving vehicle to a radio receiver in another vehicle. Respondents ' counsel concedes forthrightly that paragraph 3 of the examiner s order, which prohibits representat.ions that a product is guaranteed, unless the provision115 of the gmlrnntec: including service or other charges, are clearly set forth in conjunction t1181'6yrith, represents a reasonable exerclse of the Commission s powers and he doe,s not except to thi,' provision.

Respondents object to paragraph 4 of the order in toto on the ground that it is not supported by the evidence. That prohibition requires respondents to cease and d(? ist from repre.3enting that no license or permit is required for any operational llse of the device unless the specific. conditions under which such license or permit would be required are clearly set. forth in conjunction "ith such a claim.

The issues we must resolve on respondents' exceptions are, therefore, narrowed to tl1rec primary questions: (1) Does the record sustain an order prohibitlng representations that the effective range of the transmitter without aclc1itional equipment is in excess of fifty feet in cities or seventy-five feet in rural areas and two city bloeks when transmitting- from one automobile to another: (2) whetl1er respondents should 1 be required to ce.aee and desist from representing that no license or permit is required for a.ny opera.tional uses of the device unless the specific conditions under wbieh such license would be required is clearly set forth in conjunction with sllch claim: and (8) the procedure I question of whether respondents should ha,' been given access to the Fina.l Report of t11e Commission s attorney.:v examiner testifying in this proceeding.

. . .. ) ) 90S FEDERAL TRJ. DE CO:\D.UBSION DECISIONS Opinion 63 Y.

vYe first turn to the examiner s fmdings on the effective operational range of respondents' device without the use of additional equipment and the record evidence relating to those fmdings. To support that aspect of the case, counsel supporting the complaint adduced testimony on the operational capabilities of transmitters secured from two of respondents: customers, namely, John E. lair of Kansas City, Mo., and Dr. 1'aul Yattcrot of Crevc Couer, 1\10. Mr. J\lair testified that he followed thc instructions included with respondents' transmitter and that he was unable to make the device work. There was also testimony irom Robert ,V. Hester, engaged in the television repair business in Kansas City, that he and Charles Snavely, the Commission s attorney examiner, ran some preliminary tests on Mr. j\Iair s set. In the tests made by Hester, respondents device did not work except when an additional carrier wire was added to t.he transmitter.

The Mair transmitter was then tested by a J\Ir. Donald Day, also of Kansas Cit.y and vice-president of Television Service Engineers in Kansas City, a trade association. This expert had be,en recommended by Hester as more qualified t.o thoroughly test the equipment on the basis or his experience with transmission and receiving equipment.

Day, apparently contrary to Mair and Hester, was able to get a readable transmission from the Radi-Vox, although nowhere near the maximum distances claimed in respondent's advertisements and circlllars. A meaningful finding on the ca,pabilities or the transmit.ter, purchased by Mr. Mair, must therefore be made solely on the basis or Day s testimony, and we do not rely in any respect on the testimony of Messrs. Mair, Hester and Snavely in resolving the substantive issue, namely, the effective operationnl range of respondents' transmitter. Day testeel respondents' dC'Free in both an urban and a rural area using both a standard automobile receiver and a special communications receiver, the Hammurland I-rQ.-129, which aeeording to the witness, is not norma,Jly in the hands or the average radio listener. In the city, under normal operating conditions or noise, the maximum range or tram:mission without alteration or the tnmsmitter as received by the special receiver was rorty reet. Under Broadcasts To Any name or Car Radio Without Wires or HooJt-'Cps! .. .. .. " Talk to Your Friends Up To A Block Or )fore Away! Talk up to 1 mile or more betwr.en two automobiles " (CX 6 and CX 7. Talk to a11 hou es and car radios everywhere! .. '" '" No wire connections required! '" .. .. Normal Range Up To 1f )Jile .. '" '" Talk From Car To Car Up '1'0 1-10 ).iles Apart * * * . Between Bnilclings Up To 1h Mile Or More " (CX 13- Sends Your Voice To Any House Or Car Radio! o conneetions, Wires Or Electric 'Plug In ' Works everywhere-Up To Vz IIile Or :'lore: .. .. "' " (CX 13- WESTER:\ RADIO CORP. ET AL. 909 882 Opinion quiet conditions in a suburban location the maximum range of the transmitter without attachments, for a barely intellgible reading by the Hammnrland equipped with one hundred feet of aerial, was 350 feet. Wilen the witness used the ordinary anto radio under normal noise conditions, he was able to receive a satisfactory signal at a distance of only twenty feet. In a quiet zone the automobile receiver, to which a one-hundred-foot aerial was attached, received a signal from the transmitter at a distance of seventy-five feet.' The witness concluded, on the basis of the tests he had made, that communications between cars up to a mile or more or between houses a block or more away would be possible only under special conditions if at all.

Respondents attack the findings made by the hearing examiner in reliance on Day s tests on t.he ground that the set llsed was obviously defective.8 The argument is without merit for it has no support except respondent Paul Beshore s speculation on the failure of fessrs. lair Hester and Snavely to operate the device sllccessfully. The fact is, however, that respondents' instructions specify the transmitter with its built-in antenna will operate over a distance of twenty-five to 300 feet, depending upon the sensitivity of the rece;,ing radio and location. The test results achieved by Day, which have already been noted, were within or very close to those limits. In fact, the reading at 350 feet, which may be ascribed to the ahoyeaverage sensitivity of the Ha.lllTUrlanc1 radio with the extra onehlmdred-ioot aerial attached exceeded the performance standard envisaged by respondents' imtruetions, although not equal1))' the challenged claims in their advert.isements. In view of these facts Beshore s testimony that the set was damaged is conjeetnral and entitled to little weight, and Day's testimony, therefore, constitutes a valid foundation for findings by the examiner or the Commj sion. The hearing examiner also relied on testimony relating to the operational range of a transmitter secured from Dr. Paul Vatterot. Dr. Vatterot testified that sc,veral attempts were made to transmit messages from his automobile to another driven by his brother-in- :I In his testimony Day gins a figure of "approximately 40 feet. (Tr. 123-24. ) For the purpose of this declslon we wil accept the longer distance of 75 feet given in his writ. ten report. (CX 12.

3 Respondent rely on fajr s testimony that the oniy sound he could get from the transmitter was a squeak when he touched tbe antenna of the device with that of a radio (Tr. 84) ; Hester s testimony that be eouli get no inteJIgible sound from the device (Tr. 115) ; Snavely s testimony that be COl1ld get no sound from the transmitter; Day s answer during cross-examination that the transmitter may have been damaged (Tr. 128) ; and the testimony of respondent Paul S. BesllOre Hntt t11C foregoing testimony shows that the Mair transmitter was obviously defective and may have been damaged In tbe mails. ('rr. 295-299.

