Sol. Raphael, Inc

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IN THE MATTER OF SOL. RAPHAEL, INC.

COMPLAINT, li'INDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 4205. Oomplaint, July 91, 19!,0-Decision, June ,.f, 1941 Where a corporation engaged In Importing rugs and in competitive interstate sale and distribution thereof to wholesale and retail dealers- Made use of designations "Khandah," "Aristan," "Karachi," "Numdah,'' "Calcutta," "Burma," "Daria,'' "Damascus," "Bagad," "Tamur," and "Chinese," in describing and designating certain of its prollucts in invoices and letters addressed to dealers, and in otherwise referring thereto, and on labels attached to rugs designated "Calcutta," set forth said name with depiction of coat of arms of Persia, and on labels attached to its "Bagad" rugs, said name together with depletion of an oriental scene; Notwithstanding the fact that aforesaid rugs designated, as case might be, by names "Khandah" and "Aristan," which were tho,;e of the genuine product, made in the true oriental manner in India; by name "Karachi" which was that of true oriental rug made in Persia; by name "Numdah" which was that Qf felted woolen rug made in India; and by other names or designations which, used as aforesaid, connoted places In the Orient and China, were not, as long understood from such designations, oriental rugs made in the Orient, or more particularly certain parts of southwestern Asia, Qr Chinese oriental rugs made in China, by hand, with pile of wool, or silk and wool, threads of which were knotted by hand In a special manner, long held In great public esteem because of texture, beauty, and durability and therefore decidedly preferred on the part of many of the 1mrchasing public, but were made on power looms in factories in France and Belgium of cotton or jute, or of a combination of both, and did not possess all the characteristics, as aforesaid indicated, of the true oriental or Chinese oriental rugs, Which they so closely simulated in appearance as to be indistinguishable therefrom by a large portion of the purchasing public; With capacity and tendency to mislead purchasers and pro:,;pective purchasers into the erroneous belief that said representations and designations were tlu~. and to induce them to purclmse said rugs, by reason thereof, as the genuine ' product, in all respects, and with effect of placing in the hands of retail dealers means of misleading the public In aforesaid particulars, and with further result that trade was unfairly diverted to it from its competitors engaged in interstate sale of rugs of various kinds, including genuine oriental, Chinese oriental, and domestic rugs, who truthfully represent their said prouucts; to the injury of competition in commerce: lieu,, That said ads and practices, under the circumstances set forth, were all to the prejullice and injury of the public and competitors, and constituted unfair methods of competition in commerce and unfair and deceptive acts and practices therein.

Mr. Randolph W. Branch for the Commission.

Mary Rehan, of New York City, for respondent. Complaint 33 F. T. C. 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, having reason to believe that Sol. Raphael, Inc., a corporation, hereinafter referred to as respondent, has violated the provisions of the 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:

PARAGRAPH 1. Respondent, Sol. Raphael, Inc., is a corporation organized and existing under the laws of the State of New York and having an office and principal place of business at 333 Seventh A venue, city and State of New York.

PAR. 2. Respondent is now, and has been for more than 3 years last past, engaged in the business of importing, distributing, and selling rugs. In the course and conduct of its business, respondent sells said rugs to various wholesale and retail dealers and causes them, when sold, to be transported from its aforesaid place of business in the State of New York to purchasers thereof located in various other States of th~ United States and in the District of Columbia. Respondent maintains, and at all times mentioned herein has maintained, a course of trade in said rugs in commerce among and between the various States of the United States and in the District o£ Columbia. PAn. 3. In the course and conduct o£ its said business, respondent is now, and has been at all times mentioned herein, in substantial competition with other corporations and with firms, partnerships, and individuals likewise engaged in the sale and distribution of rugs in commerce among and between the various States o£ the United States and in the District of Columbia. Among such competitors are many who do not misrepresent the nature of their products and the place or method of manufacture thereof, or who do not furnish their dealercustomers with means or instrumentalities for deceiving the public. PAn. 4. A substantial portion of the purchasing and consuming public understands, and for many years has understood, oriental rugs to be rugs made in the Orient or, more particularly, in certain parts o:f Southwestern Asia, by hand, of pleasing texture and original and beautiful design and having a pile o:f wool or silk and wool, the threads o:f which are individually knotted in a special manner. Such rugs are usually designated by names which are indicative of the Orient and oriental origin and manufacture. A substantial portion of the purchasing and consuming public understands, and for many years has understood, Chinese oriental rugs to be made in China, by hand, in the same manner and possessing the same qualities and characteristics SOL. RAPHAEL, INC. 11 9 Complaint as the oriental rug. Both oriental and Chinese rugs have been for many years, and still are, held in great public esteem because of their texture, beauty, durability, and other qualities, and by reason thereof, there is a decided preference on the part of many of the purchasing public for such rugs.

