David Genser

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IN THE Matrer OF DAVID GENSER ET AL. TRADING AS GENSER MANUFACTURING CO.

COMPJ,AlN'l', FINDINGS, AND ORDER IN REGARD TO 'lllll ALLl!lGIDD VIOLATION OF SEC. 5 OF AN AOl' OF CONOm:ss APPROVED SEP'l'. 26, 1911 Docket 5847. Oom:plaint, June 30, 191,5-Decision, a11.g. 25, 1950 A substantial portion or tbe purchasing public has a gcne1·a1 preference for products produced in the United States by American labor and containing do111estic materials, where otller considerations, such as style, quality, etc.,. arc equal, ancl has a prejudice against some imported products, particularly those originating in .Tapnn and Spain, and also understands and believes· that imitation pearl necklaces and other jewelry, composed in substantial~ part of lmltutiou pearls and offered and sold in the United States, are products of domestic mn nufaetnre, in the absence of some identification indicating foreign origin.

Where six partners engaged in llle inte-rstate sale and distribution at wholesale of domestic and importeu merchandise, incluuing necklaces auu other jewelry composed of imitation pearls, which, imported in quantity by them from Japan, Spain, and other foreign countries, were, when r eceived by them, on strings or in bulk, so marked with tags or labels, either on the strings or on the containers, as to disclose the name of tho country of origin; and were ordinarily thereafter, with only inciUentul use of domestic materials, graded, SOI'tod, and strung into graduated or ungraduated necklaces, to which clnsps of domestic manufacture were ntluched, or used ill other articles of jewelry;

Without disclosing by any mark, label or otherwise the foreign origin of said huportecl imitation pearls, whicll are not goncrnlly distinguishable from the domestic product, and from which, during the handling and processing as above set out, they caused to be removed all tags, labels, or other means of identification indicative of said origin, offered, sold, and distributed said jewelry products which, composed in whole or in substantial part of said imported imitation pearls, were substantially of foreign origin; With capacity and tendency to mislead and deceive pmchasers into the erroneous: belief that said products were wholly of domestic manufacture {\nd originr and into the purchase thereof in reliance upon such belief; and with the r esult of placinp; In the hands of retailers a means by which members of the public might be misled and deceived into such false belief, and thereby.· into their purchase:

Bela, That said acts ancl p1·actices, under the circumstances set forth, were t:'01 the injury and prejudice of the public, and constituted unfair and deceptive nets and practices in commerce.

As respects the charge in the complaint thfl.t the practice of offering, selling, and distributing necklaces or other articles of jewelry composed of imitation pearls manufactured in the United States from imported base beads, without any label or marking to indicate to purchasers the foreign origin of such bn~;e beads, constituted an unfait· and deceptive act and practice-: 60 FEDERAL TRA'DE COMMISSION DECISIONS Complaint 47 F. T. C.

tbe Commission was of the opinion and found, for the reasons stated in its opinion accompanying its findings and desist order in L. Heller ~ Son, Inc, et a~.• docket 5358, hereinbefore reported at page 34 et seq., that ~ncb charge was inadequately sustained.

Before Mr. John W. Addison, trict~l examiner. Mr. B . G. Wilson and M1'. Joseph Callaway for the Commission. Davies, Richberg, Beebe, Busick &: Richm,dson, of Washingtont D. C., for respondents.

COli:IPLAIN'l' 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 David Ganser, Max Ganser, Ida Ganser, Ada Genser, Wallace Ganser, and Shirley R. Cohen, copartners trading as Genser Manufacturing Co., hereinafter referred to as respondents, have violated the provisions of 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 complaintt stating its charges in that respect as follows : PARAGRAPH 1. Respondents David Genser, Max Ganser, Ida Genser, Ada Genser, Wallace Genser, and Shirley R. Cohen ttre copartners trading as Genser Manufacturing Co., with their office and principal place of business located at 45 Waldo Street, Providence, R. I . PAR. 2. Respondents David Genscr, Max Genser, Ida Gensel', Ada Genser, 'iVallace Ganser, and Shirley R. Cohen are now, and for several years last past have been, engaged in the wholesale distribution and sale of domestic ::md imported merchandise of various kinds, including imitation pearls and base beads for the manufacture of imitation pearls made into necklaces, and other articles of jewelry in commerce among and between the various States of the United States and in the District of Columbia.

