Dirigold Distributors, Inc

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IN THE :MATTER OF DIRIGOLD DISTRIBUTORS, INC.

COMPLAINT, FINDINGS, AND ORDER IN REGARD '1'0 Tile ALLEGED VIOLATION OF SEC. 6 OF AN ACT OF CONGRESS APrROVED Sert. 20, 1914 Docket 2816. Complaint, May 'U, 1936-Decision, Aug. 3, 1997 Where a corporation engaged in sale at retail, chiefly, of highly polished, flat ond hollow tableware and other articles made of alloy containing no gold,. but composed chiefly of aluminum and copper, and so finished that they had the color, appearance and luster of 14-karat or 18-karat gold, depend· ing upon the discernment of the particular observer, in direct and substantial competition with those engaged in sale and distribution, in commerce among the various States and in the District of Columbia, of similar tableware and other articles of the same general kind and for the same purposes, composed, as case might be, of sterling silver, silverplated ware, ond other materials- Included word "Dlrlgold" in its corporate name and thus made use thereof in its printed matter and otherwise, and sold said ware under said name and os a descriptive term thereof, ond with each piece thereof thus stamped, and made use of printed matter in its business in promoting sale of said ware, in which said word was most prominent part of trade mark thereon depleted, and thereby falsely represented that said ware contained gold, and through use in circular advertising matter, in connection with word "Dirlgold," of many statements, phroses and descriptive terms, such as ""' * * a wonderful merchandise with the color of fine gold * * *," ""' * * the homogeneity of structure, the fine texture, and the lustrous brilliance of gold, * * *," "* * * may be quite truthfully described as DETTER THAN GOLD," "Beautiful as Gold," "Here, in effect, is the luxury and spl(•ndor of solid gold," "SOLID not plated,""* • * the ultimate gift of a Golden Age," and "Golden Anniversaries * • * ldeol for such momentous occasions," served to create impression that said ware contained gold, and fallt•d, through such qualifications as "Contains no gold" on some of its Printed matter and in connection with aforesaid trade mark on some of such matter, but not in connection with stamplugs thereof nor with its said corporate name in all instances where word was used in print, nor in every hustance by those making oral use of word in selllug such wore, to reach au members ot the public, or all those coming in contact with said name, or all members of the public shopping tor flat and hollow wore including \\' that sold by it, or all those actually buying such ware; lth result that some members of the public were in fact misled through such i11herently mlsleodlng designation, used as aforesaid, which, togethet> With misleading implications thereof, served to attract }Jrospectlve customers to ware thus designated and cause them to look with favot> thereon by rrason thrreot, and with tendency and capacity to confusl', Inislead, nnd deceive members of the public, notwlthstondlng proctlce of its rrpreHentatl\'E'S of Informing customrrs there was no gold in such ware, into erroneous beiiPf that its sold products contained at least some gold, llnd to induce th£'m to buy same because of erroneous belief thus engen- Complaint 25F.T.C.

dered, and to divert trade to it from competitors engaged iu sale in interstate commerce of flat, hollow and other ware adapted to and used for same general purposes, and with effect of diverting business to it from competitors who do not misrepresent the materials from which their ware is made, but who truthfully and accurately state the facts in such respect; to their substantial injury and prejudice: Held, That such nets and practices were to the prejudice of the public and competitors and constituted unfair methods of competition. Before Mr. John lV. Addison, trial examiner. },fr. Harry D. Michael for the Commission. flood & Hahn, of Indianapolis, Ind., and Sanborn, Graves, Appel, Andre & Morton, of St. Paul, 1\Iinn., for respondent. Co11IPLAINT Pursuant to the provisions of an Act of Congress approved Sep· tember 26, 1914, entitled "An Act to create a Federal Trade Commis· sion, to define its powers and duties, and for other purposes," the Federal Trade Commission, having reason to believe that Dirigold Distributors, Inc., hereinafter referred to as respondent, has been and now is using unfair methods of competition in commerce as "commerce'' is defined in said act, and it appearing to the Commis· sion that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows:

