Algren Manufacturing Co., Inc

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IN THE MATTER OF ALGREN l\fANUF ACTURING COMPANY, INC.

CmiPL.\DIT, FINDINGS, AND ORDER IN REG.\tm TO Tile ALI,EGED \VIOLATION OF f;Eo:. ;; OF ,AN ACT OF CONGRESS APPI!OVED SEI'T. 26, 1914 Docket 3200. Complaint, Aug. 10, 1931-Decision, July 9, 1940 Where a corporation engagf'd in manufacture of jpwelry fi11dings, including wrist watch buckles, and in sale and distribution thereof to ptu·chasers in various other States and in the District of Columbia, in substantial competition with oti.Jers engaged in manufacture of such products, and in sale and distribution thereof to jobbers lll commerce among the various States and in said District of Columbia- Sold its said jewelry findings and bucldes wifh word:; "Gllld FiiiPd," which it had caused to be stamped, branded, or imprinted thcrt>on, to jobbers by whom they were offe1·ed and sold, thus branded, to consuming public, facts being, minimum standard for marking of gold-filled a rtides other than watch cases, as accepted by jewelry manufacturing trade, whkh had generally adopted use of certain terms in describing g(lld-covered articles IH! descriptive of process used in applying gold thereto nnd as de:siguating quality, quantity, and character of gold thus applit>d, a1Hl as rt>presentations to general public that articles WPre made, and gold applied, in <•onformity with certain set standards, is one-twentieth by weight of 10-carat gold, and said wrist watch buckles did not contain a layer or coating of gold of such substantial thickness as to be properly and accurately represented, designated, or referred to as "Gold Filled," but contained ]2-carat gold to extent only of one-fiftieth of their weight, and not equivnlPnt to one-twentieth hy weight of 10-carat gold, in accordance with minimum standard aforesaid for articles properly designated as "Gol<l Filled" and genemlly uceepted by trade and substantial portion of general pnrchnsing public as being of character and weight superior to articles made by processes designated as "Gold Plate" and "Gold Electro-Plate";

'With result, through use of such false and misleading statement, of placing in hands of jewelry jobbers aforesaid, instrument and means whert>by they might perpetrate a fraud upon substantial portion of retailers, and both jobbers and retailers upon substantial portion of consuming public, by enabling them falsely to represent, offer, and sell saiu wri;,t watch bucldes as being superior to other articles not so branded, and as being of same quality and value us other articles truthfully branded "Gold Filled," and with effect that substantial portion of retailers aforesaid and of consuming public, believing that words "Gold Filled" denoted quality exceeded only by solid gold or carat gold, were led, because of such belief, to purchase its said product, and with further result that its said acts and practices constituted added inducements for substantial number of jobbers and retail and consuming purchasers to buy such product, nnrl unfairly diverted t:ubstantial volume of trade from many competitors who conform to set standards above referred to nnd do not bmnd ns "Gold FiliPd" wrist watch buckles or other jewelry findings which do not contain by weight at least 5 percent gold of a fineness of at least 10 carats; to the substantial Injury of competition in commerce:

ALGREN MANUFACTURING CO., INC. 461 400 Complaint Held, That such acts and practicrs wrre all to the prrjudice of the public and of competitors and constituted unfair methods of competition. Before Air. John lV. Addi.wn, trial examiner. JJ!r. Mo-rton Nesmith for the Commission.

Mr. HenryS. Setllin, of New York City, and Mr. Lucim~ Nemser, of Brooklyn, N. Y., for respondent.

Col\rPLAINT Pursuant to the provisions of an Act of Congress approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," the Federal Trade Commission, having reason to believe that the Algren Manufacturing Co., Inc., a corporation, hereinafter referred to as respondent, is now, and has been, using unfair methods of competition in commerce as "commerce" is defined in said act, and it appearing to said Commission that a proceeding by it in respect thereto would be in the public interest, hereby issues its complaint stating its charges in that respect ns follows:

PARAGRAPH 1. The respondent, Algren Manufacturing Co., Inc., is a corporation organized, existing, and doing business under and by virtue of the laws of the State of New York, with its office and principal place of business locat<'d at 8 ·washington Place, in the city of New York, State of New York, and is now, and has been for several years last past, engaged in the business of manufacturing, selling, and distributing jewelry findings, including wrist watch buckles, in commerce as hereinafter set out ..

PAR. 2. Said respondent, bing engaged in the business as aforesaid, causes said jewelry findings, including wrist watch buckles, when sold, to bo transported from its office and principal place of business in the State of New York to purchasers thereof located in various cities and other States of the United States and the District of Columbia, and there is now, and has been at all times mentioned herein, a constant current of trade and commerce in said jewelry findings, including watch buckles, so sold and distributed by respondent between and among the various States of the United States and the District of Columbia.

PAR. 3. In the course and conduct of said business, the respondent is now, and has been, in substantial competition with individuals, firms, and corporations engaged in the business of manufacturing, selling, and distributing jewelry findings, including wrist watch buckles, as herein described, to jobbers and retailers in commerce between and among the various States of the United States and the District of Columbia.