910 FEDERAL TRlA,DE- COMMISSION DECISIO Opinion 63 F.

law on a trip. The Radi-Vox on that occasion, according to this vdtness, worked when the cars were fifty feet apart but not when they were one or two blocks apart. The same ,,-itness testified that lie was unable to make the device work satisfactorily in his offce although the distance between transmitter and receiver was only twenty:five feet in that experiment. At home Dr. Vatterot foun tha.t the transmitter would not ",york in excess of fifty feet From the receiving radio. The same set was Sl1bseqllent:y tested by Harold "Y. Bourell, the engineer in charge of the Kansas City Federa. Communications Offce, for compliance with that agency.is licensing rules. Incidental to that test he found that with its antenna fully extended the voice modulation or the Rftdi-Vox was rairly clear and could be understood ,vhen the transmitted.r was six reet f;'om the receiving radio, but that at ten feet it was too ,veah: and distorted to be understood and eonld not be heard at all beyond fifteen feet.' Respondents evidently do not dispute that the Vn.tterot transmitter was operational but argue that Vatterot's experience should be discounted on the ground that he had not followed the instructions accompanying respondents' device which specify hooking a coupling device to the transmitter. The coupling device, described in the instructions, is an adaptor which win connect the Hadi-Yox to the automobile antenna; it is not. furnished with the transmitter, but may be purchased Tor $3.05 from respondents or made by the purchaser from stanch\rd parts. But respondents' contention -is without merit because t.hey initially advertised t.11at the promised operational range could be. obtained without additional ,yires and hooknps and therefore the fact that Yatterot dic1not hook up the coupling (lcyico suggested by the instn1actions in his tran missjon attemtps from one vehicle to another does not invalidate his testimony. Respom1ents further argue that Dr. Yatterot had not used the transmitter in accordance with instructions rurnished with the set because he nnd not turned up the radio in his offce to its maximum volume. Vatterot during cross-examination, admitted that he had not turned the radio up to its maximum volume becfll1se he did not want t.he radio blaring in his offce'. Vatterofs failure to turn up the volume of his radio was immaterial; respondents' circu1nr claims that its device would "Bre ak In Reguhr Radio Broadcasts should be unnecessary to point out that the public does not receive regular radio broadcasts" whh their receivers turned to maximum volume. Respondents! instructions after the sflle therefore qualify 4 eX19.

ex 16.

WESTERN RADIO CORP. ET AL. 911 882 Opinion in a 111aterial respect one of the initia.l representations inducing purchase of the product.

Respondents presented rcbuttal evidence 011 the operational range of their transmitter, namely, the testimony of a Jr. Peter Y Dung, who ran certain tests on their device. Respondents charge tha.t the he,f(dng examiner erroneously rejected this evidence. The contention is without merit. The tests made by Y Dllng on the transmission capabilities of the device from one vehicle to another are irrelevant, as the examiner found, since they ,were made 'with a.n addit.ional hook-up to respondents' transmitter. The issue here involved is the ope-rational capability of the unit without additional equipment. In the case of the test relating to the device s transmission to homel rcceivers, Young admitted that the home recein'r u ed in t.he test was connected to an extension antenna as recommended in the instructions. ",Ve note again, in this connection that respondents represented without qualification that the device Yl'ould broadcast to home or car radio \\-ithollt wires or hook-ups. This all-embrncing chim necessarily represented also ihnt no additional wires or hookups are required with respect to the receiving set. Young s test on the transmitting range of the Rac1i-Vox to home receivers clearly is not. relevant to the issues prrsentec1 by ihe complaint, namely the operational capabilities of the unit without the installation of flrlditional equipment. In fact, Y oung s tests are not pr'l'tinent to the issues presented except insofar as they show that even \With additional equipment the Rac1i-Vox s operation does not equal the maximum claims mi1c1e for the device in the advertisements under consideration 1101'e, On reviewing the evidence, w'e are convinced that the record supports the finding that respondents have misrepresented tile ette.dive operational range of their transmitter. Even respondents do not. in their exceptions argue that their transmitter without addition.1 equipment could transmit to home receivers up to one-half mile a\Vay or from a moving vehicle to another at distances of up to ten milBs as represented in their advertising claims. The remaining question on this issue, therefore concerns the proper remedial measures which should be adopted to preclude further deceptions of this nature. On this record. we nre forced to conclude that the maximum operational capability of the device is extremely Imv. l-;nder urban conditions without the use of additional equipment the record (; Young te"tlfied tllat his test 1'esnJts incllJ'Jeo reception by a home recel'ver nt a distance of 2% blocks, and transmissions of % block to :' or 4 blocks in the city of Kenrney, ana 3 to i) miles in the country;\' in the cllse of the automobile tests, (Respondents ' brief, 16. ) Compare with the ao,,ertising claims set forth in note 1, lIupru. 912 FEDERAL TR:ADE COM_i\IISSION DECISIONS 63 F. Opinion evidences reception by radios at distances ranging from six, twenty, forty, and np to a maximum of fifty feet from the transmitter. Day, in a rural area, recorded transmissions at distances of 350 feet to the Hammurland receiver and seventy-five feet to an ordinary car radio when an aerial of one hundred feet was attached to these receivers. Day s results in t.he rural area, it may be concluded, in fact exceeded the effective operational range of the device without the use of additional equipment.

The order submitted by the hearing e.examiner in effect gives respondents the license to claim distances in excess of their transmitter s operational capacity by the prohibition of representations that the unit, without additional equipment, has an operational range of any specified distance in excess of sevcntv-five feet in countrv or rural areas. The provision in the hear:ing examiner s order TNjuiring respondents to cease from representing that the device. without additional equipment, when transmitting from an fllltomobile or other moving vehicle to a receiver in another vehicle, has a range of any distance in excess of t\VO city blocks is not supported by the evidence. The relevant evidence does not shmv that the Radi- V without additional equipment will in fact satisfa.eorily communicate to a vehicle two blocks aT\lly. The only pertinent testimony on this point is that of Dr. Paul Vatterot, who testified, as the hearing examiner found: that the R.adi-Vox worked when the cars were fifty feet apart but that the transmission was inaudible when tbe distance between the vehicles increased to one or two blocks. We conclude that the on1e1' entered below should be modified by respol1Jentsdeleting therefrom paragrn.phs 1 and 2. "which require to refrain from representing that their transmitters without additional equipment have operational ranges in excess of the dishmces specified therein, e.g. , fifty feet, seventy-five feet or two city blocks etc. The record here warrants a broader IJrohibition prec.uding assertions in any manner misrepresenting the effective operational range. of "Testern Radio s transmitters.. Respondents will therefore be prohibited from representing that their transmjtters have any specified operational range unless they atc able to establjsh that their Requiringdevice can effectively operate over the distance claimed. respondents to e.nsure the accuracy of their advertising claims in t.his manner is necessa.ry to preclude further misrepresentation and esaggeration about the merits of their product of the nature documented by the record. This prohibjtion has the further advantage of flexibility permitting respondents to adapt thejr advertising claims to changes in the product provider1 that they establish the veracity of , :

WESTERN RADIO CORP. ET AL. 913 882 Opinion thelr claims. T118 requirement that respondents establish the validity OT their representations on the operational range of their trans- 1111tter clearly delineates ,Vestell1 Hadio s obligations under the order. The t.ask of respondent.s of complying with the order and the duty of the Commission to enforce compliance will therefore be facilitated.

Furthermore, the order should not. be jimited merely to misrepresentations of the effectin ness of the transmitter made in COlljunction with the representation that no additional equipmeJit required. The order will be amended to cover any possible misreprese.ntation respondents might make as to the effective range of the Hadi-Vox whether or not such claims arc made in conjunction with a recommendation for the use of additional equipment. The order should not be limited merely to the precise misrepresentations brought to light in this proceeding but should be broad enough to encompass any deceptive statement. reltsonably related to the false advertising claims evidenced by this record. ,:V e turn now to respondents' exception to the examiner s finding they falsely represented their Radi-Vox device may be operated under all conditions and circumstances without a license. The Federal Communications Commission regulations pertinent to a consideration of this issue are contained in Part 15 of that agency's rules entitled "Incidental and Restricted Radiation Devices Subpart E Low Power Communication Devices. " 7 These regulations, which require a 1license for operation if the device s radiation exceeds the permissible limits stated therein, are designed to prevent interference with authorized radio services. The record evidence relating to respondents' representations on the licensing requirement pertains t.o the period 1957-1958. In this connection we note that although the rules in effect in 1957 underwent certain revisions in the following year, these changes are not relevant to the questions presented hy this proceeding, since the minimum field intensity requirement remained substantially unchanged.