PARAGRAPH 1. That respondent, Dirigold Distributors, Inc., is fl corporation organized, existing, and doing business under and bY virtue of the laws of the State of Illinois, with its office and principal place of business in the city of Chicago in said State. PAn. 2. That said respondent is now and has been engaged for more than two years last past in the sale in commerce of tableware and other articles designated and described ns "Dirigold," as herein set out. Said respondent sells said products at retail to members of the consuming public and acts as a retail outlet for the manufacturer thereof. Said respondent, in the course and conduct of its said busi· ness, causes said products, when sold by it, to be transported from its said place of business in Illinois to, into and through States of the United States other than Illinois to customers in such oth('r States to '"hom such products are or have been sold. PAn. 3. That, during the time above mentioned, other individuals, firms, and corporations in various States of the United States are nnd have been engaged in the sale and distribution in commerce of table· ware and other articles of the same general kind and for the saJl'le purposes of use as those so]d by respondent, as aforesaid, some of DIRIGOLD DISTRIBUTORS, INC. 675 673 Complaint which said ware is of sterling silver, some of silver plated ware, and some of other materials, and such other individuals, firms, and corporations have caused and do now cause their said tableware ancl other such articles, as aforesaid, when sold by them, to be transportetl from the respective States of the United States where they are located to, into and through States other than the State of origin of the shipment thereof to the purchasers thereof at their respective Places of location. Said respondent has been, during the aforesaid time, in competition in interstate commerce in the sale of its said tableware and other articles designated and described as aforesaid With such other individuals, firms, and corporations. Some of such competitors sell their protlucts directly to the purchasing public While others sell to dealers through whom or which they are in turn sold to members of the public.

PAn. 4. That the respondent, in connection with the sale of its said tableware anti other articles, as aforesaid, represents by the means nnd methotls as herein set out that such products contain gold. In truth and in fact, saitl products do not contain any gold but are made from an alloy consisting of other metals, the chief of which are n~uminum anti copper. Said products made from such alloy are highly polished anti so finished that they are of the color, appearance and lustr;e of 14-carat gold.

Saitl name "Dirigold" is stampetl on each article made from said alloy so sold by respondent. It is the most prominent part of the ~trade-mark used by respondent in its advertising literature, letter- Cards and other printetl matter. It is used as a part of respondent's corporate name. It has been adoptetl by respondent as a descriptive term anti is so used by it in its printed matter. It is also used by ~espontlent's representatives as the term to describe such products In conversation anti otherwise.

. ~n.iu name "Dirigold," so applied to articles containing no gold, 1 ~ Inherently misleatling in that it implies and serves as a representa- !Ion that such protlucts contain at least some gold. The use of saiu· erm as a name for such articles further has the tendency and ca- ~ac.ity to lead members of the public to believe that the products so l{CSlgnated contain gold and it has hat! and does have such effect. respondent places on some of its printed matter the statement "DirifolJ contains no gold" and the phrase "Contains No Gold'' is somet Times Used in conjunction with the trade-mark heretofore referred t~· Such statements and modifications do not reach all members of 1 ~ Public nor all those who come in contact with the name "Dirigo d." Neither do they reach all members of the public who shop for Complaint 25F.T.C.

or buy said ware. Not all ultimate buyers or prospective buyers of said products see or have the opportunity to see respondent's printed matter containing such statements and modifications. No such modifications occur in connection with the stampings on said ware nor in connection with respondent's corporate name. Nor are they made in every instance when the word "Dirigold" is used in its printed matter. Neither do such printed modifications affect the misleading effect of the word "Dirigold'' as applied to respondent's ware when used by word of mouth. Formerly, respondent made no such modifications or explanatory statements in its printed matter as above described.

PAR. 5. That respondent in its circular advertising matter uses many statements, phrases and descriptive terms that serve to increase the said misleading effect of the word "Dirigold." Among such statements, phrnses and descriptive terms are the following: Dirlgold is a wond<•rful merchandise with the color of floe gold • • •. It has the homogeneity of structure, the ftne texture, nnd the lustrous bril· llances of gold, • • •.

Dirlgold mny be quite truthfully described as DETTER THAN GOLD. The Jlpauty and Color of Gold with Dirlgold. • • • Dlrlgohl-with its irresistible golden beauty. neautifnl as Gold.

Color and lleauty of Gold.

• • • the alluring golden color and finish, the marvelous sheen and lustre • • •.

