Karagheusian, Inc., A. & M

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IN THE :MATI'ER OF A. &. M. KARAGIIEUSIAN, INC.

COMPLAINT, FINDINGS, AND ORDF.R IN REGARD TO Tile ALLEGED VIOLATION OF SEC. II OF' AN ACT OF CONGRESS API'RO\'ED SEPT. 26, 1914 Docket 4305. Complaint, Sept. 6; 1910-Dccision, Mar. !9, 1943 Where a corporation, with foreign offices in Tientsin, China, and throughout rersia, engaged in the domestic manufacture, importation, and .competitive Interstate distribution and sale of variou!:J rugs and carpets, which resembled in design, color, and general appearance genuine 01·ientals, and included as its leading and most expensive domestic line Its "Gullstun" rugs, lu the more recent labeling of which it more or less prominently displayed their American manufacture, and In the advertising of which it discussed its patented process and method employed therein- ( a) .Made use of words "Iranian" and "Hindustan" to tlesignate certain rugs, the faces of which had many points of resemblance In dPslgn, color, and general appearance to the long esteemed, distinctive hand-I.Juilt genuine Orientals, <!commonly designated by geographical or tribal names Indicative of their Oriental origin, and thereby-notwithstanding labels which almost tndlscernii.Jly displuyrd the words "i\Iade In U. S. A." or "An ·Aml'l·iean product," and "Made by the makers of Gu!lstan,"-rrpresPnted that its said products were true Orientals In every respect, made I.Jy hand In Persia (or Iran) or in India (or Illndustnn);

When in tart said domestic products were woven by It on powpr looms; nnd, while "washed" to Impart the desirable luster or sheen of the genuine Oriental, similarly acquired, they were not so woven that colors nud patt<'rns, as in the genuine, showed through, but had the hard or white buck common to Wilton and Axmlnstrr mnnufacturing mel hods; (b) With cnpaclty and trndl'ncy to cause purc·haslng pnbllc to hell I've that clrtain of Its aforesaid "washed" domestic machine-made rugs, color!'!, and 11attrrns of which showed tht·ough, nud which, labPle(] ns ai.Jovc dP£erlhecl, had, as atoresnhl, many other points similar to true Orlentnls, were suc·h, made ut~e, as designation Uwreof, of c·olnro word ''l\flrastan," dl~tlnctlve suffix of which It shnrl'cl with names of such genuine Orkntals as "Deln· chlstan," "Kurrllstan," "LarlRtan," "CubiRtan," and "Daghestan''; and (c) 1\Iacle use of word ''lleprodu!'tion" or ''Reproductions" In advertising copy turnlshPd by it to denlrrtoJ In which were coutainl'cl such stat£·nwnts 1111 ''Gullstan-the world famous Oriental rrproduetions that most people cannot tell from a lJand wovf'n Oriental rug"; "Superb Pt>rslan reprodnc· tlons • • • Hlndustan rugs"; "Persian reproductions • • • the Iranian rng"; "Mirnstnn Oriental rrproductlons • • • see JHirnstan and compare It with the costlieRt rcrsiun rugs. You will be amazed at the similarity"; .

The f1tcts being that while ~<orne of j;UCh rug:'! followed as cloj;ely as possii.Jie in power-loom weaving the colors and pattern!~ o! original Orlentnl11, they did not do so exactly, while others Wf're adaptation~ and combinations of colors, motif!:, and patterns found In genuine Orlf'ntals; the manufacture thereof did not Involve the ct,pying of the color nnd ueslgn ot any particular single A. & M. KARAGHEUSIIAN, INC. 447 446 Complaint genuine Oriental, but the designs lls a whole were entirely new; and said products were not reproductions of Orientals in structure or method of manufacture but merPiy slnmlated the appearance thereof; Tendency and capnclty of which acts and practices were to confuse and mislead purchasers aud pt·osppctive purchasers thereof Into the erroneous anu mistaken belief that such l'l•pt·e~entations and designations were true, and thus to induce them to purclmse .snld rugs on account thereof, with effect of placing inthe hnJl!ls of retail dcale!'s means to ml~lead and deceive the purchasing public in the particulars nforesal<l, nnd of diverting trade unfairly to it from its competitor!! who truthfully l'PpresPIJt their genuine Oriental and domestic :products:

Held, That such acts and pl'!lctlct•s, under the circumstances above set forth, were all to the preju<liee and Injury of the public Hilt! competitors, and constituted unfair methods of competition in commerce and unfair und deceptive acts and practices therein.

Eefore Mr. James A. Purcell, trial examiner. Mr. Randolph lV. Brancli for the Corrunission. White&: Oluie, of New York City, for respondent. Co:\tPLAINT Pursuant to the provisions of the l!'ederul Trade Commission Act, and by virtue of the authority vested in it by said act, the Federal Trade Commission, hn ving reason to believe that A. & M.Karagheusian, Inc., a corporation, hereinafter referred to as respondent, has violated the provisions of said act, and it appearing to the Commission that a proceeding by it in respe<'t thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. Respondent, A. & M. Karagheusian, Inc., is a corporation, organized and existing under and by virtue of the laws of the State of Delaware, having an office and principal place of business at 205 Fifth Avenue, in the city and State of New York, and having manufacturing plants at Freehold and Roselle, in the State of New Jersey. Respond£>nt also has foreign ofliccs in Tientsin, China, and throughout l,er!'da.

PAR. 2. Uespondent, is now, and has been for more than 3 years last past, engaged in the business of manufacturing, distributing, importing, and selling various rugs and carpets. In the cour~e and conduct of its business respondent sells said rugs and carpets to various wholesale and retail dealers, and causes such rugs and carpets, when sold, to be transported from its aforesaid places of business in the States of New York and New Jersey to purchasers thereof located in various other States of the Unite<! States and in the District of Columbia. Respondent maintains, and at all times mentioned herein has maintained, a course of trade in said rugs and carpets in commerce among 448 FEDERAL TRADE COMMISSION' DECISIONS Complaint 30 F. T. C. f).nd het~een the variou~ States of the United States and in the District of Columbia.

PAn. 3. In the course and conduct of 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 indiyiduals likewise engaged in the sale and distribution of rugs and carpets iq commerce among and between the various States of the United States and in the District of Columbia. Among such com~ petitors are many who do not misrepresent the nature of their products pr'the place or method of manufacture thereof, and who do not furnish their qealer-qustomers with means or instrumentalities for misleading or deceiving the purchasing public.

PAR. 4. A substantial portion of the purchasing and consuming public understands, and' for' ~~ny years has understood, Orie'tital rugs to be rugs made in the Orient, or, more particularly, in certain parts of Southwestern Asia, by hand, of' pleasing t~xture' and original and beautiful design, and having ~ pile of wool or silk and wool the threads of which are individually knotted in a special manner. Such rugs are usuatly designated by names which are indicative of the Orien~ and Oriental origin of manufacture. Oriental rugs have been for many years and still' are held i'n great public esteem because of their texture, beauty, durability and other desirable qualities, and by reason thereof there is 'a decided preference on the part of many of the purchasing public for such rugs. When names of Oriental implication are applied to carpets, as well as rugs, the purchasing public understands and believes that 'said carpets are manufactured in the Orient.