The testimony of Iessrs. Knight and Bouren is ample to demonstrate the falsity of respondents: unqualified representation license needed. 1\1' Knight. is an electronic scientist employed by the Laboratory Division of the Federal Communications Commis- 747 C. R. 15.201 et seq. (1958).

The hearing examiner found, and no exception is made to the finding, that the radiation JiJlit provided by tbe Federal Communications Commission s rules were as follows: for G;,)O kilocycles 36.9 microvolts per meter at 100 feet; 15 microvolts per meter at 190 feet; for 950 kilocycles 15 micro"\olt per meter at 165feet. G ex 6 and ex 7, .Advertisements in Popu'lr Sc-ience January 1957 and July 1958. 914 FF,DERAL TR1.,DE COMMISSION DECISIONS Opjnian 63 F.

sion: where he is primarily concerned "ith rartiating c1eyices and the measurement of the intensity of their radiating field to determine Vi-hetJ181' they are in compliance with the rules and rcgubtions of the Commission. IIi8 report, dated April 16 , 1957, categorically states that although the Radi-Vox ,,"as in compliance 'with Part 1;3 of the Federa.l Communications rules then in effect, if operated ,,-jlh the small antenna provided, it Tfoulc1 violate the rules when 118('(1 with the Jarge antennas suggested in the operating instructions furnished with the unit,1O Respondents have apparently 8 banclOl1Pd the contention strel!llously urged during the trial of this proceed1ing, that the tests were not relevant in vic"\y of the fact that the Fedcrul Cornmunicaions Commission had not tested respondents' regular production devi(' but l'flther an experimental model with stronger radiation characteristics. The examiner resolved the conflict of evidence on this point between respondent Panl Beshore and the Commissioll witness, David Ablo"\vich, a former employee of the Federal Communications Commission, in favor of the latter: finding in fact that the Federal Communications Commission had secured two of respondents: regular production models for the purpose ox t1H:3e tests.

Respondents nmy contend that the tests made by Knight should be clisregardecl on the ground that in December ID57 an external antenna coupler as added to the Eadi-Vox transmitter, which sub stantinlJy reduced radiation and brought the transmitter into compliance wihne1V F. C. regulations on low powered communication devices which had become, effective on January 1 , 1958. In this connection respondents further claim tlmt the coupJer in question was added to the operating equipment approximately fourteen months prior to the issuance of the complaint herein. The evidence shows that respondents unqualifiedly claimed their device did not require a license when in fact llse of the transD1.itter with an outside aerial as suggested by t.11eir instructions violated the Federa.l C0l1munic tions Commission s rules in effect at the time the test as made namely, April 1957. Under any circumstance, respondents' a.pparent cla.im of abandonment of the violation of F. C. rules some nine months after it was found out by that agency is not a valid bar to Commission action here with respect to respondents: misrepresentations. :Moreover, the record indicates t.1at cve,n by the middle of 1958 respondents had failed to bring their device and representations into compliance with F. C. rules.

10 ex 3 WESTERX RADIO CORP. ET AL. 915 882 Opinion Also tested for compliance with Federal Communications Commission rules find licensing requirements 1'\(1S the tran.-mitter purchased by Dr. Paul l/aHerot in .Tuly of 19;'58 in response to respondents' adverti cJnent in the uly 1958 Popular Science which represented without qualification that 110 lieense 'WflS needed in connection wit.h the. operation of the transmitter. These tests were conducted b:v Ha.rold Bouren, the engineer jn charge. of the locftl Federal Communications Commission oirice in KflHsas Cjty )10. 1-Ie testified that tile unit, if used 1with the antenna attached to the device, ,,,ould comply with Part If; of the Federal Communications Commission s rules relating to incidental and restricted radiation devices, but that\ if the unit were llsed with some of the lengths of wire and connections listeel in the instruction s11eet, mcaSl1reme, of radiation under thc.5c conditions did not comply ,with the Commission s rules.ll In this connection, t,11C witness stated specifically that the addition of a seventy-foot nntcnna ,,-ould make the intm1sity exceed the ra.diation limits permitted under Part 1,). Respondents attack the validity of BOl1rell's test on several grounds. B,respondents argue that it. js inexplicable that BonreH got a result 1',ith111 permissible limits when the seventy-foot antenna utilized WfIS grounded but exceeded the permissible radiation 1vhen using the same antenna. 1With the ground (1isconnBcted. In their exceptions respondents also argue that the high reading in the tests was due to the fact that Bouren's test antenna 1,as connected to the same post to which ,,"as connected a large nmatel1r antenna belonging to the witness-s. Respondents rely on the testimony of Paul Beshore to the effect that the presence of BOl1rell's nmateur ante,nna ,vould increase the capacity bet1yeen the amateur antenna and the seyenty-foot wire resulting in an electrical length several hundred feet long. Respollclents' exceptions fail to take note of :Mr. Bourelfs esphmation tllft the amateur antemul on t118 post, although in close proximity to the test antenna, did not produce fln unusual reading. The witness, on cross-exflwinntion elicited by respondents' counsel expressly stated that such would not. be the effect because of the tremendous diil'erences in the ,,-a ve lengths of the flmfl teur antenna and the unit testeel.1 ,Vc find credible Boul'el1's explanation that the reason the seventy-foot antenna had II stronger signal with the n The opel':1tir.g in tfnctions to which the witnci5s referred suggested outside aeriah of any type, as ,, eD as speeitcally suggesting lengths of fifty to a hundred feet of antenna wire. (CX 1(3.

Tlle witness c"plained that the aIJllte!lr antenna was I'e onant at 14 megacycles, 1e1,GOO l;iloeycles, all(l thf'reIore was vf'r;) bait in comparison to the resonant frequency at 0;)0 kilocycles, whicu was the frequenc:;- of rcspom1edt . device. (Tr. 218. , 916 FEDERAL TIMDE CO:\\IISSIO), DECISIONS Opinion 63 F.

grouncl removed "'as that at this length the ground showed an absorption of the signal and that this may have been due to some resonance at that particular frequency. The witness stated that he had made these measurements four different times with two meters to make sure they 'were correct.

NIl'. BourelFs testimony on this point convinces us that his measurement of intensity with the seyenty-foot antenna attached to respondents' device was accurate and his statement adequately answers the rhetorical question in respondents' brief vVhy should disconnecting the ground so drastically increase the ra,diation 1" the conflict between Mr. Bourell and respondent Paul Beshore we are inclined to give credence to BourelFs testimony on these points. The heating examiner slated in detail his reasons for not finding the testimony of Mr. Beshore credible as a general matter. Furthermore, of the two witnesses, Bourell, on the basis of the record, is the better qualified in the measurement of field intensities. Finally, Bourell, unlike Beshore, had no direct interest in the outcome of this proceeding.

Further evidence of the falsity of respondents' nnqualified representation that no license is required in connection with the operation of its device is the change in the text of the instructions a.ccompanying the Radi- V ox transmitter. In the amended instructions issued apparently in the latter part of 1959 , purchasers were warned that cOillecting additional wires to the transmitter s ante1la would make the device inoperatiye or ineffective. .Ve agree with the examiner that this radical change in the operating instructions constitutes a tacit a.admission that the former recommended use of long antennas and extra hooknps violated the Federal Communications Commission s rule requiring a license for the device when operated in this manner.