Here, in etrect, is the luxury and splendor of solid gold I • • • the perfect harmony and effect when used with gold-trimmed llavllnndl Dlrlgolu will always retain lts lustrous golden color because it's solid clear through.

SOLID not plated.

• • • its rich, warm, lustrous golden color • • •. Dlrlgold-The fashionable and exquisite ware that possesses the color and lustrous beauty of gold! Like the precious metals-Dirlgold is solid clear through. No home need be denied the rare luxury and beauty of gold on the table and In the home.

Dlrlgold Is truly-the ultlmn te gift of a Golden Age. Golden Annh·ersarlcs. How appropriate tllat Dlrlgold be always considered as the i<lt>nl gift tor such momentous occasions. PAR. G. That the representations nnd practices of respondent, as aforesaid, have had and do have the tendency and capacity to con· fuse, mislead, and d.eceive members of the public into the belief that said ware so sold by respontlent contains gold when such is not the fact, and to induce them to buy the same because of such erroneous Lelief engendered as above set forth. Said practices of respondent DIRIGOLD DISTRIBUTORS, INC. 677 ~73 Findings also have the tendency and capacity to divert trade to respondent from competitors engaged in the sale in interstate commerce of tableware of various kinds and articles of the same general kind as those sold by respondent. There are among the competitors of respondent those who do not in any wise misrepresent the material or materials of which their products are made or the composition of the same, but who truthfully and accurately state the facts in such ~·egard without the use of misleading terminology or other mislead- Jng representations. As a result of respondent's said practices, as herein set forth, substantial injury has been and is now being done by respondent to competition in commerce between and among the various States of the United States.

PAn. 7. The above acts and things done by respondent are all to the injury and prejudice of the public and the competitors of respondent in interstate commerce within the intent and meaning of Section 5 of an Act of Congress entitled "An Act to create a Federal 'l'rJ.de Commission, to define its powers and duties, and for other llltrrosrs," approved September 26, 1914.

HtronT, FINDINGS AS TO THE FACTS, AND OnnEn Pursuant to the provisions of an Act of Congress, approved Septt>mber 26, 1914, pntitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," !he Federal Trade Commission, on May 21, 1936, issued and served lts complaint in this proceeding upon respondent Dirigold Distribu- ~ors, Inc., charging it with the use of unfair methods of competition ~n commerce in violation of the provisions of said act. After the Issuance of said compbint and the filing of respondent's answer thereto, testimony and other evidence in support of the allegations of said complaint were introduced by Harry D. Michael, atbrney for the Commission before John \V. Addison, an examiner of the ·Commission theretofore duly designated by it, and in opposition to the allegations of the complaint by Harold D. Hood, representing Irood nnd Hnhn, attorneys for the respondent; and said testimony and other evidence were duly recorded and filed in the office of the 'Commission. On August 24, 1936, during the course of hearings, the Commission recci ved and ordered filed respondent's amended ~nswer. Thereafter, the proceeding regularly came on for final learing before the Commission on the said complaint, the amended answer thereto, testimony and other evidmce, briefs in support of the complaint and in opposition thereto, and the oral arguments of eouns£1] aforesaid; and the Commission having duly considered the Findings 25F.T.C.

same, and being now fully advised in the premises, finds that this proceeding is in the interest of the public, and makes this its findings as to the facts and its conclusion drawn therefrom; FINDINGS AS TO THE FACTS PAR,\GRAPH 1. The respondent, Dirigold Distributors, Inc., is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Illinois, with its office and principal place of business at 70 East Jackson Boulevard, in the city of Chicago, in said State. Said corporation was organized on October 29, 1930.

PAR. 2. The respondent is now and has been engaged since said elate of organization in the sale in commerce between and among the various States of the United States of tableware, consisting of flatware and hollow ware, aml other articles designated and described as "Dirigold." Respondent sells said ware generally at retail direct to members of the consuming public. Said business is confined largely to the city of Chicago and vicinity. Sales are made and have been made, however, to members of the public located in States other than Illinois. In a few instances, during the year 1034, respondent sold said ware at wholesale to retail dealers located in States other than Illinois. The respondent, in the course and conduct of its said business as aforesaid, causes and has <"aused said ware to be transported from its said place of business in Illinois to, into and through States of the United States other than Illinois to various and numerous customers in such other States, to whom said ware is or has been sold.