PAR. 5. In the course and conduct of its business, and for the purpose of inducing the purchase of said rugs, respondent has engaged in the practice of describing and designating certain of its rugs which closely resemble true oriental or Chinese oriental rugs in appearance by the ' ' ' ' ' "Chinese.'~"namesBurma,"of "Khandah""Daria," "Damascus,""Aristan" "Karachi" "Numdah" "Calcutta" "Bagad," "Tamur," and !here are rugs known as "Khandah" and "Aristan," which are made 1ll the true oriental manner, in India.. A true oriental rug, made in Persia, is known as the "Karachi," and a felted woolen rug, made in India, is known as the "Numdah."

" ,!he u~e by respondent of the,designations "Khandah," "Aristan," I\.aracln," and "Numdah" have the capacity and tendency to create the mistaken and erroneous belief that the rugs so designated are in fact the genuine oriental and Indian rugs of the same names. The other designations, used as aforesaid, connote places in the Orient and China, and have the capacity and tendency to induce the mistaken and erroneous belief that the "Chinese" rugs are made in. China, that ~he others are made in the Orient, that all are made by hand and are, lll all respects, including materials, true Chinese oriental or oriental rugs. Respondent uses said names to designate its said rugs in invoices and letters addressed to dealers, and in otherwise referring to the same in the sale thereof to dealers. To the rugs designated as "Calcutta'' are firmly attached labels upon which that name appears in connection with a depiction of the coat of arms of Persia; to the rugs designated "Bagad" are firmly attached labels upon which that name appears in connection with the depiction of an oriental scene. Said labels are plainly discernible to members of the purchasing public when said rugs are displayed for sale by retail dealers. In truth and in fact respondent's said rugs are woven on power looms in factories in France and Belgium. They are not made by hand, nor are the individual threads knotted in the distinctive manner of the true oriental or Chinese oriental rug. Said rugs are made of cotton or of jute or of the two combined. They do not possess all the characteristics of the true oriental or Chinese oriental rug, but do in fact so closely simulate them in appearance as to be indistinguishable from them by a large portion of the purchasing public, and are in consequence readily accepted as being true oriental or Chinese oriental rugs.

12 FE:DERAL TRAD'E' COJ\IMISSION DECISIONS _Findings 33F. T.C.

·PAn. 6. 'Jhe use .bY respondent of the designations, depictions and .representations, as set forth herein, in connection with the offering for sale and sale of its said rugs, has had, and now has, the tendency and .capacity to mislead purchasers and prospective purchasers thereof into the erroneous and mistaken belief that such representations and designations are true and correct, and to induce them to purchase said rugs .(ln account thereof. Respondent's said acts and practices have the t.ffect of placing in the hands of retail dealers who purchase said rugs .and resell the same to the purchasing public, means and instrumentalities of misleading and deceiving the public in the particulars afore- ·said.