Respondents object that the examiner erroneously rejected the tests of respondent Beshore and Mr. Young on the field strength or radiation characteristics of the Radi-Vox. From our review of the record, we are convinced that the examiner decided the issue correctly. He explained in detail his reasons for finding that Beshore testimony was lacking in credibility, and we see no reason for disturbing that conclusion. Y Dung testified that, when used in accordance with respondents' amended instructions, the unit complies with the Federal Communications Commission s regulations. I-lis test results, however, do not serve to rebut the fu1dings of the Federal Communications Commission employees, Knight and Bourell. The total length of antenna and tmnsmission line attached to t.he Radi- , WESTERN RADIO CORP. ET AL. 917 882 Opinion Vox in Young s test did not exceed ten feet; the antenna used, therefore, fell short by a substantial margin of the fifty to one-hundred foot length suggested by respondents: instructions effective in the period relevant t.o this proceeding when they made the No licensing required" cla.im which is challenged here. In fact, respondents former instTIlctions further suggested that outside aerials of any type be utilized with no limitations specified as to the lmgth of the antenna.

Respondents take exception to paragraph 4 in the order entered below on the ground that they should not be required to disclose in t.their advertising modes of operation of their device which will violate the Federal Communications Commission s licEmsing regulations since their present instruction sheet does not recommend any uses which would require a license. In this exception respondents ignore the fact that they are not required to represent that no license is required in connection with the use of their device. However, if respondents desire to make representations of this nature they ma,y be required to revenl the conditions under which operation of the device without a license would 'dolate the law. Affrnlative disclosnrp may, of course, be required by the Commission in those instances ,yhere a claim is misleading unless facts material in the light of such representations are stated in conjunction thercwith. irIanco Watch Strap Co., Inc. , et oZ. Docket Ko. 7785 (1962) (60 C. 495J. As the Supreme Court has stoted those e,mght violating tl1c Act must expect some fencing in. Fede"tgl Trade CO?n mission v. National Lead Company, et aZ. 352 U. S. 419, 431 (1957). Furthermore, there is, of coursp, no assurance that respondents wdi not at some time in the future again e-l1ange their instructions or issue different instructions with another device resllltinrr in the same type of misrepresentations with which we are faced he foreover, respondents have already been advised with eonsiclcrable force and clarity of the need for affrmative disclosure of the type required by the order entered below. By letter dated April 24 1957, the Federal Communications Commission, the agency directly concerned, advised respondents:

The IFederal Communications) Commisslon is charged \with the responsibilty of enforcing its Rules to prevent radio and television interference and your cooperation is desired. Please alJvise this otlce at an eal'Jy elate what steps you are taking to Wal'llSerS of the Radi-Vox units that operations ,with aerial ,,"ires ' result in exccssive radiation for IIllich severe pCllnlteR are p1'o"ided by the Communications .Act of 1034, as amended. Respondents also ralse t11C procedural issue that they were denied a fair hearing since tlle hearing examiner did not permit them to 750-018-6-9- 918 FEDERAL TRADE CO:'l1viission DECISIONS Opinion 83 F.

examine a. so-called "Finn! Report" referred to by the Commission attorney examiner, Charle.s T. Snftvely, when he testified in the hearing of :March 29, ID60. Snavely s testimony does not. go to fln:v of the substantive issues raised in this proceedjng. As Commission counsel stated during the course of the hearing: his testimony 'vas taken for the purpose of continuity, namely, to prove. that the tra,nsmitter tested by ::iessrs. 1-Iester and Day was in fact. secured from respondents' customer, John :LIair. On examing the record we have determined that Snavely s testimony is not even l'e.quired1 for that limited purpose and ,ve have not relied upon it.1 Respondents do not suggest any"\vhere in their exceptions that the 1\10.11' transmit.tel' , identified 0.8 CX- , was not the one tested by :.\11'. Day. Furthermore, even assuming for the moment tlult Snavelis testimony :is required to bridge the transition of the transmitter from :\lair to Hester, the fact remains that the particular report ,'equested by respondents would have been of no utility in cross-examining Snavely on the subject. The report in question is simply a skeJetal memorandum of transmittal consisting of one page, forwarding one ni respondents' transmitters and listing the field re, ports submittee1.14 The l'CpOl' , confined to administrative matters could not possibly be the basis for impeachment of Snavely as Tesponc1ents suggest in their exceptions. Respondents, therefore, have not been subjected to any disadvantage by the withholding of this report. In view of our holding that Snavely s testimony was not necessary to lay the fonndation for the testimony of 1\lesErs. Hester and Day and our further holding that access to the report in question would in any case have been of no help to respondents in t.he cross-examination of the witness discussion of the applicability of either the rule of Jencks v. Url'iterl States Hi or the Jencks statute 16 to this proceeding would be superfluous.

'Ve ha, ve already noted the nccessity of revising the order entered belmv to preclude any misrepresentation by respondents of the operational range of their transmitters. The order should be, llodifie,d in two other respects. The scope of the order relating to claims on 13 Respondents ' cmitome!" :'11' :-lRjr, identified Commission Exhibit, for identification o. 2, fH! the transmitter he received from respondents, (Tr. 83. ),11'. Hefiter testified that Snawly caeJe to him with the device "which was this Radl-Vox I belic\"e it' s called " (Tl' . 115. ) From the record as Il whole it is ch l1l" that the device with respect to which Hester testified wus in filet the transmitter purchased by :-1111r. Furthermore, Dn,l' testified tlJllt tlie transmitter in question was given to him by Hester for purposes of testing'. (Tr. 121.) 1' Re Don(lists' counsel, on oral argument. although not waiving the claim of prrOl" stated h had no objection to inspection by tile Commission of this document. 1'; 3;)3 U. S. 657 (1957).

16 J8 V, C. 3500.

\ . ,:. WESTERN RADIO CORP. ET AL. 919 882 Opinion the operational range of respondents ' transmitters and the bck licensing requirements should be. broadened to encompass respondents' representations in connection ",-jtb. any transmitter. That provision of the order relating to guarantee claims should be made applicable to an)' product sole! by respondents. Unlike the other deceptive claims considered in this proceeding, the proper remedy for misrepresentation of a guaranty is not peculiar to radio transmitters.

Respondents' exceptions, eycept fib noted, are denied. The ildtial decision, as modified and suppJemE'l1tec1 by the findings in this opinion, is adopted as the decision of the Commission. OPIKION ox RESPONDEXT S EXCEl'TIOXS TO THE PROPOSED ORDER SEPTE::IBER 2 5 , 1 D G 3 By 3iAcINTYRE 007nJrI/tsslonei' On June 12, 1963, the Commission issued its opinion and proposed order'" in this matter requiring respondents to refrain from misrepresenting the operational range of their radio tra11smitters from representing that, no license is nece itry in the operation of their devices unless the condi60ns under which a license or permit would be required are clearly set forth in conjunction therewith, and finally from making deceptive claims on the guarantees attaching to t.their products.