PAn. 5. In the course and conduct of its business, and for the purpose of inducing the purchase of said rugs and carpets, respondent has engaged in the practice of describing and designating certain of its rugs, which closely resemble genuine Oriental rugs in appearance, by the names of "Gulistan," "Hindustan," ".Miro.stan," and "Iranian," and certain of its carpets by the name "Gulistan." The name "Ira· nian" connotes and indicates a place in the Orient, i.e., Iran or Persia, which is a place of origin of genuine Oriental tugs; the names "Gulistan" and ''l\Iirastan" are distinctly Oriental in sound and sugg~st and connote places in the Orient, and "Ilindustan" is a country of the Orient. The said names have the tendency and capacity to create the mistaken and erroneous belief that the rugs so design:tted as "Iranian" are made in Persia, that the other rugs are made in the 'Orient, that all of them are made by hand and are in nil respects g(muine Oriental rugs, and that ''GuHstan" carpets are lnade in the Orient.

.,.l~~ .... A. & M., ;KA,B4GHEUSlA~J ,. • ' .. Respondent uses said designations in invoice!? and in otherwise referring to the sa:t:ne in the sa~~ ,thereof to .de~lers, and also c;,us~; labels bear~ng the name "Gulistan" to be securely attached to the sa~d carpets, and labels bearing one or another of said names1 to be securely attached to said rugs so as to be plainly discernible to members of the purchasing public when such rugs and carpets are exhibited for sale by retail dealers. Respondent also uses said names in advertising copy furnished to dealers buying said rugs and car:rets in the lh.anner and for the purposes hereinafter set forth. In truth and in fact, respondent's carpets and rugs referred to herein are woven on power looms in jts factories in the U l).ited .States. Said rugs are not made by hand. The individual threads are not knotted in the distinctive manner of the genuine Oriental rug. They do not possess all of the characteristics of the genuine Oriental rug, but do in £act so closely simulate genuine Oriental rugs in appearance, design, and texture that they are practically indistinguishable from1 them by a large portion of the purchasing public and, consequently, are readily accepted as being genuine Oriental rugs.

PAR. 6. In the fOUrse and conduct of its business, respondent has ~ngaged in the practice of furnishing to dealers buying certain of its ,rugs and carpets made as aforesaid, advertising copy which is intended to be, and is, inserted by such dealers in newspapers, magazines, and -other publications of general circulation among the purchasing public in the various States of the United States. Such advertisements contain numerous false and misleading statements which represent and imply that said rugs are in all respects reproductions and copies of genuine Oriental rugs. Among and typical of such statements are the following:

Gullstnn • • • the world famous Oriental reproductions that most people ~cannot tell from a hand-woven Oriental rug. Superb Persian r,eproductions • • • Jllndustan rugs. Persian reproductions • • • the Iranian rug. Mlrastan Oriental reproductions • • • see !IIIrastan and compare it with the costliest Persian rugs. You will be amazed at the similarity. In truth and in fact, said rugs are not exnct copies or reproductions 'Of genuine Orientals in structure, material, quality, or method of manufacture, but merely simulate Orientals in. appearance, texture, and design.

PAR. 7. The use by the respondent of the designations and representations as set forth herein in connection with the offering for sale, sale, and distribution of its said rugs and carpets has had, and now has, the tendency and capacity to confuse and mislead purchasers and 450 FEDERAL TRADE COM~fiSSION DECISIONS Findings 36F.T.C~ prospective purchasers thereof into the erroneous and mistaken belief that such representations and designations are true and correctt and to induce them to purchase said rugs and carpets on account thereof. The aforesaid acts and practices of respondent have the pffect of placing in the hands of retail dealers who purchase said rugs and carpets and resell the same to the purchasing public, means and instrumentalities whereby they may mislead and deceive the purchasing public in the particulars aforesaid.

PAR. 8. As a result of respon.dent'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 tlw District of Columbia of carpets and of rugs of various kinds, including both genuine Oriental and domestic rug:.;, 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 competitors in commerce among and between the various States of the United Stutes nnd in the District of Columbia. PAR. 9. The aforesaid nets and practices of respolHl<'nt as herein alleged 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 nets and practices in commerce within the intent and meaning of the Federal Trade Commission Act .. REPORT, FINDINGS AS TO TIIE FACTS, AND ORDER Pursuant to the provisions of the Federal Tmde Commission Act, the Federal Trade Commission on Srptember G, 10-10, issued and subsequently served its complaint in this proceeding upon the respondent, A. & 1\I. Karagheusian, Inc., a corporation, charging it with the use of unfair metholls 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 nnd the filing of respondent's answer thereto, test imony und other evidence in support of and in opposition to the allegations of said complaint were introduced before James A. }lurcell, a trial examiner of the Commission theretofore duly dt>signated by it, nnd said testimony and other evidence were duly recorded and filed in the office of the Commission. ThereaftH,. this proceeding rrgularly came on for final lwaring before the Commission upon said complaint, answer thereto, testimony, and other evidence, report of the trial examiner upon the evi<lence, briefs in support of the complaint and in opposition thereto, and oral argument of counsel; and the Commission, having duly considered the matter and being now fully advised in the premises, '·.. A.'' & M;. KARAGHEUS'IAN r. INC. 451 446 Findings 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 Tile FACTS Paragraph 1. Uespondent, A. & M. Karagheusian, Inc., is a corporation organized and existing under and by virtue of the laws of ' the State of Delaware, having au office and principal place of business at 2!)5 ~fifth Avenue in the city and State of New York, and having manufacturing plants at Freehold nnd Roselle, in the State of New Jersey. Respondent also has foreign offices in Tientsin, China, nnd throughout Persia.

PAR. 2. Respondent is now, and for several years last pnst has been, engaged in the business of manufacturing, distributing, importing, and selling various rugs and carpets. In the course and conduct of its business, respondent sells such rugs and carpets to various wholesale and retail dealers and causes such rugs and carpets, when sold, to be transported from its aforesaid places of business in the States of New York and New Jersey to purchasers thereof located in vari· ous Sta.tes 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 and carpets in commerce among and. between the various States of the United States and in the District of Col~mbia.

PAn. 3. In the course and conduct of its said business, respondent is now, and at all times mentioned herein has been, in substantial COI!Jpetition with other corporations and with firms, partnerships, and inj.ividuals engaged in the sale and distribution of rugs and cnrpets in commerce among and between the various States of the United. States and in the District of Columbia. Among such competitors ure many who do not misrepresent the nature of their prodnets or the place or metlwJ. of manufacture thereof und who do not furnish their dealer-customers with means or instrumentalities for misleading or deceiving the purchasing 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 Asia from Turkey to the Yellow Sea, including India, by hand and having a pile of wool or silk and wool, the threads of which are individually knotted in a special manner.