As a result of respondent's said acts and practices, trade has been unfairly diverted to respondent from its competitors engaged in the sale in commerce between and among the various States of the United States and in the District of Columbia of rugs of various kinds, including genuine oriental, Chinese oriental, and domestic rugs, who truthfully represent their products as set forth in paragraph 3 hereof. In ('Onsequence thereof, injury has been and is now being done by respondent to competition in commerce among and between various States of the United States and in the District of Columbia. PAn. 7. The aforesaid 'acts and practices of respondent as herein .alleged are all to the prejudice and injury of the public and of respond- £>nt's competitors and constitute unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. REPORT, FrNDINGs As TO THE FACTs, AND OnoEn Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission, on July 31, 1940, issued, and on August 1, 1940, served its complaint in this proceeding upon respondent, Sol. Raphael, Inc., charging it with the use of unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce in violation of the provisions of said act. After the issuance of said complaint and filing of respondent's answer, the Commission, by order entered herein, granted respondent's request for permission to withdraw said answer ,and to substitute therefor an answer admitting all the material allegations of fact set forth in said complaint, and waiving all intervening procedure and further hearing as to said facts, which substitute answer was duly filed in the office of the Commission. Thereafter, this proceeding regularly came on for final hearing before the Commission on the said complaint and substitute answer, and the Commission, having duly considered the matter and being now fully advised in the premises, finds that this proce>eding is in SOL. RAPHAEL, INC. 13 9 . Findings ' the interest of the public and makes this its findings as to the facts. and its conclusion drawn therefrom.

FINDINGS AS TO Tile FACTS PARAGRAPH 1. ·Respondent, Sol. R:1phael, Inc., is a corporation organized and existing under the laws of the State of New York and having an office and principal place of business at 333 Seventh Avenue,. city and State of New York.

PAR. 2. Respondent is now, and has been for more than 3 years. last past, engaged in the business of importing, distributing, and f;selling rugs. In the course and conduct of its business, respondent E:sells said rugs to various wholesale and retail dealers and causes themt when sold, to be transported from its aforesaid 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 all times mentioned herein has maintained, a course of trade in said rugs in commerce among and between the various States of the United States and in the District of Columbia. PAR. 3. In the course and conduct of its said business, respondent is now, and has been at all times mentioned herein, in substantial com- J)etition with other corporations and with firms, partnerships, and individuals likewise engaged in the sale and distribution of rugs in ~commerce among and between the various States of the United States and in the District of Columbia. Among such competitors are many who do not misrepresent tlw nature of their products and the place or method of manufacture thereof, or who do not furnish their dealercustomers with means or instrumentalities for dec~iving the public. PAR. 4. A substantial portion of the purchasing and consuming public understands, and for many years has understood, oriental rugs to be rugs made in the Orient or, more particularly, in certain parts of southwestern Asia, by hand, of pleasing texture and original and beautiful design and having a pile of wool or silk and wool, the threads of which are individually knotwd in a special manner. Such rugs are usually designated by names which are indicative of the Orient and oriental origin and manufacture. A substantial portion of the purchasing and consuming public understands, and for many years has understood, Chinese oriental rugs to be made in China, by hand, in the same manner and possessing the same qualities and characteristics as the oriental rug. lloth oriental and Chinese rugs have been for many years, and still are, held in great public esteem l1ecause of their texture, beauty, durability, and other qualities, and by 4351120'"-42-vol. 33-2 14 ' FEDE:RAL TRADE COMMISSION Decisions Findings 33F.T.C.

reason thereof there is a decided preference on the part of many of the purchasing public for such rugs.

PAR. 5. In the course and conduct of its business, and for the purpose of inducing the purchase of sai<;l rugs, respondent has engaged in the practice of describing and designating certain of its rugs which <:losely resemble true oriental or Chinese oriental rugs in appearance by the names of "Khandah," "Aristan," "Karachi," "Numdah," "Cal- <:utta," "llurma," "Daria," "Damascus," "Bagad," "Tamur," and ''Chinese." There are rugs known as "Khandah" and "Aristan," which are made in the true oriental manner, in India. A true oriental rug, made in Persia, is known as the "Karachi," and a felted woolen rug, made in India, is known as the "N umdah."