This matter is now before us on respondents' objections to the proposed order and cOlllplaint counse,ls answer thereto. Respol1cl ents contend that the order is too broad because it is not confined to precisely those deceptive claims they lun c made in the past. but also covers possible allied and related misrepresentations. They also object the order is defective in that it is not confined to the particular transmitter "it 11 respect to which evidence was adduced below. These contentions require 1;'0 extended discussion; respondents are here advancing an argument which enn no longer be seriously entertained.' Respondents also take exception to the provision in Paragraph (a) of the order requiring them to refrain fl'OlTI making repre.sentations that their transmitters have a satisfactory operational range "'Proposed Order is omitted, adopted res tlw Finnl Order of the Commission. Fcdera Trade Commission R11uer01rl Co" 343 U, S, 470 (1952) ; Jacob Siegel Co. Peacrul 'J.udc Commission 327 U. S. 608 (194U) ; NIresk Ind'll8trie.s, h1C., lot al.v. Fedel. Trade Commission 278 F. 2d 337 (7th Cil'. 1960) ccrt. rIci1icrl304 U. S. 883 (1960) ; Maryla. Baking Company '1. Peileral Trade Commissioj! 243 F. 2d 710 (4th Cir. 1957); Rei' shcH Chocolate Corpol'atfon v. Federal 'Ji.urle Cammi. sion. 121 F. 2d 9G8 (3d Clr. 1941). 920 FEDERAL TRADE co r?\IISSION DECISIONS Opinion 63 F.

of Rny distance, unless they establish that their devices in fact have the capabilities specified. In this connection respondents state, in pertinent part:

Paragraph (a) of the modified order is too broad and is confusing in that it f'oJ1lln(' l'eSIJondents in future ad,erti ing claims to stating only those specific dlstnnccs in operational range 'Which they have established their transmitters possess. This provision not only requires that advertising claims be not deceptin! but also that their truthfulness be: shown or proven to some unidentified pel',;ol1s * * * Reqnil'illg' respondents to establish the nl1iclity of their ndvertisillg claims on the. dfertiH l'llge of IYeslcrll Hadia s transmitteri3 Sl101l1c1 ('itn e no undue hardship, a35uming such representations arc made in good fait.h. Cnless there. is it demonstrable factual basis for the.ir representations on this point, the veracit.y of respondents claim Iyould at. best be. subject to the vagaries of happenstance. The necessity for placing such a burden on respondents is amply snpported Ly their past exaggerations of the merits of 'Western Radio transmitters documented by this record.

Before turning to respondents' other objections, it may be in order to clarify their duties under Paragraph (a) of the order and t.he manner in which this proviso is to be administered. Respondents need not volunteer experimental or other data prior to each advertisement, nor need they submit each advertisement to the Compliance Dil-jsion prior to publication. Respondents are required how' evel' to have at hand and to furnish to the Commission upon demand complete data supporting any advertising claims on the operational ranges of their transmitters. In general, such requests "iJl Le initiated by the Commission s Compliance Division. Respondents' objection that the Compliance Division does not hayc the facilities for scientific testing or evaluation of data supporting respondents' claims is without merit. The Compliance Division, of course, whenever circumstances so require, may solicit the technical assistance of other government agencies or of scientists or engineers employed by private organizations. The argument that it is an unlawful delegation of the Commission s powers to require evaluation by its staff of the data relied upon to establish the veracLty of respondents' advertising claims is patently without founclation. Obviously, as a practical matter, the day to day burdens of the enforcement of Commission orders are initially Lome by its staff. Equally groundless is thc assertion that the-re ,yould be no recourse to the Commission from the Compliance Diyision s evaluation of the datll submitted to document the validity WE STERK RADIO CORP. ET AL. 921 882 Final Order of respondBnt's representations on their devices' capabilities. Iore. over, under Rule 3.26(b) of the Commission s Rules of Practice effective August 1 , 1963, respondents are explicitly given the privilege of requesting the Commission s acl-.dce whether any contemplated course of action will constitute compliance with an order. in the past, respondents have the opportunity for informal consultation with the Compliance Division to facilitate adherence to the terms of the order. Furthermore, the staff of the Compliancc Division will, on respondents' request, advise on the type of data required under Paragraph (a) of the order to substantiate respondents advertising claims of transmitter capabilities. Respondents' objections to the proposed order issued June 12 , 1963 are rejected, and it wil be adopted as the final ordcr of th Commission.

FINAL ORDER SEPTEJIBER 25 : 1963 Pursuant to S 1:2:2 (c) of the Commission s Rules of Practice: in effect prior to A.august 1 , 1963, respondents were sen-eel 'with the Connnission s decision on appeal and afforded the opportunity to fie exceptions to the forlll of order "\yhicl1 the Commission contemplates entering; and Respondents having made timely filing of their exceptions io the ordel' proposed which ,were opposed by a reply filed by counsel supporting the complaint and the Commission upon review of these pleadings having determined that respondents: exceptions should be disallowed and that the order as propose,l should be en! ered as the final order of the Commission:

I t is ordel' That respondents ,Yestern R.ndio Corporation. a corporation, and its offcers, and Paul S. Beshore and ,V. P. Beshore individually and as offcers of said corpora.tion and respondents agents, representatives and employces, directly or through any corporate or other device, in connection with the offering for sale, sale and distribution of their products, including radio trnllsmitters. in commerce, as "commerce ' is defined in the Federal TradeCOllJJ1Ssion Act, do forthwith cease and desist from: 1. R.representing, directly or by implication: (a) That their (ransmitters with or without the u,e of additional equipment have a satisfactory operati011al range of any specified distance unless respondents establish that their devices in fact have the operational ranges specified. 922 FEDERAL 'fRclcDE CQ'L\!ISeION DECISIONS 63 F. Oomplaint (b) That no license or permit is required for any operational USB of their radio transmitters unless the specific COllditions under which such license or permit would be required are conspicuously set forth in conjunction therewith. (c) That any product is guaranteed unless the terms and conditions of such guarantee are clearly and conspicuously set forth, including the amount of any service or other charge which is imposed.

It i8 further OJ'dered That the initial decision, as modified and supplemented by the Commission s opinion, be, and it hereby is adopted as the decision of the Commission. It i8 further ordered That respondents shall, within sixty (60) days after service upon them of this order, file with the C0111nissioll a report, in writing, setting forth in detail the manner and form in which they have complied with the order set forth herein. IN THE ThIATTER OF SPAULDIKG BAKERIES, IKC., ET AL.

COX SENT Order ETC.. IX REG.um TO THE ALLEGED VIOLATION OF THE FEDERAL Tr..-\DE CO?DIISSIOX ACT Dochet 80fi'. Complaint, .July 1960-Decision, Sept. , 1963 Com.ent oruer requiring bakers in Binghamton, N,Y., to cease representing falsely in newspaper advertising, b\' rflllio broadcasts and otherwise, that their new SLDI-ETTE WHITE BHEAD" was a low-calorie food, substantially different in caloric ,value from ordinary bread, and would cause the con sumer to lose weight and preyent him from gaining. 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, l1aving reason to believe that Spaulding Bakeries Inc., a corporation, and Rexford ,V. Titus, Charles A. Struble and Edward S. Lecky, individual.1y and as offcers of said corporation hereiml-ter 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: , is a corpo- PARAGRAPH 1. Respondent, Spaulding Bakeries, Inc. ration organized, existing and doing business under and by virtue of the laws of the State of New York, with its offce and principal place of business located in Binghamton, K ew York. SPAULDING BAKERIE-S, L , ET AL. 923 D22 Complaint Respondents Rexford VV. Titus, Charles A. Struble, and Edward S. Lecky are offcers of the corporate respondent. They formulate direct and control the acts and pract.ices of the corporate respondent including the acts and practices hereinafter set forth. Their address is the same as that of the corporate respondent. PAIL 2. Hespondents are nm\', and for more than one year last past have been, engaged in the sale and distribution of a food product, as "food" is defined in the Federal Trade Commission Act. Said food product is known and designated as "Slim-ette Bread. PAR. 3. Respondents cause the said food product, when sold, to be transported from their place of business in the State of ew York to purchasers thereof located in various other States of the Vnited States. Respondents maintain, and at all times mentioned herein have maintained, a course of tra-de in said food product, in commerce, as "commerce': is defined in the Federal Trade Commission Act. The volume of business in such commerce has been and is substantial.