In general, Oriental 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 demand on the part of many of the purchasing public for such rugs. 452. FEDERAL TRADE' COMMISSION DECISIONS Findings l 36F.T.C. · Oriental rugs are not woven but are built, tied, or. knotted by hand, the knots being tied around the warp threads and the rows of knots held by weft threads. The knots or the thread ends thereof make the pile of the rug. Oriental handmade rugs are des\gnfl,ted by names which generally, but not always, ar~ geographic br tribal and, in noun or adjective form, indicative of actual geographic or tribal origin in the Orient. They are never made with hard back or 'vhite back. PAn. 5. During the periods indicated below, respondent used the names "Hindustan," "Iranian," "Mirastan," and "Gulistan" to designate certain lines of rugs in various sizes, patterns,·and colors: Hindustan rugs introduced July 1935; discontinued ,January 6, 1941. Mirastan rugs introduced August 1933; discontinued July 5, 1938. Iranian rugs introduced July 1939; discontinued April 4, 1940. Gulistan rugs were introduced about 1927 or 1928. The name was registered as a trade-mark on February 26, 1924, but for the first few years was used only on carpeting. Since the introduction of Gulistan rugs they have been continuously sold by the respondent until the present time and have constituted respondent's leading and most expensive line of domestic rugs.

All of sad rugs were woven on power looms in respondent's factories in the United States. They were not made by hand, and the individual threads were not knotted in the distinctive manner of the Oriental rug. They did not possess all the characteristics of Oriental rugs. Some were, in pattern and design, copies so far as possible where power looms are used, of specific genuine Oriental rugs, and others l1ad patterns and designs which embodied Oriental designs, motifs, colors, and treatments adapted from genuine Oriental rugs, and, in addition, some of respondent's Gulistan rugs embodied 18th century French designs.

All respondent's rugs are "washed," that is, subjected to a chemical treatment to impart a luster or sheen, which is one of the desirable characteristics of the genuine antique Oriental rug. The very great portion of knotted Oriental rugs have for many years been "washed" for the same reason and in a generally similar manner. The :Mirastan rugs were so woven that the colors and patterns showed through on the back of the rug, a feature which was, until about 1927, found only in certain carpets and in genuine Oriental rugs.

The Hindustan and Iranian rugs had the so-called hard back or white back, which is common in the United States to both the Wilton . and Axminstcr process of manufacturing rugs and carpets, and the patterns and colors of the face did not show through on the back. , A. &. M •• URAGHEUS'IAN1 INC. 453 446 , .Findings Gulistan rugs, until January 6, 1941, were so woven that the colors and patterns showed through on the back of the rugs, a feature of genuine Oriental rugs. Since January 6, 1941, all Gulistan rugs have had the so-called hard back or white back, and the patte:ms und colors of the face do not show through on the back. The £aces o£ the Hindustan, Iranian, Mirastan, and Gulistan rugs (other than Gulistan rugs of French design) had many points of resemblance in design, color, and general appearance to genuine Oriental rugs.

PAR. 6.. The name ."Iranian" is synonymous with "Persian," Iran being the modern name of Persia. Persia has for centuries been identified with Oriental rugs as one of the places of origin thereof, and many Oriental rugs are described and known simply as "Persian." Hindustan is a district of India, a country in which genuine Oriental rugs are. produced, and various rugs made in the district are known and described simply as "Indian." The name "Mirastan" is a coined word, the last syllable of which is the Persian word for "place." The name "Gulistan" is made from two Persian words meaning "place of roses" or "garden of roses." There are no genuine Oriental rugs known as "Gulistan." Many genuine Oriental rugs are known by names the final syllable of which is "stan"; for example, "lleluchistan," "Kurdistan,'l "Laristan," "Cabistan," and "Daghestan." PAR. 7. In the labeling of its Iranian, llindustan, and Mirastan rugs, it was customary for the respondent to use two labels-one pasted or attached to the back of the .rug, usually on the right-hand corner, and a second label sewed on to the same end of the rug so that the label protruded beyond the rug. On all its labels except the ones attached to the back of the Ilindustun aml l\Iirastan rugs appeared the words ''l\Iade in U. S. A." and on the labels on the back of the Ilindustan and l\Iirastan rugs appeared the statement "An American Product." However, the terms "l\Iade in U. S. A.'' appeared either in small letters at the top of the label or in printing closely corresponding to the color of the label so as to be almost indiscernible except by very close examination. The terms "An American Product" appearing on the two rugs as. stated are in dark letters closely corresponding to the color of the label and are not readily discernible upon examination. All of said labels contain the statement "l\Iade by the makers of Gulistan." In the labeling of its Gulistan rugs respondent has on occasion placed a. label upon the back of said rug and a label sewed onto the end of the rug, extending beyond the rug, and in some cases has labeled said rugs only by the label placed on the back of the rug. FEDERAL TRADE COMMISSION . DECISIONS Findings 36F.T.C.

In its earlier label, it has used some labels 'Without any statement that the rugs are made in the United States and others which cont<:tin the term ".Made in U. S. A.'' or some similar statement, at times rather difficult to discern. In its later labeling, however, the respondent has more or less prominently displayed the terms "Made · in U.S. A." and other terms of similar import. PAn. 8. In connection with the advertising of said rugs, the reflJOndent has featured the name "Gulistan" and in the context of the advertisement usually discussed the method of manufacture of its Gulistan rugs and the patented process developed by the respondent in such manufacture.

PAR. 9. Respondent has also for several years last past designated <:certain carpets manufactured by it on power looms in its factories in the United States by the name "Gulistan." They are what are generally anti commonly known as roll carpets or broadloom carpets. They have the thick, Ro-called hard back or white back, which is common in the United States to both the Wilton and Axminster processes of manufacture of rugs and carpets, and the patterns and colors of the face uo not siww through on t.he back. These carpets are made in a variety of designs and patterns and in plain colors. The patterns and designs ure not copied from genuine Oriental rugs nor do they involve Oriental designs, motifs, colors, or treatments adapted fr.om genuine Oriental rugs.

PAR. 10. The use by the respondent of the word "Hindustan" to designate certain of its rugs constitutes a representation that the rugs so designate<l are true Oriental rugs in all respects, made in India by hantl. In like manner the use of the word "Iranian" to designate or describe certain other of its rugs is n reprcsrntation that the rugs so designated are true Oriental rugs in every respect, made in Persia or Iran by hand.

The use of the word "Mirastnn," together with the manner in which £->aid rug was labeled by the respondent, has the capacity und tendency to cause the purchasing public to believe that such rugs are in fact true Oriental rugs in all respects, made in the Orient by hand. PAn. 11. In the c(mrse and conduct of its business, respondent has engaged in the practice of furnishing to dealers buying its rugs, advertising copy which wns intended to be, and was, inserted by such dealers in newspapers and magazines and other publications of general circulation among the purchasing public. Contained in certain of such nd vertising copy were one or all of the following statements: Gulistun -- the world famous Oriental reproductions that most people cannot tell from a hand woven Oriental rug. Superb Persian reproductions • • • IIindustan rugs. A. & M. KAR.AGHEUS1IAN, INC. 45fi •'j•, 446 Conclusion Persian reproductions * * * the Iranian rug. Mirastan Oriental reproductions * * * see Mirastan and compare it with the costliest Persian rugs. You will be amazed at the similarity.

