Brabant Needle Co., Inc

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IN THE MATTER OF THE BRABANT NEEDLE COl\IPANY, INC.

COMPLAINT, FINDINGS, .AN~ ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF .AN ,-\CT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 1212. Complaint, Aug. 2, 1940-Decision, S'ept. 17, 1911 \Vhere a corporation engaged in importing needles and needle threaders from England, Germany, Holland, and Czechoslovakia, and in interstate sale and distribution thereof- (a.) Packaged needles--the container pads or flaps of which, at time of importa· tion aud pursuant to the laws of the United States, bore the name of tbe country of origin-in a manner which concealed said name, and In booklets or other containers which usually bore the words "Printed in U. S. A.," and sold and distributed its needles, thus packaged, without disclosure of fact that they were made In Germany or oth~r foreign country, to dealers for resale, and to manufacturers, dealers, and others for distribution to tbe public as part of a sales promotion plan to act as sales reminders and create good wlll for the supplying concern; and · (b) l\Iade use of such statements, in In voices, letterheads, and other matedals, as "Factory Lion Works, George St. Redditch-England U.S. Factory and Sales Rooms 47 Great Jones Street, New York, N. Y."; The facts being needles of English manufacture are considered by trade and con· sumlng public as supet·ior In quality to those manufactured In Germany, Uol· land, or Czechoslovakia; there Is a prejudice on the part of a substantial part of said purchasing public against products mani1factured in Germany; and said corporation had not for many years, and did not then, own, control, or operate any needle factory in the United States or in England, and was not a manufacturer, for dealing with whom there Is a decided preference on tne part of a substantial portion of the purchasing public, as affording, in Its belief, a saving of the middleman's profit and other advantages; 'With capacity and tendency to mislead and deceive a substantial portipn of tbe purchasing public into the erroneous belief that its needles were of domestic or Englh;h origin and that it owned or controllf>d factories In which such needles were produced, and with result, as consequence of said erroneous belief, that a substantial portion of said public was induced to purchase its products, and there was thereby placed in the hands of dealers a means whereby they were enabled to mislead and deceive members of the purchasing public as to the source of such products and the business status of s:1id company:

Held, That such acts and practices were all to the prejudice and injury of tbc public and constituted unfair and deceptive acts and practices In commerce. Before Mr. Arthu.r F. Thomas, trial examiner. Mr. Carrel F. Rhodes for the Commission.

Mr. William Kessler, of New York City, for respondent. Complaint Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested in it by said net, the Federal • THE BRABANT NEEDLE CO., INC. 1345 1344 Complaint Trade Commission, having reason to believe that The Brabant Needle ~o., Inc., a corporation, hereinafter referred to as respondent, has "?olated the provisions of said act, and it appearing to the Commis- ~wn 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, The Brabant Needle Co., Inc., is a corporation organized, exi!"ting, and doing business under the laws of the State of New York, with its office and principal place of business at 47 Great Jones Street, New York, N.Y. · PAR. 2. Respondent is now and for more than 1 year last past has h~en engaged in the business of importing, packaging, selling, and di~tributing needles and needle threaders. Respondent causes its ~aid products, when sold, to be transported from its place of business ln the State of New York to purchasers thereof, located in various other States of the United States and in the District of Columbia. At all times mentioned herein, respondent has maintained a course of trade in said products, 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 business, respondent imports said needles in pads or flaps from Germany and other foreign countries; the name "Germany" indicating the country of the origin of some of such needles is stamped or printed upon the back of each P~d or flap. In marketing certain of its products, respondent comhines various pads or flaps of needles into booklets, or containers, sometimes in combination with other' articles, such as needle threauers. Respondent prepares such booklet's or containers by securely Pasting the pads or flaps of needles to the inside covers of the booklets or containers in such a manner that the backs thereof are entirely Concealed and any printing thereon, indicating the origin of said needles, is completely hidden from view. Such booklets, or .con- , tainers, are thereupon sold and distributed by respondent in commerce, as aforesaid, without any marking thereon whatsoever, visible to the purchaser, indicating that such needles are of German origin. PAR. 4. In the further course nnd conduct of its business, and in furtherance of the sale Qf its products, the respondent, during the times n1entioned herein, has printed, or caused to be printed, upon the book- ·lets, or containers, of its needles, the words: ·"Printed in U.S. A." and "~· S. A." and has caused to be printed ·on its letterheads, invoices, and h1U heads, circulated, and caused to be circulated, by United States Complaint SSF.T.C· mails, and by other means among purchasers and prospective pur· chasers, the follqwing statements and representations: The Brabant Needle Company, Inc.

Factory, Lion Works, George St., Redditch, England U. S. Factory and Sales Rooms 47 Great Jones Street, New York, N. Y.