PAR. 4. In the course and conduct of their said business, respondents have disseminated, and caused the dissemination of, certain advertiscments concerning the said food product by the United States mail and by ,-ariolls means in commerce, os "commerce ' is defined in the Federal Trade Commission Act, including, but not limited to advertisements inserted in newspapers and other advertising media and by means of radio broadcasts transmitted by radio stations having suffcient power to carry such broadcasts across state lines for the purpose of inducing and whicl1 "'ere hkely to induce, directly or indirectly, the purchase of said food product; and have disseminated, and caused t.he dissemination of, advertisements concerning said product by various means, including but not limited to the aforesaid media, for the purpose of inducing and which were likely to induce, directly or indirectly, the purchase of said food product, in commerce, as "commerce" is defined in the Federal Trade Com mission Act.

PAR. 5. Among nnd typical of the statements and representations contained in said advertisements disseminated, as hereinabove set forth, fire the following:

(a) Tr:ving to get your weight down? 'T ant to have that smart slim look'! Tl!€n this is for you!TIJe new 8LIJI-E7' TE WHITE BREAD now only 25 cents. Here s the loaf that helps Ol1 get "Jim fine1 stay sum! 1\ow, you can enjoy white bread at every meal or e,en in bet\\PE'n meals and diet, too. hecause Slim-ette s specirtJ 'dgh- protein. laIC-calorie fonlln1a gi,t's YOll thllt Qnick energy find ;vet satisfies hungl' Y appetites. 924 :FEDERAL TH'ADE COM nSSIO T DECISIONS Initial Decision 63 F.

, if you re putting the squeeze on calories, slim dmVl1 ;your meals and YOil figure * * '" 81Citch to the nelJ.' Slim- ette white bi ead, (radio advertising) (b) Try the NEW Slirn-ette White Bread. Helps You GET SLIM! STAY SLIM! (accornpanit.d bJ slender yjgnettes) (newspapcl' advertising). (c) Slim-ette White Bread Helps You GET SLIl\l, STAY SLIM. High in Protein, Low in calol'8s (Calorie Counter). Only 45 Calories pel' slice (Calorie Counter) (Point-of-sale material).

PAR. 6. Through the use of said advertisements, and others similar thereto not specifically set out herein, respondents represented directly or hy implication:

(a) That said bread is a JO'i-calorie food; (b) That said bread is substantially lower in calories than, and therefore substantially different in caloric value from, ordinary bread; and (c) That e,ating said bread will cause the consumer to lose weight and prevent the consumer from gaining weight. PAH. 7. The aforesaid advertisements referred to in paragraph are misleading in material respects and constitute "false advertisements" as that term is defined in the Federal Trade Commission Act, In truth and in fact:

(a) Said! bread is not a IO'i-calorie food; (b) Said bread is not snbstalltially different in caloric value from ordinary breads; and (c) Eating said bread will not cause the consumer to lose weight and will not prevent the consumer from gaining weight. PAn. 8. Through the use of the name "Slim-ette as a designation for said bread, respondents likewise represented, directly or by implicatioll1 contnuy to the fact, that said bread is a J01\-calorie food and that its use will cause the consumer to lose weight and prevent the gaining of 1Veight.

PAR. 9. The. dissemination by respondents of said false advertisements as alleged herein, constituted. and now constitutes, unfair and deceptive acts and practices, in commerce, 1\within the intent and meaning of the Federal Trade. Commission Act. ilfT. l1Jichael J. Y,:ta./e supporting the complaint. 3fT. Rex/m'd 1Y. l'i.h. Binghnmton, N. , for respondents. INITIAL DECISION BY Emv \.nn CREEL, I-learing EX"DHNER The Federal Trade Commission issued its complaint against the respondents on July 18 1960 charging them with misrepresenting a food product designated "Slim-etto Bread" in violation of the Federal Trade Commission Act.

SPAULDING BAKERIES "C. 'Eit AL. 925 922 Initial Ded.sion After the complaint issued, an agreement was reached betlleen the parties to the effect that an agreelnent providing for the entry of a consent order would be submittecl to the hearing examiner ,,,which would be in acc-orelance with Commission action in another matter. Consonant with that agreement there was submitted to the hearing examiner an agreement between respondents and counsel supporting the complaint providing for the entry of a consent orller. This agreement disposes of all of this proceeding as to all parties. In the agreement it is recommended that the complaint be dismissed insofar as it concerns respondent Edward S. Leeky, it fonner offcer in his individual capacity only, for the reason set forth in thc affdavit attached to and made a part of said agreement. Under the terms of the agreement, the respondents admit the j urisdictional facts alleged in the complaint. The parties agree, among other things, that the cease and desist order there set forth may be entered without further notice ancl have the same force and effect as if entered after a fun hearing and the document includes a waiver by the respondents of all rights to challenge or contest thc valadity of the order issuing in accordance therewith. The agreement further recites that it is Tor settlement purposes only and does not constitute an admission by the respondents that they have violated the law as alleged in the complaint.

The hearjng examiner finds that the content of the agreement meets all of the requirements of the Rules of the Commission which are applicable to this proceeding.

The hearing examiner having considered the agreement and proposed order, and being of the opinion that they provide an appropriate basis for settlement and disposition of this proceeding, hereby accepts the agreement, and it is ordered that said agreement shan not become a part of the offcial record unless and until it becomes a part of the decision of the Commission. The following jurisdictional findings are made and the fonowing order issued: 1. Respondent Spaulding Bakeries, Inc. , is a corporation, organized, existing, and doing business under and by virtue of the laws of the State of New York, with its offce and principal place of business located in Binghamton, K ew York.

Respondent Charles A. Struble is an offcer of the corporoterespondent. Rexford IY. Titus, Jr.. is also an offcer of mid corporat.ion. Ins nRIne was incorrectly set forth in the complnint as Rexford \V. Titus. These offcers formll1ate. direct, and control the policies, acts and practices of said corporrttion. and thejr address is the same as that of the said corporation. Respondent Edward S. Lecky resigned as an offcer on Ma)' 23 , 1960. Initial Decision 63 .' . T. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the pnb1ie interest.

Order It zs ordered That respondent Spaulding Bakeries, Inc., and iis offcers, and Hexford VV. Titus, Jr., and Charles A. Struble, individually and as offcers of said corporation, anll Edward S. Lecky, as a former offcer of said corporation, and respondents' representatives agents and employees, directly or through any corporate or other device, in connection with the offering for sale, sale and distribution of the food product designated as "Slim-ctte Bread" , or a,ny other product of substantially similar composition, whether sold under' the same name or under any other name or names, clo fortlnyith cease and desist from:

1. Disseminating or causing to be disseminated any advertisement, by means of the United States mails, or by any means ill commerce, as "commerce" is defined in the J.ecleral Trade Commission Act, which advertisement represents, directly or by implication, that:

(a) Said bread contains fewer calories than other commercial breads;

(h) Substituting said bread for other commercial breads in the normal diet win cause a loss of weight or prevent a gain in weight, or that said bread is useful in a reducing or weight control diet, unless it is clearly and affrma6very clisclosed in immediate conjunction therewith that said bread has no Jess calories than other commercial breads and its only usefn lness in a reducing or weight control diet derives from the fact that its thinner sEces enable t11e consumer to conveniently serve and Calls1lllB sma.ller individual portions. 2. Disseminating or causing to be disseminater1 any advertisement, by means of the United States mails or by any means in commerce, as "commerce" is defined in the Federal Tra,de Com mission Act. in which the vlOrds "Slim-et.te ' or words of similar import or meaning are used as the trade name or designation for respondents' bread.