The rugs to which the foregoing statements refer were woven on power looms. Some of them in color and pattern followed as closely as is possible when respondent's method of power-loom weaving is used, but not exactly, the colors and patterns of original handmade rugs from the Orient. Such rugs were made in the same size as the original rugs and in sizes smaller or larger than the original. Some of said rugs were, in color and pattern, adaptations, and combinations of colors, motifs, and patterns found in various genuine Oriental rugs. The manufacture of these rugs did not involve the copying of the color and design of any particular single genuine Oriental rug, and the designs of these rugs as a whole were entirely new. Respondent's rugs are not reproductions of Oriental rugs in structure or method of manufacture but merely simulate Oriental rugs in appearance. PAR. 12. The use by the respondent of the designations and representations as set forth herein in connection with the offering for sale, ~ale, and.distribution of its said rugs has had, and now has, the tendency and capacity to confuse and mislead purchasers and prospedive purchasers thereof into the erroneous nnd mistaken belief that Euch representations and dl'signations are true and correct, and to induce them to purchase said rugs on account thereof. The aforesaid acts and practices of the respondent have the effect of placing in the hands of retail dealers who purchase said rugs and re:;ell them to the purchasing public, means and instrumentalities whereby they may mislead and deceive the purchasing public in the particulars aforesaid.

As a result of respondent's said acts and practices, trade has been unfairly diverted to the respondent from its competitors engaged in the sale in commerce between nnd among the various States of the United States and in the pistrict of Columbia of rugs of various kinds, including Loth genuine Oriental and domestic rugs, who truth. fully represent their prollucts.

CONCLUSION • The aforesaid arts and practices of the respondent as herein found are all to the pr£>judice and injmy of the public and of r£>spondent's (.ompetitors and constitute nn fair methods of competition in commerce and unfair and deceptive acts and pructicl's in commerce within the intent and meaning of the Federal Trade Commission .Act. Order 36F.T.O.

ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commis· sion on the complaint of the Commission, answer of the respondentr testimony and other evidence in support of and in opposition to the &.llegations of the complaint taken before a trial examiner of the Commission theretofore duly designated by it, report of the trial examiner upon the evidence, briefs filed in support of the complaint and in opposition thereto, and oral argument of counsel; and the Commission having made its findings as to the facts and its conclusion that said respondent has violated the provisions of the Federal Trade Commission Act.

It is ordered, That the respondent, A. & M. Karagheusian, Inc.r a corporation, and its officers, representatives, agents, and employ· ecs, directly or through any corporate or other device in connection with the offering for sale, sale, and distribution of rugs or carpets in commerce as "commerce" is defined in the Federal Trade Corn· mission Act, do forthwith cease and desist from: 1. Using the words "Iranian" or "Ilindustan" or any other word indicative of the Orient, to designate or describe rug~ which are not in fact made in the Orient and which do not possess all the es· ~ential characteristics and structure of Oriental rugs. 2. Using the word ".Mirastan" or any other word or combination of words or syllables, coined or otherwise, which are indicative of the Orient, to designate or describe rugs which are not in fact made in the Orient and which do not possess all the essential char· ueteristics and structure of Oriental rugs. 3. Using the word "reproduction" or any other word of simi· lar import or meaning to designate or describe rugs which are not in fact reproductions of genuine Oriental rugs in all respects, in· cluding structure, method of manufacture, and material. It i& further ordered, That no provision of this order to cease and desist shall be construed as prohibiting the respondent from using the term "Gulistan" to designate or describe its rugs and carpets, provided there is used in immediate connection or conjunction therewith a statement which clearly and conspicuously states in uppropri· ate terms that the rugs and carpets so designated and (V:'scribed are woven on power looms jn the United States.

It is furtlter 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 has complied with this order, ' ATM{)RAY, INC., ET. AL. 457 Syllabus IN TIIE MATI'ER OF AT.MORAY, INC., AND ATMOZONE COMI'LAIN1', FINDINGS, AND ORDER IN REGARD TO Tile ALLEGED VIOLATION OF SEC. ~OF AN ACT OF CONGRESS APPROVED Sell. 26, 1914 Doclcet 4630. Complaint, Nov. 13, 1941-Decision, .Apr. 2, 1943 Where two corporations engaged in the manufacture and interstate sale and distribution of their "Atmoray" electric ozone generator, which was intended for the treatment of various ailments and diseases through use by the lay public In the home withoJ]t medical supervision- (a) Uepresented, through advertisements di:;;seminated by radio and by circulars, leaflets, pamphlets, and other advertising literature, including purported testimonials, that their device constituted a remedy or competent treatment for many specified ail~ents and diseases, including sinusitis, asthma, hay fever, tuberculosis, respiratory diseases generally, blood uiseases, kidney and liver trouble, diabetes, rheumatism, and cancer; and (b) Represented, as aforesaid, that their said device was an effective oxiuizing, germicidal, and disinfecting agent;

The facts being that ozone is without therapeutic value in the treatment of the diseases and conuitions mentioned, or any others; does not constitute, in the concentration supplied, an effective oxidizing, germicidal, and disinfecting agent, and a concentration sufficiently high to be effective for such purpose, would break down and destroy tissues and cause serious injury, and in some cases denth; and the ~;oncentration orulnarlly produced by the machine was capable of causing rather serious irritation of the respiratory organs, particularly if breathed continuously over an extended period; and (c) Failed to reveal facts material in the light of the representatloll.S contained in their said advertisements and with respect to consequences which might result from the use of said device under prescribed or usual conditions, tn that they failed to reveal the several fnetors which must be considered in determining the safety of the ma(·hlne, Including Its output, the 1;lze of room In whi<·h opPratt•d, vcntllntlou, nnu leug1h of time machine Is oporntt>d; that concentration rPsplrcd should not be permitted to exceed one-half part of ozone to a million parts of nlr; that care shouhl be taken by user to avoid proximity to the muchlne while in opt>ratlon: anu that Inhalation of an t>xcessive amount of ozoue mny 1'!'sult In irritation of the rPsplmtory organs; With tendency and cnpaclty to mislead and decf'i\'e a substantial portion of the pm·cltaslng public with respect to the therapeutic properties, value, and safety of the de,·ice In question; thereby causing purchase thereof In substantial quantities, because ot such mistaken belief: Held, That sueb nets an<l prnetict>s, under the circumstances set forth, were all to the prl'judice of the public, anu conslltuted unfair and deceptive acts and practices in commerce.

As respects the making, as allf'ged, of false and misleading rf'presentntlons ln advertisements with respect to tl•e thernP<•ntlc value ot a machine, the function of which was to generate ozone from the oxygen In the nlr electrically, and which was intended for lay use In the home without meulcal supervision In the treatment and cure, ns ns~>erted, of a large nun1ber of ailments, dls- 52R713-43-,·ol. 36--32 458 FEDERAL TRADE CO:MMISSION DECISIONS Complaint 31JF. T. C. eases, and conditions: The testimony of a number of members of the public with respect to beneficial results allegedly obtained by them from use or the machine, Including that of a natur·opnth who usP!l It os an ndjnnct along with other treatment, and of lay witnesses dealing with alleged cures for many dl1rerent types of diseases, some of the most serious nature, was In such .direct conftlct wlth recognized medical and scientific opinion that its correctness was open to ser·\ous question, and, In view of all the evidence, was not sufficient to overcome the expert testimony, Including that of three witnesses, I. e., a practicing physician who was a specialist In physicnl therapy, a professor of pharmacology, and a ]JroJ'essor of biochemistry. Before Mr. Lewis C. Ru.ssell, trial examiner. 11/r. Jesse D.J{ash for the Commission.

Coan & Rosenberg, Mr. lV·illiam M. Stone and Mr. Li-vy Stipp, of Oregon City, Oreg., for Atmozone.