PAn. 3. During the time above mentioned other individuals, firms, and corporations in various States of the United States are and have been engaged in the sale and distribution in commerce between and among the various States of the United States and in the District of Columbia, of tableware, consisting of flatware and hollow ware, and other articles, of the same general kind and for the same purposes of use as the ware sold by respond<'nt as aforesaid, some of which said ware is of sterling silver, some of silver-plate, and some of other materials. Such other individuals, firms, and corporations have caused nnd do now cause their said tableware nnd other articles, as aforesaid, when sold by them, to be transported from the respective Stnt<>s of the United States where they are located to, into and through States other than the State of origin of the shipment thereof to the purchasers of tho same at their respective places of location. Respondent has been, during the aforesaid time, in competition in DIRIGOLD DISTRIBUTORS, INC. 679 673 Findings interstate commerce in the sale of its said tableware and other articles made from said alloy, with such other individuals, firms, and corporations. Such competition has been direct and substantial. PAR. 4. The respondent in connection with the sale of said ware, as aforesaid, has represented by the means and methods herein set out, that such ware contains golU when in truth and in fact such is not the fact. The ware so sold by respondent and described and designated as "Dirigold" is composed of an alloy consisting chiefly of aluminum and copper. Other metals enter into the composition of said alloy, but the process is claimed to be a secret one, and their identities were not revealed. It was admitted, however, that there ~s no gold in said alloy or the products made therefrom. Said ware Is highly polished and so finished that it is of the color, appearance and luster of gold, such appearance being that of 14-karat gold or 18-karat golU depending upon the discernment of the particular ob~erver. The name "Dirigold" is stamped upon each piece of said Ware sold by respondent. It is the most prominent part of the trade-mark depicted on the printed matter used by respondent in its business and in promoting the sale of said ware. Said term is also Used as a part of respondent's corporate name and appears wherever the corporate name occurs on respondent's printed matter. Said Word is also used by respondent as a descriptive term to describe said ware. It is also used by respondent's representatives in the sale thereof as the term to describe it in conversation and otherwise. PAn. 5. Respondent, in its circular advertising matter, has used lnany statements, phrases and descriptive terms in describing said W~re that served to create the impression, when used in connection With said word "Dirigold," that said ware contains gold. Among Elllch statements, phrases, and descriptive terms so used are the followincr1:>'· Dirlgold is a wonderful merchandise with the color of fine gold • • •. 1. It hns the homogen<'ity of structure, the fine texture, and the lustrous brll- lance of gold, • • •. Dirigold mny be quite truthfully described as DETTER THAN GOLD. 'lhe lleauty and Color of Gold with Dirlgold. " • • Dirlgold-with Its irresistible golden beauty. Deautlful as Gold.

~color and lleauty ot Gold.

• • the alluring golden color and finish, the marvelous sheen andl Ustre • • • I . Iere, In effect, is the luxury and splendor of solid gold I II • • • the }X'rfect harmony and effect when used with gold-trimmed al"IJund 1 Dirlgold will always retain its lustrous golden color l1ecnuse It's solid clear through.

Findings 25F.T.C.

SOLID not plated.

• * • its rich, warm, lustrous golden color • • •. Dirlgold-The fashionable and exquisite ware that possesses the color and lustrous beauty of gold! Like the precious metals-Dirlgold Is solid clear through. No home need be denied the rare luxury and beauty of gold on the table and In the borne.

Dirigold is truly-the ultimate gift of a Golden Age. Golden Anniversaries. How appropriate that Dirigold be always cousi<lered as the Ideal gift for such momentous occasions. P .AR. 6. On some of the printed matter used by respondent the statement "Dirigold contains no gold" has been used. Also th() phrase "contains no gold" has been used on some of such printed matter in com:iection with the trade-mark containing the word ''Dirigold." Such statements and modifications do not reach all members of the public nor all those who come in contact with the r•ame "Didgold." Neither do such expressions reach all members of the public who shop for flatware and hollow ware including the said ware sold by respondent. Nor do they reach all those who actually buy said ware. Not all buyers or prospective buyers of said ware see or have the opportunity to see printed matter containing said statements and modifications above referred to. No ~uch modifications are made on the stampings on said ware, nor in connection with respondent's corporate name, nor are they used in all instances where the word "Dirigold'' is used in print. Neither llfe such expressions used by those who sell said ware in every in- E>tance where said term "Dirigold" is us<'d when spoken by word of mouth. Uepresentativ('s of respondent have made it a practice · to inform customers that there is no gold in "Dirigold" ware but there is no certainty that such information is given or will he given in all cases.