Complaint 31 F. T. U. PAR. 4. In the course of the operation of said business and for the purpose of inducing individuals, firms, and corporations to purchase said wrist watch buckles, the responden.t caused the words "Gold Filled" to be stamped, branded, or imprinted upon said buckles. Respondent sells its jewelry findings, including wrist watch buckles, as described in paragraph 4 hereof, to jobbers and retailerb who in turn offer for sale and sell the articles to the consuming public branded "Gold Filled."

PAR. 5. The jewelry manufacturing trade has generally. adopted the use of certain terms ·in describing gold covered articles. The names so used are descriptive of the process used in applying gold to the manufactured articles, and also designate the quality, quantity, and character of the gold so applied to the articles, and serve as representations to the general purchasing public that the articles were manufactured, and the gold applied, in conformity, with certain set standards. The designations generally adopted by the trade with respect to articles that are not of solid gold are: "Gold Filled," "Rolled Gold Plate," "Gold Plate," and "Gold Electro-Plate." In the process of manufacturing articles designated as "Gold Filled," a substantial quantity of gold in weight and thickness is applied to the base metal core, and these articles truthfully designated as "Gold Filled" are generally accepted by the trade and a substantial portion of the general purchasing public as being of a character and quality superior to articles manufactured by the processes designed as "Gold Plate" and "Gold Electro-Pia te."

PAR. 6. In truth and in fact, the respondent's wrist-watch buckles described in paragraph 4 do not contain a layer or coating of gold of such substantial thickness as to be properly and accurately represented, designated or referred to as "Gold Filled." PAR. 7. The foregoing false and misleading statement on the part of the respondent places in the hands of the aforesaid jewelry jobbers an instrument and means whereby said jobbers may perpetrate a fraud upon a substantial portion of the retailers, and both jobbers and retailers upon a substantial portion of the consuming public, by enabling them to falsely represent, offer for sale, and sell respondent's wrist watch buckles as being superior to other articles not so branded and as being of equal quality and value with other articles truthfully branded "Gold Filled." A substantial portion of said retailers and of the consuming public are of the opinion that the words ''Gold Filled" denote a quality exceeded only by solid gold or carat gold, and are thus led to purchase respondent's product engendered by said belief. PAR. 8. There are among the competitors of respondent many persons, finns, and. corporations who in no way misrepresent the composi- ALGREN MANUFACTURING CO., INC. 463 460 Findings tion, nature, character, or quality of the jewelry findings, including wrist-watch buckles, which they manufacture, sell, and rl.istribute. The aforesaid acts and practices of the respondent are added inducements for a substantial number of jobbers, retail purchasers, and consuming purchasers to buy respondent's product, and have a tendency and capacity to, and do unfairly dinrt a substantial volume of trade to respondent from its said competitors. As a conseqnenc~ thereof, substantial competition in commerce among and between the various States of the United States and in the District of Columbia has been substantially injured.

PAR. 9. The above and foregoing acts, practices, and representations of the respondent have been, and are, all to the prejudice of the public and respondent's eompetitors, as aforesaid, and have been, and are, unfair methods of competition within the meaning and intent of section 5 of an act entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," approved September 26, 1914.