The aforesaid statements, used by respondent, serve as representa· tions to members of the purchasing public that its needles are of do· mestic or English origin and that it owns, operates, or. controls fac· tories located in England and in the United States, wherein the needles, which it sells and offers for sale, are made and manufactured. PAR. 5. In truth and in fact, none of the needles packaged as afore· said, and sold by respondent, are manufactured in the United States or England, and the respondent has not during any of the times mentioned herein owned, operated, or controlled any factory wherein such needles sold by it were manufactured either in England, the United States, or elsewhere. All of said needles are imported by respondent from for· eign countries other than England for purpose of resale. PAR. 6. For many years last past, there has been maintained among domestic manufacturers and importers an established custom and prac· tice of marking products of foreign origin in such a manner as tQ indicate that such products are, in fact, of foreign, rather than domes· tic, origin. The purchasing public is familiar with and relies upo~ such custom and practice, and when products bear no marking indl· eating that they are of foreign origin, the purchasing public assumes that such products are of domestic origin. There is, among a sub· stantial portion of the purchasing public, a decided preference for products which are manufactured in the United States or England over products manufactured in Germany or other foreign countries. PAR. 7. There also is, and has been during all of the time mentioned herein, a preference on the part of a substantial portion of the pur· chasing public for purchasing products directly from the manufac· turer. There is and has been durip.g all of such time a belief that a saving of the middleman's profit could be obtained and that other advantages would accrue by purchasing directly from the manufac· turer, and that dealing directly with a manufacturer is preferable and more advantageous than dealing with purchasers for resale. PAn. 8. The practice of the respondent in packaging its products in such a manner that the origin of said products is entirely concealed from the view of the purchaser, and of printing on said booklets and containers the words, "Printed in U. S. A." and "U. S. A.," without THE BRABAN'.r NEEDLE CO., INC. 1347 1344 Findings disclosing to the prospective purchasers the fact that certain of its products offered for sale are made in Germany, and the representations that it owns or controls factories in England and the United States, has a tendency and capacity to, and does, mislead a substantial ~ortion of the purchasing public into the erroneous and mistaken behe£ that a portion of its products are of domestic or English origin and that it qwns or controls the factories manufacturing all of its said Products. As the result of said erroneous and mistaken belie{, engendered as herein set forth, a substantial portion of the purchasing public is induced to and does purchase respondent's products. Through the practices herein set forth, the respondent places in the hands of dealers a means and instrumentality whereby such dealers have been and are enabled to mislead and deceive members of the purchasing public as to the source or origin of such products and as to the business status of respondent.

PAR. 9. The aforesaid acts and practices of the respondent, as herein alleged, are all to the prejudice and injury of the public and constitute Unfair and deceptive acts and practices in commerce, within the intent and meaning of the Federal Trade Commission Act. REPORT, FINDINGS AS TO THE Facts, AND Onder Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission, on August 2, 194D, issued and subsequently served its complaint in this proceeding upon respondent; 'I'he Brabant N ecdle Co., Inc., a corporation, charging it with the Use of unfair and deceptive acts and practices in commerce in violation of the provisions of said act. After the issuance of said complaint and the filing of respondent's answer thereto, testimony and other evidence in support of the allegations of said complaint were introduced by an attorney for the Commission and in opposition to the allegations of the complaint by an attorney for the respondent before an examiner of the Commission theretofore duly designated by it, and said testimony and other evidence were duly recorded and filed in the uffice of the Commission. Thereafter, the proceeding regularly came on for final hearing before the Commi.ssion on the ~;aid complaint, the answer thereto, testimony and other evidence, 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 tTiat this proceeding is in the interest of the public and makes this its findings as to the facts and its conclusion drawn therefrom.

1348 FEDERAL TRADE COMM:ISSION DECISIONS Findings 33F. T.C.

FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent, The Brabant Needle Co., Inc., is a corporation organized, existing, and doing business under the laws of the State of New York and having its office and principal place of business at 47 Great Jones Street, New York, N.Y. The respond· ent is now and for more than 1 year last past has been engaged in the business of importing, packaging, selling, and distributing needles imd needle threaders.

PAR. 2. Respondent causes its said products; when sold, to be transported from its place of business in the State of New York to purchasers located in various other States of the United States and jn the District of Columbia. At all times mentioned in the corn· plaint respondent has maintained a course of trade in said products 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 business respondent irnports needles vnd needle threaders from England, Germany, Holland, und Czechoslovakia. At the time of importation into this country the said needles are arranged in pads or flaps and, pursuant to the laws of the United States, the name of the country of origin is printed or stamped upon the pads or flaps in which the needles are packaged. In some instances the name of the country of origin rtppears upon the face of the pad or flap and in other instances upon the back thereof. In selling and distributing the needles so imported, respondent frequently combines a number of the pads or flaps of neecTies, sometimes with other articles such as needle threaders, into one package by securely pasting said pads or flaps ]nto a booklet or other container in which form they are sold and distributed. In those instances where the name of the country of origin of the imported needles appears upon the back of the pad or flap in which they are packaged, the name of such country of origin is effectively concealed when such pad or flap is pasted into a booklet or container, and is not visible to any purchaser or prospective purchaser.