3. Disseminating or CallSlTIg to be di seminated an:v advertisement, by any means, for the purpose of inducing: 01' which is likely to induce, directly or indirectly. the pnrchaee in commeree. as "commerce" is defined in the Federal Trade Commission Act of any such ioon product, which advertisements contain any of the representations prohibited in paragraph 1 , .

CHESEBROUGH-POND' INC. 927 022 Complaint hereof or the trade name or designation prohibited in paragraph 2 hereof.

It Ui furthe,' ordered That the complaint insofar as it relates to respondent Edward S. Lecky in his individual capacity be, and the same hereby is, dismissed.

DECISION OF THE Cm,nnSSION AND ORDER TO FILE EPORT OJ? COMPLIANCE Pursuant to Section 3.21 of the Commission s Rules of Practice published May 6, 1955 , as amended, the initial decision of the hearing examiner shah, on the 25th day of September 1963, become the decision of the Commission; and, accordingly:

It is O1'dered That the respondents, Spaulding Bakeries, Inc., Rexford ,V. Titus Tr. , Charles A. Struble and Edward S. Lecky, shall within sixty (60) days after senice 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.

By the Commission, Commissioner Elman not participating. Ix THE l\fatter OF CHESEBROllGH-POND' , INC.

GOXSEXT OIilER, ETC. , IN REGARD TO THE ALLEGED VJOIJATION OF THE FEDERAL TRADE C02lDIlSSIQX ACT Docket C-602. CO?nplaint, Sept. 1963-Decision, Sept. 1963 Consent order requiring the ilar1ufactnrer:3 of "Vas(,line Petroleum .Tell:(' to cease making a variety of um\"n'rantell statements as to the therapeutic and protectiye qualities of its saiel prod1Jct as in t11e order below sets fortb. CO::IPLAIXT Pursuant to the provisions of the Federal Trade Commi,sion Act and by virtue of the authority vested in it by said Act, the ederal Trade Commission, having reason to believe that Chesebrol1gh. Pond' , Inc. , a corporation, hereina.after referred to as respondent has violated the provisions of eaid Act, ancl it appearing to the Commi::sion, that a proceeding by it in respect thereof would be in the public interest, hereby issues its c.complaint stating its charges in that respect as follows:

PARAGRAPH 1. Chesebrough-Pollc1 : Inc., is a corporation organized, existing and doing busine s under and by virh..e of the. laws of the State of New York, with its principal offce and place of busi- 928 FEDERAL TRADE CO::\L\IISSION DECISIONS Complaint 63 F.

ness located at 485 Lexington Avenue, in the city of New York, State of New York.

PAR. 2. Respondent is now, and has been for more than one year last past, engaged in the sale and distribution or a product which is within the classification of "drugs" as the term "drug " is defined in the Federal Trade Commission Act. The designation used by respondent for said product, and the formula thereof are as follows: DeMonation: Yaseline Petroleum .Telly For;nula: Said designation is applied 'Ial'iousJy to White Petrolatum, U. anll to Yellow Petrolatum, N.

PAR. 3. Respondent causes the said product, when sold, to be transported from its place of business in the State of New York to purchasers thereof located in various other States of the United States and in the District of Columbia. Respondent maintains, and at an times mentioned herein has maintained, a course or trade in said product in commerce, as "comr:nerce" is defined in the Federal Trnr1e Commission Act. The volume of business in such commerce s been and js substantial.

PAR. 4. In the course and conduct of its said business respondent has disseminated, and crmsed the dissemination of, certain advertisements concerning the said product by the united States mails and by various means in commerce, as "commerce" is defined in the Federal Trade Commission Act, including, but not limited to, advertisements ins€',rted in newspapers, magazines and other advertising media, and by means of television broadcasts transmitted by television stations located in various States of the United States, and in the District of Columbia, having suffcient power to carry such broadcasts across State lines, for the purpose of inducing and which were likely to induce, directly or indirectly, thc purchase of said product; and has disseminated, and caused the dissemination of, advertisements concerning said product by various means, including, but not limited to the aforesaid media, for the purpose of inducing and which were likely to induce, directly or indirectly, the purchase of said product in commerce, as "commerce" is defined in the Federal Trade Commission Act.

PAR. 5. Among and typical of the statements and representations verbally and pictorially, contained in said advertisements disseminated as hereinabove set forth are the following: One of the best ways to help skin heal by far is to reach for the "Vaseline Petroleum ,Jelly jar. Have you got chapped hands? Did you scratch your nose ! Burn your finger? Stub your toes? BarIc your skin? Get a cut on your thin? 'Yell. remember, Vaseline Petroleurn Jelly works better than leading medicated creams or lotions to protect an injury, promote healing. Yaseline" Petroleum Jelly actuali:- g.i,es better protection than any baby oil, lotion or powder. .. * * Irritating lloistul'ecan t get through the protective CHESEBROUGH-POND' ) INC. 929 027 Complaint harder that "Vaseline" Petroleum Jelly prot"des. '" '" * Remember lother, use Vaseline" Petroleum Jelly for problems like diaper rash, cradle cap or chapping-. It works better than leading medicated creams or lotions to protect baby injured. skin.

Vaseline" Petroleum Jelly works better two ways to help skin heal. (1) Works better than leadlng medicated creams and lotions to protect injUl.r, promote healing. (2) Works better than lanolin to soothe and softell injured skin.

Use always for scabbed skin. Works better two ways to help skin healprotect injury, promote bealing.

Lae always for diaper rash, chafing, chapping, scrapes, Hcabbed skin, Sllllburn, scratches, ('radle cap, itching, burns, and 1001 other uses. ?\othing protects skin :more safely, completely and lastingly than "Vaseline Petroleum Jelly. * * '" Keep bacteria out-Keep natural fluids in. *.. Helps nature heal marc quickly.

The First Aid Kit in a Jar! VIDEO AUDIO ECL' "Vaseline" Petroleum Jelly jar Like this doctor s family use'" '" . in glamour setting. Super: MEDI- Vaseline" Petroleum Jelly-the med- CAL TREAT,mnt THAT HELPS ical treatment that helps skin heal SKIX HEAT. FAST fast! VIDEO AUDIO 8. Test'" .. '" ECU of hands '" '" .. rub 8. "\Vatch * '" '" coat this kitchen strainer with "Vaseline" Petrole- strainer with "Vaseline" Petroum Jelly. leum Jelly'" * , 9, Rub other strainer 'with baby 9. coat the other strainer with baby lotion. lotion. 10. Pour water into both strainers. 10. OW pour in water. "Vaseline" Pe- Camera focus is on water dripping troleum Jelly holds back waterthrough and how VPJ is water water floods through the baby proof and puddles water. lotion instantly. 11. Mo,e in to I'JCU to see how VPJ 11. But "Yaseline" Petroleum Jelly strainer holds ", a tel'. Tuen pour is waterproof-actually. out.