Respondents cause and have caused their said merchandise, when sold, to be shipped from their said place of business located in the State of Rhode Island to pnrcha-Sers thereof located in various other States of the United States and in the District of Columbia. The said respondents maintajn, and at all times mentioned herein have maintained, a course of trade in their said merchandise in commerce among and between the various States of the United States and in the District of Columbia.

PAR. 3. In the course and wnduct of their said business, in connection with the sale and distribution of said necklaces and other articles t of jewelry, respondents have purchased large quantities of imitation 1 OENS'EIR MANUFACTURING CO. 61 59 Complaint pearls and base beads used after the manufacture of imitation pearls of foreign origin from importers engaged in the sale and distribution of said products in the United States. Repondents manufacture necklaces and other articles of jewelry from said imported imitation pearls and sell and distribuoo said products in said commerce, as aforesaid. Respondents operate a factory .where they cause domestic base beads and base beads of foreign origin to be finished into imitation pearls through a process of spraying or clipping in a solution. After said processing as aforesaid, respondents manufacture necklaces and other jewelry products from said imitation pearls made on imported bases and sell and distribute such products in commerce, as aforesaid.

PAR. 4. At the time of the importation into the United States of said base beads and imitation pearls, and at the time the said respondents receive said products of foreign origin from importers, such products have been and are all labeled or marked with the word "Japan" or the words "Made in Japan", or the word "Spain" or the words "Made in Spain", or marked with other word or words indicating the country of origin.

After said products are received. by them the respondents cause the words or marks indicating their foreign origin to be removed therefrom and thereafter sell and distribute the said products made into necklaces and other articles of jewelry in commerce as above set forth, .without any words or marks thereon indicating their foreign origin, and cause said products to be offered for sale and sold to members of the purchasing and consuming public in that condition, without informing the purchasers thereof that the said products are of foreign origin.

PAR. 5. There is a well-established practice among merchandisers generally to mark or label products of foreign origin and their containers with the name of the Gountry of their origin in legible English words in a conspicuous place. By reason thereof, a substantial portion of the buying and consuming public has come to rely and now relies upon such labeling or marking and is influenced thereby to distinguish and discriminate between competing products of for- ~ign and domestic origin, :iJ1cluding imitation pearl necklaces. When products composed in whole or in substantial part of imported materials are offered for sale and sold in the cham1els of trade in commerce in the various States of the United States and in the District of Columbia, they are purchased and accepted as and for and taken to be products wholly of domestic manufacture and origin unless the same are labeled, marked, or imprinted in a manner which -------~ FEDE:RAD 'IRA'DE' Commlssion DECISIONS62 Findings 47 F. T. C.

informs the purchaser that said products or substantial parts thereof are of foreign origin.

PAR. 6. There is now and for several years last past has been among members of the buying and consuming public, including purcha~ers and users of imitation pearl necklaces, a substantial preference for products which are .wholly of domestic manufacture or origin, as distinguished from products of foreign manufactme or origin, or from products made in substantial part of mn.terials or parts of foreign or1gm. During recent years, and especially at the present time, there is a decided and overwhelming preferm1ce among American consumers for products of American manufaclme und origin as distinguished from products wholly or partly of Japanese manufacture and origin.

PAR. 7. The practice of the respondents, as aforesaid, of offering for sale, selling, and distributing their imitation pearl necklaces and other articles of jewelry of Japanese, Spanish, or other foreign origin without any labeling or marking Lo indicate to purchasers the Japanese, Spanish, or other foreign origin of such imitation pearl necklaces, has had and now has Lhe capacity and tendency to, and does, mislead and deceive purchasers a.nd prospective purchasers into the false and erroneous belief that said imitation pearl necklaces and other articles of jewelry, and all the parts thereof, are wholly of domestic manufacture and origin, and into the purchase thereof in reliance upon such erroneous belief. Furthermore, respondents' said practice places in the hands of uninformed retailers of respondents' imitation pearl necklaces and other articles of jewelry a means and instrumentality to mislead and deceive members of the buying and consuming public into the :false and erroneous belief that said imitation pearl necklaces and all the parts thereof are wholly of domestic origin, and thus into the purchase thereof in reliance upon such erroneous belief.

Pan. 8. The aforesaid acts and practices of the respondents, 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 int~nt and meaning of the Federal Trade Commission Act.