PAn. 7. The name "Dirigold'' applied to ware containing no goldt especially "·hen such ware has the appearance of gold, is inherently misleading in that it implies and serves as a representation that such ware contains at least some gold. The use of said term as a name for flatware, hollow ware, and other ware such as that sold by respondent, has the tendency and capacity to lead m('mbers of the public to beliere that the ware so designated contains gold. Some members of the public ha.ve in fact been so misled and have (•ntertained the belief that "Dirigold" ware contains gold, which said belief was eng<'ndered by the use of said word "Dirigold" or by a combination of the impression created by said word "Dirigold'' and the appearance of the ware to which it was applied. The tendency and capacity to mislead by use of the word "Dirigold'' to DIRIGOLD DISTRIBUTORS, INC, 681 673 Order describe said ware is increased by the fact that the ware so designated has the appearance of gold. Furthermore, the use of descriptive terms such as those previously referred to emphasizing !he word "gol<l," or like expressions, serves to increase the mislead- Ing effect of said term "Dirigold" when used as aforesaid. Said term serves as a means to athact members of the public to the ware so designated and causes them to look upon it with favor because of the misleading implication contained therein, as aforesaid. PAR, 8. The representations of respondent as aforesaid have had the tendency and capacity to confuse, mislead, and deceive members of the public into the belief that the ware sold by respondent as aforesaid contains at least some gold, when such is not the fact, and to induce them to buy the same because of the erroneous belief engendered as above set forth, and to divert trade to respondent irom competitors engaged in the sale in interstate commerce of flat- Ware, hollow ware and other ware adapted to and used for the same ~;neral purposes for which the ware so sold by respondent is used. there were and are among the competitors of respondent those who do not misrepresent the materials from which their ware is made but who truthfully and accurately state the facts in such respect. ~respondent's said acts and practices have tended to and do in fact ~hvett business to respondent from its competitors to the substantial lnjury and prejudice of such competitors.

CONCLUSION .The aforesaid acts and practices of the respondent, Dirigold Distributors, Inc., are to the prejudice of the public and of respondent's competitors, and constitute unfair methods of competition in com- ~erce, within the intent and meaning of Section 5 of an Act of congress, approved September 26, 1914, entitled "An Act to create ; Federal Trade Commission, to define its powers and duties, and or other purposes."

ORDER TO CEASE AND DESIST .This proct-eding having been heard by the Feueral Traue Com- ~Jssion upon the complaint of the Commission, the amenueu answer ~ r~spondC>nt, testimony and other evidence taken before John W. b d~Js?n, au examiner of the Commission theretofore duly designated fy lt, In support of the allegations of said complaint and in opposi- . 'A~~Il thereto, briefs filed herein, and oral ur~uments by Harry D. Se~c~ael, counsel for the Commission, and by Harold ll. Hood, reprern· h.ng Hood and Hahn, counsel for the respondent, and the Com- 1881011 having made its findings ns to the facts and its conclusion Order 25F.T.O.

that said respondent has violated the provisions of an Act of Con· gress approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes."

It is ordered, That the respondent, Dirigold Distributors, Inc., its officers, representatives, agents and employees, in connection with the offering for sale, sale, and distribution of tableware, consisting of flatware and hollow ware, and other articles made from an alloy of metals containing no gold, in interstate commerce or in the District of Columbia, do forthwith cease and desist from: Representing, through the use of the word "dirigold" or "gold" or any coined word containing the word "gold," alone or in connection or conjunction with any other word or words, in its corporate name or as descriptive of or as a trade-mark for its products, or in any other manner whatever, or through any other means or device, that such tableware, flatware, hollow ware, and other articles contain gold.

It is further ordered, That the respondent shall, within GO days after service upon it of this order, file with the Commission a report in writing setting forth in detail the manner and form in which it lias complied with this order.

SILVER ROD STORES SUPPLY CO., INC., ET AL. 683 Syllabus