CoMJ'LAI~T 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 Atmoray, Inc., a cor- .poration, and Atmozone, Inc., a corporation, hl•reinafter referred to as respondents, ha\·e violated the provisions of said act, and it appearin~ to the Commission that a proceeding by it in respect thereof would be jn the public interest, hereby issues its complaint. rotating its charges in that respect as follows:

PARACRAPII 1. Respondent, Atmoray, Inc., is a corporation, created by and existing under the laws of the State of Oregon, with its principal office and place of business located at 408 Northeast Thompson Strel't, in the city of Portland, State of Oregon. Atmozone, Inc., is a -corporation, created by and existing under the laws of the State of Dn·~on, with its principal office and place of business located in the Beavrr Building, in the city of Oregon City, State of Orrgon. PAR. 2. Uespondent, Atmozonc, Inc., is now and for more than 3 yrars last past has been engaged in the manufacture of a device known as "Atmoray," an ozone gen(~rator which is intended for use in air -conditioning, in the elimination of obnoxious odors, and in the treat· ment and prevention of diseasrs. The respondent, Atmoray, Inc., bas the ('Xclusive sales rights in said device and for more than 3 years last pa:;t has engaged in its sale and distribution. Uespondents cause Mid device, whrn sold, to be transported from their said places of busint'SS in the State of Orrgon to the purchasers ther('of located in otll('r States of the United States nnd in the District of Columbia.

AT.M:ORAY, INC., Er. AL. • 459 ·457 Complaint Respondents maintain, and at all times mentioned herein have maintained, a cour~e of trade in commerce among and between the various States of the United States and in the District of Columbia. PAR. 3. In the cour~e and conduct of their aforesaid business respondents have disseminated and are now disseminating, and have ·caused and are now causing the dissemination of, false advertisements ·concerning their said device, Ly United States mails, by pamphlets, newspaper advertising-, and by radio broadcasts having an interstate reception, and through sales Iepresentatives, and by other means in ·commerce as commerce is (}('fined in the Federal Trade Commission Act, n11d have disseminated and are now disseminating, anu have ·causeu and are now causing the dissemination of, false advertisements concerning their said device by various means for the purpose of inducing and which are likely to induce, directly or indirectly, the purchase of their said device in commerce as commerce is defined in the Federal Trade Commission Act. Among and typical of the false statements and representations contained in said advertisements disseminated and caused to be disseminated as aforesaid are the following:

ATMOHAY-'hin O~LY !'HOVEN THEllAPEU'l'IO OZONE MACHINE ATl\IOHAY-TIIEl SYl\Into m• HEALTH • • • generator ot cllt'mif'ully pure ozone, in quantlti£•s suftlcl(•ntly lnrge to be thoroughly t>flt>ctlve In the destruction of odors, toxic gases and disease bacteria.

As a mean~ of rPllevlng lllnes!!.-:\[edlcal authorities claim that approximately DO% ot all lllnesse>~ from which humanity suflers are due to an impure blood ·Rtt·rnm. It It were posslllle to (•llnllnnte these Impurities from the lllood and to maintain n pure blood fltreum, bettf·r health would result. Atmorny is a very Pt'nctltal mPnns of doing just that. • The rny emanating ft·om the .Atmoray G<.'n<'rntor, In <'mubinntlon wllh the -ozone Is tlint whi<'h mukf'!l thfs n»toundtrrg little lustrnm<'nt of Ju•alth flo l'alunble. DlsPn~<e germs or uny kind n1·e completely eliminated when coming Into <'ontnct with ozone.

no yon nctunlly want relieC from ~lnu~. Colds, Asthma or any one- ot the host ot diseases that £'mnnate from an Impure !Jiood stream? H you do, you will find Atmoray rf'ndy to do its job in restoring health. Wbut Is Atmoray? It Is a rrentor ot Df'W oxygen In the form ot ozone. It Is tlendly to gf'rms. It Is health.

Arc there days when you wake up just plnln, all Jn? Do you sutrer from low{•rt'<l phy~kal resistance, Con!itlputlon, Nenousrwss or Insomnia? Give us an opportunity to llelp you with Atmoray. It emanates the es~entlals of Ute that hnw• slowly hPl'n takrn owuy from people down through the yPnrs. 'fhe value ut this Atmoray has br£'11 recognized as u therapeutic mcn~ure for ll tx•rlod or time nnd nov Atmorny brings this vulnernble rny to your home. The he11lthful qual!tl.-s of Atmoruy nre fur more \'Ulunble than dollars nnd cents. Ozone, lu it~~t•lt, Itt the most drectlve oxidizing, gerrulcldul, dlslntertlng, and -deodorizing agent known.

• FEDERAL' TRADE' CO:MMISSION1.DECISIONS460 Complaint 30F.T.C.

.Atmoray not only produces ozone.. but with it an. invisible .ray, that acts directly on the human organism.

The di:rect action of ozone is its attack on the impurities of the blood stream aml while eliminating the Impurities it builds and increases th(l red blood cor· puscles. The ray from the Atmoray has an intensive penetrating quality bY which it carries the ozone with it directly to the a1Iected part of the anatomy· Back goes vitality to the body. Out goes injurious bacteria. The b\]man system undergoes revitalization, the nerve,s relax, the blood purifies * * *. "The conditions that I would mention especially as being most amenable t~ this (Ozone) treatment are such as Neurasthenia, Melancholia, Insomnia, Hay Fever, Bronchitis, early stages of Pulmonary Tuberculosis, Anemia, Dyspepsia, Constipation, Headache, inactive Liver or Kidneys, and Syphilis ln -any stage. and I would say that it is a most valuable adjunct to surgjcal, electrical and ower procedures for the relief or cure of organic disease." A. J. Welch, Jennings Lodge, Oregon, states that he has been relieved of kidney and prostate trouble.

E. E. Limbaugh, Gladstone, Oregon, states that he was completely· relieved o! sugar diabetes.

Mike Boushley, Oregon City, Oregon, states, ''I :wish ta add. myAtesthnony t~ the value of your machine. I ha.ve su~ercd from rheuma1;ilm nncl arthritis tor two years and the treatments have giv~n me intmcdiate:relief." • A. II. Bronson of Oregon City, Oregon, states, "I su1Iered with a large cancer ln my jaw which was exceedingly painful. After taking treatments from your machine 1t was. compl~tely absorbed nnd l experienced no puln or dillcomfort from it. I recommend this treatment very highly for all cuse~;~ ot (!ancer." Mrs. Leslie Smith, 10047 S. E. Harold Street, Portland, Oregon. "This is to state what the Atmoray machine has done for my husban1l. He bud ulcers of the stomach so bud that he couldn't ~at hardly anything and was on 11 strict diet. Also had a serious operation In 1036. After taking 12 or more treatments be is able to eat almost anything and notice a big lmproverm•nt In his stomach." PAR. 4. lly the use of such advertisements and representations aforesaid, including the reproduction and publication of letters and testimonials concerning said device, and by other and similar advertisements and methods not herein set forth, respondents repre~nt and have represented that the said device, designated as Atmoray, is efficacious in the treatment, cure or alleviation of sinusitis, syphilis, head colds, colitis, neuritis, rheumatism, arthritis, run-down conditions, headaches, asthma, ulcers of the stomach, kidney and prostate gland trouble, liver and bladder infections, infectious diseases, cataracts, heart trouble, pneumonia, tuberculosis, respiratory diseases, blood pressure, hay fever, cancer, weakness, sugar diabetes, deafness, blood diseases, defective eyesight, paralysis, bronchitis, and blood poisoning, and constitutes a competent and effective treatment for such condi· tions. Said device also has been and is represented as an effective oxidizing, germicidal, disinfecting, and deodorizing a~nt. PAR. 5. The aforesaid representations and claims used and dissen1· inated by the respondents as hereinabove described are grossly exag· gerated, misleading, and untrue. In truth and in fact, the use of said A.TMOR:AY; lnc., ,ET• .AL• 461. Complaint.:

·device does not an.d.cannot-constitut&·an effective treatment.or ,cure or remedy for sinusitis,,syphilis, head colds; c9litis, neuritis,. rheumatism, ttrthritis, run-down conditions, headaches, asthma, ulcers of the stom· ach, kidney and ·prostate ·gland trouble,· liver1 and,bladder... infections, infectious diseases, cataracts, heart trouble, pneumonia, tuberculosis, respiratory diseases, blood pressure, hay fever, cancer, weakness, sugar -diabetes, deafness, blood diseases, defective eyesight, paralysis, bron· chitis, and blood poisoning, nor does it have any therapeutic value in the treatment of such diseases or conditions. Furthermore, said device is of no therapeutic value in the treatment of any disease or condition, nor is it an effective oxidizing, germicidal, disinfecting, and deodorizing agent.

PAR. 6. The respondents' advertisements disseminated as aforesaid constitute false advertisements for the further reason that they fail to reveal facts material in the light of such representations, or material with respect to consequences which may result !rom the use of the device to which the advertisements relate under the conditions described in said advertisements, or under such conditions as are <mstomary or usual.

In truth and in fact, ozone, the gas which the respondents represent as being produced from said device, is a very poisonous and dangerous gas, and if a dilution of such ozone with air equals one part of ozone to two-millionths part of air, the breathing of such air gas mixture is dangerous to health and may cause severe irritation and inflammation of the entire respiratory tract. The density of such an air gas mixture will depend upon the output of ozone from said device, the circulation of the ozone in the air, the size and ventilation of the room in which said device is placed, and other factors. If the production of ozone by said device und the resulting dilution of ozone with air is less than that stated above,!such concentration would be of no therapeutic value. PA.R. 7. The use by the respondents of the foregoing false 1 deceptive, and misleading statements, representations, and advertisements dis· seminated as .aforesaid, with respect to said device, has had and now has the capacity and tendency to and does mislead and deceive a substantial portion of the purchasing public into the erroneous and mis· taken belief that such false statements, representations, and advertise· :rnents are true, and that respondents' device will accomplish the results indicated, and induces a substantial portion of the purchasing public, because of such erroneous nnd.mistaken belief, to purchase units of respondents' said device in substantial numbers. PAn. 8. The aforesaid nets nnd practices of the respondents as herein alleged are all to the prejudice and injury of the public and constitute, 462 FEDERAL TRADE COMMISStON DE'CISIONS Findings ' 36F.T.C.

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, ANP ORDER I Pursuant to the provisions of the Federal Trade Commission Act r the Federal Trade Commission, on November 13, 19·11, issued and subsequently served its complaint in this proceeding upon the respondents, Atmoray, Inc., a corporation, and Atmozone, a corporation, charging them with the use of unfair and deceptive acts and practices in commerce in violation of the provisions of that act. After the filing of respondents' answers, testimony, and other evidence in support of the allegations of the complaint were introduced by tbe attorney for the Commission, and in opposition thereto by the attorney for respondent Atmozone, before a trial examiner of the Commission theretofore duly designated by it, and such 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 the complaint, the answers thereto, testimony, and other evidence, report of the trial examiner upon the evidence, and briefs in support of and in opposition to the complaint (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 dmwn therefrom. :nXDIXOS AS TO TIIF. J:o'.\CTS PARAGRAPH 1. Respondent, Atmorny, Inc., is n corporation org-anized nnd n:isting under the laws of the State of Oregon, with its principal office and place of business located at 408 Northeast Thompson Street, Portland, Oreg. Uespondcnt, Atmozone (referred to in the complaint as Atmozone., Inc.), is a corporation, organized and <'existing under the laws of the State of Oregon, with its principal office and place of Lusiness locateu at 2140 Northeast Union .A\'enue, Portland, Oreg. Uc!'pondent, .Atnwzonl', is now, and for a mnnher of years last past has been, ('JJgagPd in the manufactnrl' nn<l in the ~ale' n111l distribution of n mcc·hanical dl'vic(' known ns "Atrnoray," nn ozone gt'nl'rator in· f.('nded for use in the trPntnwnt of vnrions ailments und tliseaS('s of the human holly. HPspowlt•nt, AtJuo•ny, Inc., t hron~h an agreot'lllent with respowlC'ut, Atmozone, ltt'ld the exelnsi\'1' sales rights to the devicl' fm· n perio<l of some a years, nntl during buch pl'riotl w:l~ engaged in the sale and distribution of the device. ATMOR'AY, L~C:, ET. AL. 463 457 Fin<Ungs PAR. 2. Respondents cause or have caused their device, when sold, to be transported from their places of business in the State of Oregon to purchasers therl:'of located in various other States of the United States and in the Distrid of Columbia. Respondents maintain or have maintained u course of trade i'n their device in commerce among and between the various States of the United Stutes and in the District of Columbia.

PAn. 3. In the course and eon<luct of their businl:'ss, and for the purpose of inducing the purchase of their device, the respondents have dissemiuated aml have caused the dissemination of advertisenwnts conct:>rning their device by the Unitetl States mails and by various other means in commerce, as "commerce" is defined in the Federal Trade Commission Act; and respondents have also disseminated and have caused the dissemination of a<herti,;ements L'Oncerning their device by various means for {he purpose of inciucing, and which were likely to induce, di1·ectly or indirectly, the purchase of their device i!) commerce, as "commerce" is define<l in the Federal Trade Commiskiion Act. Amo11g nnd typical of the statemcn,ts and representations contained in such adrertiscments, disseminated and caused to be disseminated as herein set forth, by the United States mails, by radio continuities, nnd hy circulars, leaflets, pamphlets, and ot.hpr achertising Iiteratur~, nre the following:

ATMOUAY-TIIE ONLY rnOVEN TIIEllAl'EUTIC OZONE MACIIINE As a means of relieving lllness.-1\Ieulcul authorities claim that approximately fJO% O( all lliUeSt;('S from Which humanity tmtfers Ure due to an impure blood Htrenm. It It were pos.~Ible to ellmlnnte thrse impurities from the blood and to nutlntuln a pure blood strrum, better health would re>sult. Atmoroy is a very J•ru<:tlcnl mr1l11S uf doing just that. • • • (Com. Ex. No.4) ATMOUAY-TIIE SY!\lUOL O.li' IIEALTU • • • ge>nerntor of clwmlrnlly pure ozone In qunntltl!'s suffielrntly large to be thoroughly en'ectlve in the dPstmctlon of • • • di~t>n~e ilacterlu. • • • (Com. Ex. No.4) The ray em·anntlng from the Atmorny Geuerutor, In combluatlon with the ozone, Is what makes this nstounding little Instrument of health so valuable. (Com. Ex. No.13) • • • Disease g(•rms of any kind are completely ellrulnnte>d when coming In rontnct with Ozone. (Com. Ex. No. l) • • • Do you actually want relief from Sinus, Coltlf!, .Asthma or any one ot the host of dlsenses that £>mnnnte from. an Impure blood strl'nm? It you do, You will find .Atmor11y rl'ndy to do Its job In restoring be>nlth. • • • (Com. Ex. No. 11) Whnt Is Atmorny? • • • It 1~ 1lPndly to grrm!'!. It Is a cre>ator of m·w oxygen In the form of ozone. • • • It ls nEALTil. (Com. Ex. No. 11) 464 FEDERAL TRADE COMMISSION. DECISIONS Findipgs. 36F. T.C.