REPORT, FINDINGS AS TO Tllf. FACTS AND Onm~n Pursuant to the provisions of the Fed era 1 Trade Commission Act, tho Federal Trade Commission on June 30, 1945, issued and subsequently served upon the respondents named in the caption hereof its complaint in this proceedu1g, charging said respondents with the use GENSER MANUFACTURING CO. 63 59 Finding~ of unfair and deceptive acts and practices in commerce in violalio11 o£ the provisions o£ that act. The respontlents' answer to saitl coniplaint was iiled on ~eptember 4, 1!):1:5. On ~'larch 8, lV:I:G, October li. 19:1:7, and May 23, Hl:I:U, respectively, certain stipulations were enterccl ii1to by and between coun~e l, and in said stipulations it was provided, aJUong other t..things, that, subject to the ttpprova l of the Commission, (1) the entire ttanscr ipt o·f all heari11gs in the matter of L. Jletler & Son, Inc., et al., docket. No. 531>8, should be ll1ftdo a patt of the record in this proePe<ling to the same ext·ent as if the tt•stimony taken in said Heller case were initially taken in this proceeding, (2) that the statemont of filet~ contained in said stipulations, together with the transcript of all hearings in said Ileller case, lllay be mncle <t pat"t of the rec·or<l in this proce('ding and considered together with the complaint and anHwcr thereto, and (H) that the briefs and oral argunJCnts of cou11spl in tlw aforesaid H eller case should be considet·ed as the briefs and argumt'lllS in this proceeding.' Thercaft cr, the proceeding regularly eante 011 for finn Lhearing before the Commission upon the comphtint of the Commission, the respondents' answer thereto, the stipulations between counsel (snicl stipulations lutving be~:•u approved by tho Commission ), the testimony and other eviuenr.e taken in the matter o.f L. llellm· & Son, Inc., et al., docket No. 5:358, the recommended decision of the tt·ial examiner anu PXCcptions !,hereto (which exccpLions have been separately disposed of), and the briefs anll oral arguments o£ counsel in the aforesaid /It>llet· case; and the Conunission, having duly considered the matter and being now fully atlvised in the premises, fin<ls that this proceeding is in the interest of the public and makes this its Jjndings as to the facts and its conclusion drawn therefrom.

FlXDl.XGS AS '1'0 TIJE ]>ACTS P .\RAGR.\ f'JL 1. Re.c;;pondcnts David Genser, Max Genser, Ida Gonser, Ada Genser, w ·ftllace Genser, and Shirley 1~. Cohen arc co-partners trading as Genset· Manufacturing Co., with t their oliice and principal place oi business located at 45 Waldo Street, in the city o£ Providence, State of Rhode Island.

PAn. 2. Hespondents are now, and for several years last past they have been, mtgaged in the wholesale distr ibution and sale of domestic allcl i111portecl merdumdise of various kinds, including imitation pearl 11ecklaces and other articles of jewelry, in commerce nmong and 'See, tM flnclln~:s nucl onlt'l" in snld case, nnte, at p. 34. Hl nu;;; n::- ~ 64 FEDERAL 'IRA'DE COMMISSIION DECISION'S Findings 47 F.T.C.

between the various States of the United States and in the District of Columbia.

· Respondents cause and have caused their said merchandise, when sold, to be shipped :from their place of business in the State of Rhode Island to purchasers thereof located in various other States of the United States and in the District of Columbia. Respondents maintain, and at all times mentioned herein they have maintained, a regular course of trade in their merchandise in commerce among and between the various States of the United States and in the District of Columbia. PAn. 3. In the course and conduct of their aforesaid business respondents have imported :from Japan, Spain, and other. :foreign countries quantities of imitation pearls. Such imported imitation pearls are received in the United States either on strings, graduated or ungraduated as to size, or in bulk. When imported and when received by the respondents said imitation pearls are marked with tags or labels, either on the strings or on the containers, so as to disclose the name of the country in which they originated. After being received in the United States a minor portion of such imported imitation pearls are processed by the application of additional coats of pea.ruling solution. Respondents ordinarily, however, do.nothing more than grade and sort such pearls and, using only incidental domestic materials, string them into graduated or m1graduated necklaces to which clasps of domestic manufacture are attached, or use them in .other articles of jewelry. The necklaces of such imported imitation pearls and other articles of jewelry composed in substantial part of ·said imported imitation pearls are, therefore, substantially of :foreign origin. Imitation pearls produced in the United States are not generally distinguishable in quality or appearance from imported imitation pearls, and both are used for the same purposes in the production .of jewelry.