12. Cut to ECC of baby, cooing, laugh- 12. ,,'aterproofs baby against wet diaing. per irritation. VIDEO AUDIO 1. Open on ILS honsewife working 1. Announcer: (V. E,en in your at utilt . table facillg camera. O\yn cheery kitchen 2. Scissors, can opener, steam iron 2. * '" t, aceide11ts can sometimes pop in fast sequence, fDreground, happen. And that' s when its comframing woman. forting to know ,, 3. Di .sol,e to ECn of V. J. jar held 3. thflt nothing protects skin more in woman s hand1. Super in sync: safely, completely, and lalJtingly SAFELY, COMl'LETEiLY, LAST- 3a. then "Vaseline" Petroleum Jelly. INGLY.

930 FEDERAL TRADE CO:\J:USSION DECISIONS Complaint 63 F.

PAn. 6. Through the use of said advertisements, and others similar thereto not specifica1Jy set out herein, respondent has represented and is HOW representing, directly and by implication, that: 1. Respondent's "Vaseline" petrolemn jelly provides a protective bnrriel' to the skin, protects against infection of, and promotes healing open wounds, burns, cuts, diaper rash, scabbed skin, scrapes SCl'iltches, abrasions, and other skin injuries. 2, Rfspondent' s " V aseline ' petroleum jelly is of therapeutic value in the treatment of open ,\ymmds, burns, cuts, diaper rash, scabbed skill, .scrapes, scratches and abrasions.

8. Respondent's "Vt,seline': petroleum jelly prevents cradle cap and js of therapeutic value in the treatment of cradle cap. '1. Respondent' s "Vaseline" petroleum je1Jy is effective in the treatment. of itching.

5. A jar of responc1cnfs "Vaseline" petroleum jelly is an adequate substitute for a first aid kit.

6. Respondenes Vaseline" petrolennl jelly soothes and softens the skin more effectively than c01lpetitors products. 7. Respondent's "Vaseline" petroleum jelly prevents escape of tissue fluids from the skin.

PAR. 7. In truth and in fact:

1. Respondent's "Vaseline" petroleum jelly will not afford any substantial protection against infection and will not provide a protective bnrrier to the skin in escess of the water repellent euect provided by a continuous film of the product. 2. Respondent' s "Vaseline" petroleum jelly is of no benefit in the treatment of open vwunds, bun1s, cuts, scabbed skin scrapes scratches or abrasions, except to the extent of temporarily relieving the pain and itching of minor burns, scrapes: scratches or abrasions and softening the skin scab; is of no benefit in t.he treatment of diaper rash except that form of diaper rash characterized by dry, scaly skin; wil not prevent cradle cap or be of benefit in the treatment thereof, except to the extent of temporarily softenjng the crnsts and smles; wil have no beneficial effect upon itching, except itching from sunburnec1 dry, chapped, chafed or scraped skin or from other minor skin injuries; and is of no other benefit in promoting healing. 3. Respondent' s "Vaseline" petroleum jelly is not a substitute for a first aid kit.

does not soothe or 4. Respondent's "Vaseline" petroleum jelly soften the skin marc effectively than competitors' products having snbstnntial1y similar properties.

;.

CHESEBROUGH-POXD' , r:-w. 931 927 Decisioll and Order 5. Respondent's "Vaseline" petroleum jeny wi1 not be of value in preventing the escape of tissue fluids from the skin unless specifica.lly 1limited to reducing the escape of moisture by evaporation. Therefore, the advertisements referred to in Paragraph :5 ,were and are misleading in material respects and constituted and now constitute "false advertisements" as that term is defined in the Federal Trade Commission Act.

PAR. 8. The dissemination by respondent of the false advertisements, as aforesaid, constituted and now constitutes unfair and deceptive acts and practices in commerce, in violation of Sections 5 and 12 of the Federal Trade Commission Act. DECISION AND ORDER The Commission having heretofore determined to issue its complaint charging the respondent named in the caption hereof with violation of the Federal Trade Commission Act, and the respondent having been served with notice' of sa.id determination and wit.h a copy OT the complaint. the Commission intended to issue, together with a proposed form of order; and The respondent and counsel for the Commission having thereafter executed an agrecment containing a consent order, an admission by respondent of all the jurisdictional facts set forth in the complaint to issue herein, a. statement that the signing of said agreement is for settlement purposes only and does Dot constitute an admission by respondent that the law has been violated as set forth in such complaint, and waivers and provisions as required by the Commission rules; and The Commission, having considered the agreement, hereby accepts same, issues its complaint in the form contemplated by said agreement, makes the following jurisdictional findings, and enters the following order:

1. Respondent, Chesebrough-Pond' , Inc. , is a corporation organized, existing and doing business under and by virtue of the laws of the State of New York, with its offce and principal place of business located at 485 Lexington Avenue, in the city of Kew York, State of New York.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent, and the proceeding is in the public interest.

ORDER It ordered That respondent Chesebrongh-Pond' , Inc., a corpora.tion, and its offcers, and respondent's representatives, agents and 932 FEDERAL TRADE CO:\L\IISSIOK DECISIONS Decision and Order 63 F.

employees directly or through any corporate or other device, in connection with the offering for sale, sale or distribution of "Vaseline petroleum jelly ('Vhite Petrolatum, D. P. or Yellow Petrolatum ), or any other preparation of similar composition or possessing substantially similar properties, do forthwith cease and desist from directly or indirectly:

1. Disseminat.ing, or causing the dissemination of, by means the United States mails or by any means in commerce-, as "commerce" is defined in the Federal Trade Commission Act any advertisement which represents directly or by implication: (a) That respondent's product is of value in prevent.ng infection;

(b) That respondent's product provides a protective barrier to the skin unless limited to the water repellent effect of a continuous film of the product;

(c) That respondent's product:

(1) is of any benefit in the treatment of burns scrapes, scratches or abrasions unless specifically limited to the temporary relief of pain and itching and softening scabs of minor burns, scrapes, scratches or abrasions (2) is of any benefit in the treatment of scabhed skin unless expressly limited to the softening of the scab and temporary relief of itching, (3) is of any benefit in the treatment of diaper rash unless expressly limited to diaper rash characterized by dry, scaly skin (4) will prevent cradle cap or that it wil be of any benefit in the treatment thereof unless expressly limited to th t.temporary softening of the crust and scales (5) wil have any effect upon itching unless specifically limited to itching from sunburned, dry, chapped, chafed or scraped skin or from other minor skin injuries or is of any other benefit in promoting healing; (d) That respondent's product is of any benefit in the treatment of cuts or open wounds;

(e) That respondent's product is a substitute for a first aid kit; or that the product is "The First Aid Kit in a Jar unless such slogan is used in direct connection with or in close proximity to illustrations or descriptions of the unprohibited first aid uses of the product;

WHITEHALL LABORATORIES 933 927 Cmnplaint (f) That respondent's product wil soothe and soften the skin better than competitors' products having substantially similar properties;

(g) That respondent's product prevents the escape of tissue fluids from the skin unless specifically limited to reducing the escape of moisture by evaporation. 2. Disseminating, or causing to be disseminated, by any means for the purpose of inducing, or wmch is likely to induce, directly or indirectly, to purchase of respondent's preparation, in commerce, us "commerce" is defined in the Federal Trade Commission Act, any advertisement which contains any of the representations prohibited in Paragraph 1 hereof. It is further ordered That the respondent herein shall, within sixty (60) days after service upon it of this order, fie with the Commission a report in writing setting forth in detail the manner and form in which it has complied with this Older.