Are there days when you wake up just plain all In? Do you suffer from lowered phy~ical resistance,. constlpatJou, nervousness, or insomnia? • • • Give us an opportunity to help you with Atmoray. • • • It emanates the essentials of life that have slowly been taken away from people down through the years • • •. The value of this ray has been recognized as a therapeutic meusure for a period of time and now Atmoray brings this Taluable ray to your home. The healthful qualities of Atmoray are far more valuable than dollars and cents. • • • (Com. Ex. No. 11) • • • Ozone, in itself, is the most effective oxidizing, germicidal, disinfect- Ing • • • agent known • • •. (Com. Ex. No. 2) • • • Atmoray not only produces ozone but with it an invisible ray that acts directly on the human organism. • • • (Com. Ex. No. 1) • • • the direct action of ozone • • • is lts attack on the Impurities of the blootl stream and while eliminating the lmpurlth's it builds and increases the red blood corpuscles. The ray from the Atmoray bas an intensive penetrating quality by which it carries the ozone with it dirrctly to the affrctrd part of the anatomy. Back goes vitality to the body. Out goes injurious bacteria. The human system undergoes revitallzutlon, the nerves relax, the blood purifies • • •. (Com. Ex. No. 1) "The conditions that I would mention especially as b('{ng most amenable to this (Ozone) treatment are such as Neurasthenia, Melancholia, Insomnia, Hay Fever, Dronehltls, curly stages of Pulmonary Tuberculosis, Anemia, Dysprpsla, Constipation, Ill'adache, Inactive Liver or Kidneys, and Syphilis In any stage, and I woultl soy that it Is a most valuable adjunct to surgical, electrical and other proceclures for the relll't or cure of organic uiscose." (Com. Ex. No. 1) "A. J. Welch, Jennings Lodge, Orrgon, states that he has been relieved of kldnPy anu prostate trouble." (Com. Ex. No. 2) "E. E. Limbaugh, Glaustone, Oregon, stlltrs that he was completely relieved of sugar diabetes." (Com. Ex. No. 2) !\!ike Boushley, Oregon City, Orrgon, statrs "I wi~h to add my testimony to the value of your machine:>. I have sutrered from rheumatism and arthritis for two years and the trratmPnts have given me Immediate relict." (Com. Ex. No.2) A. 11. Bronson of Ort-gon City, Ort'gon, states, "I suiTerrd with a large cancer In my jaw which was exceedingly painful After taking treatments from your machine It wns completely absorbrd and I exprrlcncl'd no pain oor discomfort from it. I recommend this treatmt>nt vl'ry highly fur all cases of cancer." (Com. Ex. No. 2) 1\Irs. Lrslle Smith, 10047 S. E. Harold Strert, Portland, Oregon. "This b to state what the Atmorny mncbine has done for my husbund. I1e had ulcers of the stomach so bad that he couldn't eat hnruly anything and was on a strict diet. Also had a serious o[J(•rntlon In ]!)3(3, After taking 12 or more treatments he is able to eat almost anyt11lng and notice a big Improvement In his stomach." (Com. Ex. No. 2) JlAn. 4. Through the use of these representations, including the publication of letters and testimonials recein~d from persons purchas· ing their uevice, nnd throu~h the use of oth<'r nnd similar representn· tions, respondents have represented, directly or by implication, that their device constitutes n cure or remeuy, or a competent and effective treatment, for various ailments, disorders, and diseases of the humn.n ATMORAY1 INC., ET. AL. 465 457 Findings body, including sinusitis, head colds, asthma, hay fever, bronchitis, tuberculosis, pneumonia, respiratory diseases generally, dyspepsia, constipation, colitis, nervousness, melancholia, insomnia, neurasthenia, weakness, run-down conditions, anemia, blood poisoning, blood discases, hea<laclJe, inactive liver or killneys, kidney and 'prostate gland trouble, liver and bladder infections, infectious diseases generally, ~yphilis, sugar diabetes, rheumatism, arthritis, neuritis, paralysis, cancer, ulcers of the stomach, heart trouble, cataracts, defective eyesight, and deafness; and that respondents' device is an effective oxidizing, germicidal, and disinfecting agent. l)AR. 5. Uespondents' machine is an ozone generator, its function being to generate or manufacture ozone from the oxygen in the air. lt is operated by ·electric current. The machine is intended for use by the lay public in the home without medical supervision. Otone is a very active form of oxygen. Ordinarily, the oxygen in the air is made up of two atoms of oxygen to each molecule, and is known in chemistry as "02." Ozone, however, is made up of three atoms of 'oxygen to each molecule, the atoms being linked in a rather loose combination. It is highly reactive with the tissues of the human body and with organic substances generally.

During the course of the hearings there were introduced, nt the instance of the Commission, three expert witnesses, one being a practicing physician who is also a specialist in physical therapy, the second a professor of pharmacology, and the third a professor of biochemistry. The testimony of these witnesses establishes that ozone is without therapeutic value, that it has never been regarded in medical science ns a therapeutic agent. It is wholly indfectual in the treatment of any of the ailments or disorders for which it is recommended by respondents. It is not a cure or remedy for, nor does it possess any therapeutic value in the treatnwnt of, sinusitis, head colds, asthma, hay fever, bronchitis, tubcrculoi:iis, pneumonia, respiratory diseases generally, dyi:ipepsia, constipation, colitis, nervousness, melnncholin, insomnia, neurasthenia, 'weakness, run-down conditions, anemia, blood poisoning, blood disl'ases, headache, inactive liver or kidneys, kit.lney and prostate gland trouble, livl'r and bladder infections, infectious diseases gl'nerally, syphilis; sugar diabetes, rheumatism, arthritis, nl'uritis, paralysis, cancer, ulcers of the 'stomach, heart trouble, cataracts, rlefcctive eyesight, or deafness. Nor does it possess any therapeutic value in the treatment of any other rlisease or disorder of the human body.