PAn. 4. During the handling and processing of imported imitation pearls as described in paragraph 3 respondents cause to be removed all tags, labels, or other means of identification which indicate the :foreign origin of such imitation pearls. Respondents then offer :for sale, sell, and distribute necklaces of imported imitation pearls and other articles of jewelry composed in substantial part of imported imitation pearls without disclosing by any mark or label, or otherwise, that such imitation pearls are of foreign origin. PAn. 5. A substantial portion of the purchasing public has a general preference for products produced in the United States by Ameri- C'an labor and containing domestic materials where other consideration, such as style, quality, etcetera, are equal, and has a prejudice .ugainst some imported products, particularly those originating in GENSFIR MANUFACTURING CO. 65 59 Order Japan and Spain. A substantial portion of the p~rchasing public also understands and believes that imitation pearl necklaces and other articles of jewelry composed in substantial part of imitation pearls offiered for sale and sold in the United States are products of domestic manufacture in the absence of a tag, mark, or other identification thereon by which foreign origin is indicated. PAR. 6. The complaint herein also alleges that the practice of offering for sale, selling, and distributing necklaces or other articles of jewelry composed of imitation pearls manufactured in the United States from imported base beads without any label or marking to indicate to purchasers the foreign origin of the base beads constitutes unfair and deceptive acts and practices. For the reasons stated in its opinion 1 accompanying its findings as to the facts and order to cease and desist in the matter of L. Heller & Son, Inc., et al., docket No. 5358, the Commission is of the opinion, and finds, that such charge lias not been adequately sustained.

PAR. 7. Respondents' aforesaid acts and practices of offering for sale, selling, and distributing jewelry products composed in whole or in substantial part of imported imitation pearls without any labeling or other mark to indicate the foreign source or origin of such imitation pearls have had, and ·now have, the capacity and tendency to mislead and deceive purchasers and prospective purchasers into the false and erroneous belief that such jewelry products are. wholly of domestic manufacture and origin and into the purchase thereof in reliance upon such erroneous belief. Respondents' said acts and practices also place in the hands of retailers of such jewelry products a means and instrumentality by which members of the consuming and purchasing public may be misled and deceived into the false and erroneous belief that such jewelry products are wholly of domestic origin and thus into the purchase thereof in reliance upon such -erroneous belief.

CONCLUSION The acts and practices of respondents as herein found are all to the injury and prejudice 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 DESIS'£ This proceeding having been heard by the F ederal Trade Commisf)ion upon the complaint of the Commission, the respondents' answer ' See ante, p. 48.

--------~--c- -- - - - 66 FEDE:RAL TRADE COM.l\lflSSIOK DECISIONS Order 47 F. T. C.

thereto, certain stipulations entered into by and between cotmsel, the testimony and other evidence introduced before rt trial examiner of the .Com_mission in the matter of L. lleller & Son, Inc., et al., docket No. 5358, the recommended decision of the trial examiner herein and exceptions thereto, and briefs and oral arguments of counsel in the COMP aforesaid H elle?' case, and the Commission having disposed of the exceptions to the trial examiner's recommended decision nncl having made its findings as to the facts au<lists conclusion that; Lhe respondents have violated the provisions of the Fcdera] Trade Commission Act: A su It is 01•dm·ed, That the respondents, D1tvid Genser, Max Genser, Ida Gonser, Ada Genser, ·wallace Gonser, ~tncl Shirley R. Cohen, inclividually and as copartners trading as Gonser Manufacturing Co., or tntding under any other name or trade designation, and said respondents' agents, representatives, and employees, directly or through any corporate or other device, in connection whh the offering for sale, s1Lle or distribution in commerce, as "conunerce" is defined in the Wh Federal Trade Commission Act, of necklaces of imported imitation pearls or other articles of jewelry composed in substalltial part of imported imitation pearls do forthwith cease and desist from : Offering for sale or selling said products without nflirmatively nnd clearly disclosing hereon, or in immediate cOJmectio.n therewith, the country of origin of such imported imitation pearls. It is fU?·ther O?'clered, T hat the respondents shall, within 60 days after servico upon them of this onlcr, file with the Commission a Wi report in writing setting forth in detail the manner and form in which they have complied with this order.