REPORT, FINDINGS AS TO THE FACTS, AND ORDER Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission on August 10, 1937, issued and served its complaint in this proceeding upon respondent Algren Manufacturing Co., Inc., a corporation, charging it with the use of unfair methods of competition in commerce in violation of the provisions of said act. After the issuance of said complaint and the filing of respondent's answer thereto, testimony and other evidence in support of the allegations of the complaint and in opposition thereto were introduced by Morton Nesmith and S. Brogdyne Teu, II, attoriteys for the Commission, and Henry S. Sellin, counsel for the respondent, before J olm ,V. Addison, an examiner of the Commission theretofore duly designated by it, and said testimony and other evidence were duly recorded and filed in the office of the Commission. Thereafter, the proceeding regularly came on for final hearing before the Commission on said complaint, answer, testimony, and other evidence, and brief in support of the complaint (respondent not having filed brief and oral argument not having been requested) ;.and the Commission, having duly considered the matter, 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 PARAGRAPH 1. The respondent, Algren :Manufacturing Co., Inc., is a corporation organized, existing, and doing business under and by vir- Findings 31 F.'.r. C. tue of the laws of the State of New York, with its office and principal place of business located at 8 'Vashington Place, in the city of New York, State of New York, and is now, and has been for several years last past, engaged in the business of manufacturing, selling, and distributing jewelry findings, including wrist-watch buckles, in commerce. PAR. 2. Said respondent, being engaged in the business as aforesaid, caused said jewelry findings, including wrist-watch buckles, when sold, to be transported from its office and principal place of business in the State of New York to purchasers thereof located in various cities in other States of the United States and the District of Columbia, and there is now, and has been at all times mentioned herein, a current of trade and commerce in said jewelry findings, including wrist-watch buckles, so sold and distributed by respondent between and among the various States of the United States and the District of Columbia. PAR. 3. In the course and conduct of said business, the respondent is now, and has been, in substantial competition with individuals, firms, and corporations engaged in the business of manufacturing, selling, and distributing jewelry findings, including wrist watch buckles, as herein described, to jobbers in commerce between and among the various States of the United States and the District of Columbia. PAR. 4. In the course of the operation of said business and for the purpose of inducing individuals, firms, and corporations to purchase wrist-watch buckles, the respondent caused the words "Gold Filled" to be stamped, branded, or imprinted upon said buckles. Respondent sells its jewelry findings, including wrist-watch buckles as hereinbefore described, to jobbers who in turn offer for sale and sell the articles to the consuming public branded "Gold Filled." PAR. 5. The jewelry manufacturing trade has generally adopted the use of certain terms in describing gold covered articles. The names so used are descriptive of the process used in applying gold to the manufactured articles, and also designate the quality, quantity, and character of the gold so applied to the articles, and serve as representations to the general purchasing public that the articles were manufactured, and the gold applied, in conformity with certain set standards. The designations generally adopted by the trade with respect to articles that are not of solid gold are: "Gold ~illed," "Rolled Gold Plate," "Gold Plate," and "Gold Electro-Plate." In the process of manufacturing articles designated as "Gold Filled," a substantial quantity of gold in weight and thickness is applied to the base metal core. The minimum standard for the marking of gold-filled articles other than watch cases as accepted by the trade is one-twentieth by weight of 10-carat gold. The fraction preceding the carat mark or fineness <lesignation denotes the correct proportion of the weight of the gold to ALGREN MANUFACTURING CO., INC. 465 460 Conclusion the weight of the entire article. These articles are properly designated as "Gold Filled" and are generally accepted by the trade and a substantial portion of the general purchasing public as being of a character and weight superior to articles manufactured by the processes designated as "Gold Plate'' and "Gold Electro-Plate." PAR. 6. In truth and in fact, the respondent's wrist-watch buckles, described in paragraph 4, made before 1937, did not contain a layer or coating of gold of ~uch substantial thickness as to be properly and accurately represented, desig-nated, or referred to as "Gold Filled." They contained 12-carat gold only to the extent of one-fiftieth of their weight, which is not equivalent to one-twentieth by weight of 10-carat gold.

PAn. 7. The use of the foregoing false and misleading statement by the respondent plact>s in the hands of the aforesaid jewelry jobbers an instrument and mean,s whereby said jobbers may perpetrate a fraud upon a substantial portion of the retailers, and both jobbers and retailers upon a substantial portion of the consuming public by enabling them. to falsely represent, offer for sale, and sell respondent's wrist watch buddes as being superior to other articles not so branded and as being- of equal quality and value with other articles truthfully branded ''Gold Filled." A substantial portion of said retailers, and of the consuming public, are of the opinion that the words "Gold Filled'' denote a quality exceeded only by solid gold or carat gold, and are led to purchase respondent's product because of such belief.

PAR. 8. There are among the competitors of respondent many persons, firms, and corporations who conform to the set standards refen·ed to in paragraph 5 above and do not brand wrist watch buckles or other jewelry findings "Gold Filled" unless they contain by weight at least 5 percent gold of a fineness of at least 10 carats. PAR. 9. The aforesaid acts and practices of the respondent are added inducements for a substantial number of jobbers, retail purchasers, and consuming purchasers to buy respondent's product, and have a tendency and capacity to, and do unfairly divert a substantial volume of trade to respondent from its said competitors. As a consequence thereof competition in commerce among and between the various States of the United States and in the District of Columbia has been substantially injured.

OONOLUSION The foregoing acts and practices of the respondent are all to the prejudice of the public and of respondent's competitors, and constitute unfair methods of competition in commerce within the intent and meaning of the Federal Trade Commis,sion Act. 466 FEDERAl, TRADE COMMISSION DECISIONS Ordel· 31 F. T. C.

ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission, the answer of the respondent, testimony, and other evidence taken before John '\V. Addison, an examiner of the Commission theretofore duly desi~nated by it, in support of the allegations of said complaint and in opposition thereto, brief on behalf of the Commission filed herein by :\lorton Nesmith, counsel for the Commission (respondent having waived the filing of brief), oral argument not having been requested, and the Commission having made its findings as to the facts and its conclusion that respondent has violated the provisions of the Federal Trade Commission Act.

It i8 ordered, That the respondent, Algren Manufacturing Co., Inc., its officers, representatives, agents, and employees, directly or through any corporate or other device, in connection with the offering for ,sale, sale, and distribution of wrist watch buckles in interstate commerce or in the District of Columbia do forthwith cease and desist from :

Using the term "gold filled" or any other term or word of similar import and meaning as a brand, stamp, or label upon or for wrist watch buckles, unless such buckles shall have an alloyed gold content of one-twentieth by weight of 10-carat gold. It is further ordered, That the respondent ~>hall, within 60 days after ~ervice upon it of this order, file with the Commission a report in writing, setting forth in detail the manner and form in which it has complied with this order.

THE G-H-R ELECTRIC DILATOR CO., ETC. 467 Syllabus