PAR. 4. Needles of English manufacture are considered by the trade and the consuming public to be superior in quality to those lnanufactured in Germany, Holland, or Czechoslovakia, and there is a prejudice on the part of a substantial part of the purchasing public against products manufactured in Germany. In addition to fre· quently packaging needles imported from Germany or other :foreign country in booklets or other containers in a manner which conceals the name of the country of origin, as aforesaid, the respondent pack· ages such needles in booklets or other containers which usually bear THE BRABANT NEEDLE CO., INC. 1349 1344 Findings the Words "Printed in U. S. A." Respondent sells and distributes the needles packaged in the manner stated to dealers, for resale to t.h.e public, and also to manufacturers, dealers, and others who distribute them to members of the public without charge as a part of a sales promotion' plan by such manufacturer, dealer, or other. purc-haser, When so distributed they are intended to act as sales J·erninders and to create good will for the concern which supplied them as a gift. · PAR. 5. In the course and conduct of its business, as aforesaid, respondent has used invoices, letterheads, and other material bearing f"tatements such as: . Factory Lion \Vorks, George St., Redditch-England U. S. Factory & Sales Rooms 47 Great Jones Street New York, N. Y.

The respondent has not for many years, and does not now own, con- ~rol, or operate any factory in the United States or England in which lt ll1anufactures :needles. Many years ago the respondent owned an English concern known as "Brabant Needle Co., Ltd.," and is now ~e. exclusive distributor for the products of that company in the nited States and Canada. For a number of years last past, however, respondent has not manufactured any of the needles offered for sale and sold by it. There is a decided preference on the part of a substantial portion of the purchasing public for dealing directly with ~he manufacturer of the products purchased because of a belief that Y purchasing directly from the manufacturer a saving·of the middlelllan's profit is accomplished and that other ad vantages accrue through SUch :method of purchase.

• PAR. 6. The acts and practices of respondent in packaging needles ltnported from Germany and other foreign countries in such a manner that the name of the country of origin of such needles is frequently concealed from the view of the purchaser, and the placing upon the booklets and other containers in which said needles are packaged the Words "Printed in U. S. A." without disclosing to purchaser or pro~­ Pective purchasers the fact that certain of said needles are made in Germany or other foreign countries, and the acts and practices o£ ~respondent ih representing that it owns, operates, or controls factories ln. the United States and in England, have a capacity and tendency to ~lslead and deceive a substantial portion of the purchasing public lnto the erroneous and mistaken belie£ that respondent's needles are ~f domestic or English origin and that it owns or controls factories ln which such needles are produced. As a result of said erroneous Order 33F.T.0· and mistaken belie£ engendered as herein set forth, a substantial por· tion of the purchasing public is induced to and does purchase respond· ent's products. Through the aforesaid acts and practices the respondent places in the hands of dealers a means and instrumentality whereby such dealers have been and are enabled to mislead and deceive members of the purchasing public as to the source of origin of such products and the business status of respondent. CONCLUSION The aforesaid acts and practices of the respondent are all to the prejudice and injury of the public and constitute unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commis· sion upon the complaint of the Commission, the answer of respond· ent, testimony and other evidence taken in support of the allegations of said complaint and in opposition thereto, before an examiner of the Commission theretofore duly designated by it, brief filed in sup· port of the complaint (no brief having been filed by respondent and oral argument not having been requested), and the Commission havjng made its findings as to the facts and its. conclusion that said respondent has violated the provisions of the Federal Trade Com· mission Act.

It is ordered, That respondent, The Brabant Needle Co., Inc., a cor· poration, its officers, representatives, agents, and employees, directly or through any corporate or other device, in connection with the sale and distribution of needles, needle threaders, or other products in com· merce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Representing or implying that respondent owns, controls, or operates a factory in which the needles which it offers for sale, sells, and distributes are made, or representing or implying in any manner that needles or other products not manufactured by respondent are manufactured by it.

2. Concealing, erasing, or removing from imported needles, needle threaders, or other products the legend "Germany," "Made in Ger· many," or other marking showing the country of origin of such products: Provided, however, That this shall not prevent such concealment, erasure or removal of the markings showing the country of origin of such products as is reasonably necessary in the packaging, THE BR.ABANT NEEDLE CO., INC, 1351 1344 Order assembling, or other handling of such products if the respondent affirmatively and clearly discloses on or in immediate connection with such products their German or other foreign origin. It is fwrther 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.

Syllabus 33 F.T. C.