Wi At D. LlSNER & CO. 67 Syllabus IN TH I~ M A'l.l'gR OF D. LISNER & CO.

COMPJ,Al NT, F INDINGS, AND ORDER I N REGARD TO THJD ALUi;GED Violation OF SJ~C . 5 OF AN ACT OF CONGRESS APl'ROVED Sl•:PT. 26, 1014 Doclcet 5tJ/19. Comphtint, J rme SO, 1945-Decision, A.1tg. 25, 1950 A substa nt.lnl portion of the purchasing public hns a gencrnl preference for products prothlc<'d in the United States by American labor nnd contui nin~ d omestic mater ials, where other considerations, such as style, quality, etc., Rre eqtlfll, nud hns a prejudice a~aiust some impo1·ted products, particularly those> origiuallng in J npnn and Spain, and also understands und believes that imitation pearl necklaces unci other jewelry, c·omposl'd in substnulial part of imita tion pearls and offered anrl soltl in the United States, are products of domestic manufacture, in the absence of some icleutiticnlion indica ling f foreign origin.

Where a corporallon engaged iu the intersutte sale and distrilmlion iu commerce of domestic aud imported merchamllsc, including nerlclnccs a nd other jewelry of imitalion pearls, which, imported by it in la rge quantities from Japan, were, whl'n received by it, on strings or in bulk, so marl<ed with tags ot· Jnbels, either on the strings or on the containers, as to disclose the name of the country. of origin; aurl were orrlinat·ily thereaHer, with only incidental nse of domestic materials;, ~radell, sorted, anti strun~ into graduated or ungrn<luated Ilecklnccs, to which clasps of domestic manufacture were nttncbed, or used in other Uiticles of jewelry;

Without disclosi ng by auy murk, label, or otherwise lhc foreign origin of said imported imitation pearls, which nrc not generally dislin~uisltalJle from the domestic product, ::mrl from which, during the hnnclllng and processing ns above set out, they caused to be removed all lags, labels, or other means of idenUIIcation indicative of said origin, offered, sold, ami distl"ibutcd said jewelry products which, composed in whole or in substautiu l part of said imported imitation penrls, were substantially of foreign origin; Wi th capnclty and tendency to mislead and deceive purchnsen; into the erroneous belief that said products were wholly of domestic manufacture and origin, aud into the purchase thereof in reliance upon su('h belief; a ut1 with the result of placing in the bands of I"etailers a mcnns hy which nw1nbers of the ,public might be misled and deceived into such false helicf, nnd thereby into their purchase:

R e.la, 'that said acts and practices, under the circumstances set forth, were to the injury and prejudice of the 11Ublic, and cousti tutl'd unfaii· and deceptive acts and practices in commerce.

As respects the charge in the complaint that the practice of offering, selling, nn<l distributing necklaces or other a articles of jewelry composed of imitation pearls manufactured in the Un ited States f rom imported base beads, without a ny label or marking to indicate to purchasers the foreign origin of such base beads, constituted an unfair a nd deceptive act an<l practice: the Commission was of the opinion and found, fo r the reasons stated in Its opinion nccompanyiug its flncliugs and desist ot·det· In L . H elle1· & 8011, Inc., et al., 68 FEDERAL TR.A'DE COJYIMhSSIION DECISIOKS Complaint 47 F.T. C.

docket 5358, hereinbefore reported at page 34 et seq., tbnt such charge was inadequately sustained.

Before Mr. John W. Addison, trial examiner. Mr. B. G. Wilson and Mr. Joseph Oallaway for the Commission. Davies, Richberg, Beebe, Busiclc & Richardson, of Washington7 D: C., for respondent.

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 D. Lisner & Co., 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 respect thereof would be in the public interest hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. Respondent D. Lisner & Co., a corporation organized and existing under and by virtue of the laws of the State of New York with its office and principal place of business located at 303. Fifth Avenue, city of New York, State of New York. PAR. 2. Respondent D. Lisner & Co., now and for several years last pa:st has been engaged in the wholesale distribution and sale of domestic and imported merchandise of various kinds, including imitation pearls and base beads for the manufacture of imitation pearls made into necklaces and other articles of jewelry in commerce among and between the various States of the United States and in the District of Columbia.

The respondent causes and has caused its said merchandise, when sold, to be shipped from its said place of business located in the State of New York to purchasers thereof located in various other States of the United States and in the District of Columbia. The said respondent maintains and at all times mentioned herein has maintained a course of trade i:{l its said merchandise in commerce among and between the various States of the United States an.d in the District of Colmnbia.