The use by respondent of the designations "Khandah," "Aristan," "Karachi," and "Numdah" have the capacity and tendency to create the mistaken and erroneous belief that the rugs so designated are in fact the genuine oriental and Indian rugs of the same names. The c.ther designations, used ~s aforesaid, connote places in the Orient and China, and have the capacity and tendency to induce the mistaken and erroneous belief that the "Chinese" rugs are made in China, that the others are made in the Orient, that all are made by hand and are, in all respects, including materials, true Chinese oriental or oriental rugs. Respondent uses said names to designate its said rugs in invoices and letters addressed to <.lealers, and in otherwise referring to the same in the sale thereof to dealers. To the rugs designated as "Calcutta" are firmly attached labels upon which that name appears in connection with a depiction of the coat of arms of Persia; to the rugs designated "llagad" are firmly attached labels upon which that name appears in connection with the depiction of an oriental scene. Said labels are plainly discernible to members of the purchasing public when said rugs are displayed for sale by retail dealers. In truth and in fact respondent's said rugs are woven on power looms in factories in France and llelgium. They are not made by hand, nor are the individual threads knotted in the distinctive manner of the true oriental or Chinese oriental rug. Said rugs are made of cotton or of jute or of the two combined. They do not possess all the characteristics of the true oriental or Chinese oriental rug, but do in fact so closely simulate them in appearance as to be indistinguishable from them by a large portion of the purchasing public, and are in consequence readily accepted as being true oriental or Chinese oriental rugs. PAR. 6. The use by respondent of the <.lesignations, depictions, and representations, as Sflt forth herein, in connection with the offering for sale and sale of its said rugs, has had, and now has, the tendency and capacity to mislead purchasers and prospective purchasers thereof SOL. ~APHAEL, INC. 15 9 Order into the erroneous and mistaken belief that such representations and designations are true and correct, and to induce them to purchase said rugs on account thereof. Respondent's said acts and practices have the effect of placing in the hands of retail dealers who purchase said rugs and resell the same to the purchasing public, means and instrumentalities of misleading and deceiving the public in the particulars aforesaid.

As a result of respondent's said acts and practices, trade has been unfairly diverted to respondent from its competitors engaged in the sale in commerce between and among the various States of the United States and in the District of Columbia of rugs of various kinds, including genuine oriental, Chinese oriental, and domestic rugs, who truthfully represent their products as set forth in paragraph 3 hereof. In consequence thereof, injury has been and is now being done by respondent to competition in commerce among and between varwus States of the United States and in the District of Columbia. CONCLUSION The aforesaid acts and practices of respondent as herein found are all to the prejudice and injury of the public and of respondent's competitors and constitute unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. ORDER 'IO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission and the answer of the respondent, in which answer respondent admits all the material allegations of fact set forth in said complaint, and states that it waives all intervening procedure and :further hearing as to said :facts, and the Commission having made its findings as to the facts and conclusion that said respondent has violated the provisions of the Federal Trade Commission Act. · It is ordered, That the respondent, Sol. Raphael, 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 rugs and other-r merchnnJise in commerce, as "commerce" is defined in the Federal Trade Commission Act, do :forthwith cease and desist from:

Using the words "Khandah," "Aristan," "Karachi," "Numdah,'' "Caleutta," "Burma," "Daria," "Damascus," "Bagad," "Tamur," or "Chinese," or any other words or names indicative of the Orient or 16 FE:DERAL TRAD'E COMMISSION DECISIONS Order 33F.T.C.

pictorial representations or simulations of the coat of arms of Persia or other oriental arms or of typically oriental scenes, to mark, designate, describe, or refer to rugs not made in the Orient and which do not possess all the essential characteristics and structure of the type of oriental rug which they purport to be.

It is further ordered, That the respondent shall, within 60 days after service upon it of this order, file with the Commission a report in writing setting forth in detail the manner and form in which it has complied with this order.

ALTMAN NECKWEAR CORP .. 17 Complaint