Nor does ozone, in the concentration supplied by respondents' machine, constitute nn effective oridizing, germicidal, or disinfecting agent. "'while ozone in sufficiently high concentrations (beginning with DECISIO~S 466 FEDERAL TRADE COMMISSION Findiog8 36 F. T. C. concentrations of 15 parts of ozone per 1,000,000 parts of uir) is capable of oxidizing organic substances and destroying bacteria, concentrations sufficiently powerful to effect such results will at the same time break down or destroy human tissue and cause f;erious injury, and, in some cases, death. In fact, ozone is one of the most powerful of the known gases, including the gases used for war purposes. It is particularly irritating to the mucous membrane of the re!'piratory organs. The concentration of ozone ordinarily produced by respondents' machine is from one to two parts of ozone per 1,000,000 parts of air. This concentration is capable of causing rather serious irritation of the respiratory organs, particularly if breathed continuously over an extended period of timt.>. The exact amount of ozone respired by a user of the machine will depend upon a number of factors, including the output of the particular machine Nied, the size of the room in which the machine is operated, the ventilation, and the length of time the machine is operated. In no event should the concentration respired be pt>rmitted to exceed one-half part of ozone per million parts of air. Care should also be taken by the user to avoid proximity to the machine while it is in operation.

In support of their representatiolls, respondents introduced the testimony of a practitioner of naturopathy who had used respondents' machine in his practice, and the testimony of a number of members of the public who testified to beneficial results all<'ged to have been obtained by them from the use of the machine. The record further shows, however, that the naturopath had used the machine merely as an adjunct along with other treatment, and it is questionable whether the beneficial results obtained in the several cases referred to were due to the machine or to the other t1·eutinent. 'With re:;pect to the lay witnesses, whose te:-.timony dealt with alleged cures for many different types of disease, some of a most serious nature, the Commission is of the opinion that this testimony is in such direct conflict with recognized medical nnd scientific opinion that its eorrectnc!oiS is open to serious question. After1· consideration of all of the evidence introdueed at the instance of respond<'nts, the Commis!-iion fintls that such evidence is insuflicient to oven·ome tlle expert testimony in the reeortl. PAR. 6. The Commis~ion therefore finds that the representations made by respondents with respect to their device, as ~et forth in paragraphs 3 an<l 4 hereof, are erroneous, mish•ading, nn<l deceptive, and constitute fal~e ad rerth.. ements.

PAn. 7. The Commission flmls, also, that respowlents' advertisl'ments are false for the further reason that they fail to reveal facts material in the light of the representations contained therein, and material with ,:.. . .A:I'MORAY, INC., ET, AL. 467. 457 ' .• Order rt.>spect to consequences which may result from the use of respondents' device under the conditions prescribed in such advertisements or under such conditions as are customary or usual. The advertisements fail to reveal the several factors which must be considered. in determining the safety of the machine, that the concentration of ozone should not be permitted to exceed one-half p:nt of ozone per 1,000,000 parts of air, that proximity to the machine should be avoided, and that the inhalation of an excessive amount of ozone may result in irritation of· the respiratory organs.

PAR. 8. The use by respondents of these false advertisements has the tendency and capacity to mislead and deceive a substantial portion of the purchasing public with respect to the therapeutic properties and value of repondents' device and with respect to the safety of such device, and the tendency nnd ((apacity to cause such portion of the public to purchase substantial quantities of respondents' device as a result of the erroneous and mistaken belief so engendered. PAR, 9. Uespondents have ttlso represented their device to be an effective deodorizing agent, and the complaint charged. that such repre~ sentations were false and m..misleading. The evidence adduced on this issue is not sufficiently clear to enable the Commission to make a definite finding thereon, and the Commission is therefore of the opinion and finds that the .complaint should be dismissed as to this point without prejudice to the right of the Commission, should the facts so warrant, to reopen the proceeding or to institute a new proceeding on such point. COXCLUSION The acts and practices of the respondents as herein found. are aU to the prejudice of the public anrl constitute unfair and deceptive acts and }lractices in commer('e within the intent and meaning of the F('deral Trade Commission Act.

Ol:.Diill TO CE.\SF: AND DF.SIRT This proceeding having been ll<'ard by the Federal Trade Commis- -sion upon the complaint of the Commission, the answers of respondluts, testimony, nnd other <'vidence taken before a trial examiner of the Commission theretofore clnly desi~nate-d by it, in support of the allegations of the complaint and. in opposition thereto, report of the trial examiner upon the evidence, and briefs in support of and. in opposition to the complaint (oral argument not having been requested); and tho Commission having ma1le its findings as to the facts and its conclusion that the rcsponlhmts have violated. the provisions of the Feucral Trade Commission Act.

468 FEDERAL TRADE COMMISSION "DECISIONS Order S6F.T.O.

It is ordered, That the respondents, .Atmoray, Inc., ·a corporation, and Atmozone, (referred to in the complaint as Atmozone, Inc.), a corporation, and their officers, agents, representatives, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale, or distribution of respondents' device designated "Atmoray ," or any other device of substantially similar character, whether sold under the same name or under any other name, do forthwith cease and desist from directly or indirectly: 1. Disseminating or causing to be disseminated any ·advertisement by means of the United States mails, or by ttny means in commerce, as "commerce~' is defined in the Federal Trade Commission Act, which advertisement represents, directly or by implication, (a) That respondents' device constitutes a cure or remedy for, or possesses any therapeutic value in the treatment of, sinusitis, head colds, astluna, hay fever, bronchitis, tuberculosis, pneumonia,·rt>spiratory diseases generally, dyspepsia, constipation, colitis, nervousness, melancholia, insomnia, neurasthenia, weakness, run-down conditions, anemin, blood poisoning, blood diseases, headache, inactive liver or kidneys, kidney or prostate gland trouble, liver or bladder infections, infectious diseases generally, syphilis, sugar diabetes, rheumatism, arthritis, neuritis, paralysis, cancer, ulcers of the stomach, heart trouble, cataracts, defective eyesight, deafness, or n.ny other disease or disorder of the human body; or (b) That respondents' device, or the product thereof in the quantities produced, is an effective oxidizing, germicidal, or disinfecting agent.

2. Disseminating or causing to be disseminated any advertisement by means of the United States mails, or by any means in commerce, as "commerce" is defined in the Federal T'rudc Commission Act, which advertisem£>nt fails to reveal that the safety ol rc!:ipondents' device d£>pends upon the output of tho particular machine used, the E-ize of the room in which the machine is operated, the v£>ntilation, and the length of time the machine is opcrateu; that the concentration of ozone should not in any case be permitted to excecu one-half part of ozone per million parts of air; that proximity to the machine f.should be avoided; and that the inhalation of an excessive amount of ozone may result in irritation of the respiratory organs. 3. Disseminating or causing to be disseminated any advertisement by any means for the purpose of inuucing, or which is likely to induce, directly or indirectly, the purchase in commer.ce,. as "commerce" is dcfineu in the Fetlcral Traue Commission Act, of r.cspondents' uevice, which advertisement contains any I'cprescntation prohibited in para- ATMOll'AT, INC., ET. AL. 469 45'7 Order graph 1 hereof or which fails to contain the warning set forth in paragraph 2 hereof.

It is further ordered, That the respondents shall, with 10 days a.after service upon them of this order, file with the Commission an interim report in writing stating whether they intend to comply with this order, and, if so, the .manner and form in which they intend to comply; and that within 60 days after the service upon them of this order, the respondents shall file with the Commission a report in writing setting forth in d~tail the manner and form in which they have complied with this order~ It is further ordered, That the complaint be, and it hereby is, dismissed as to the point with respect to the effectiveness of respondents' device as a deodorizing agent without prejudice to the right of the Commission, should the facts so warrant, to reopen the proceeding or to institute a new proceeding on such point. 470 FEDERAL TRADE COMMISSION' DECISIONS Complaint 36F.T.ft