PAR. 3. In the com·se and conduct of its business, respondent D. Lisner & Co., in connection with the sale and distribution of its said products, imports from Japan, Spain, and other foreign countries, large quantities of imitation pearl necklaces and base beads for the manufacture of imitation pearls. Respondent causes its base beads of foreign origin to be finished by dipping or spraying said products in a solution, thereby completing the said base beads into imitation pearls. After said processing as. aforesaid, respondent sells and disl. ' ' D. LffiNER & CO. 69 67 Complaint IS tributes its imitation pearls made into necklaces in commerce togetherwith other articles of jeweh·y.

PAR. 4. At the time of the importation into the United States of the above-enumerated products, and at the time the said respondent receives said products of foreign origin, such products have been and are all labeled or marked with the word "Japan", or the words "Made in Japan", or the word "Spain", or the words "Made in Spain", or marked with other word or words indic11ting the country of origin. ~· After said products are received in the United States, the respondent I' causes the words or marks indicating their foreign origin to be re- L. moved therefrom and thereafter sells and distributes the said products made into necklaces and other articles of jewelry in commerce as above set forth, without any words or marks thereon indicating their foreign origin, and causes said products to be offered for sale and sold to members of the purchasing and consuming public in that condition,. without informing the purchaser thereof that the said products are of foreign origin.

PAR. 5. There is a well-established practice among merchandisers generally to make or label products of foreign origin and their containers with the name of the country of their origin in legible English words in a conspicuous place. By reason thereof, a substantial portion of the buying and consuming public has come to rely and now relies upon such labeling or marking and is in.fluenced thereby to distinguish and discriminate between competing products of foreign and domestic origin, including imitation pearl necklaces. When products composed in whole or in substantial part of imported materials, are offered for sale and sold in the channels of trade in commerce in the various States of the United States and in the District of Columbia, they are purchased and accepted as and for and taken to be products wholly of domestic manufacture and origin, unless the same are labeled, marked, or imprinted in a manner which in:forms the purchaser that said products or substantial parts thereo:f are o:f foreign origin. PAn. 6. There is now and for several years last past has been among members of the buying and consuming public, including purchasers and users o:f imitation pearl necklaces, a substantial preference for products which arc wholly of domestic manufacture or origin, as distinguished from products of foreign manufacture or origin, or from products made in substantial part of materials or parts of foreign origin. During recent years, and especially at the present time, there is a decided and overwhelming preference among American consumers for products of American manufacture and origin as distinguished from products wholly or partly of Japanese manufacture and origin. - -- -----.Mb COMMISSIO~ DECTSIOXS70 FEDERAL TRADE Findings 4i F. T. C. PAR 7. The practice of the respondent, as aforesaid, of offering for sale, selling, and distributing ils imitation pearl necklaces and .other articles of jewelry of J a panes, Spanish, or other foreign origin without any labeling or ma1·king to indicate to purchasers the J apanese, Spanish, or other foreign origin of such imitation pearl necklaces, has had and now has the capacity and tendency to, and does, mislen,cl and deceive purchasers and prospective purchasers into the false ltn<l erroneous belief that said imi tation pNtrl necklact>s and ol.her articles of jewelry, and all the parts thereof, are wholly of domestic manufacture and origin, and into the purchase thereof in reliance upon such erroneous belief. Furthcl"lnore, respondent's said praelice places in the hands of retailers of J'E'Spondent's imitn,tion pearl necklaces and other articles of jewelry :t means and instrumentality to mislead and deceive members of the buying lllld <"onsuming public into the false and erroneous belief that said imitation pearl nl:'ck1aces and all the parts thereof arc \\"holly of tlomestic origin, and t hns into the purchase thereof in rel iunce upon such erroneous belief. PAR. 8. The aforesaid acts and practices 0 r the respondent~ as herein alleged, are all to the prejudice and injury of the public and constitute unfa~r and deceptive acts ancl practices in commerce within the intent and meaning of the Fed ern1 Trarle Co nun i:::sion Act. Rl~PORT, F I N DINGS AS TO 'J'HJ~ FACTs, AN"n OnnEn Pursuant to the provisions of the Fedentl Trade Commission Act the Federn,l Trade Commission, on June 30, 1945, issued and subsequently served its complaint in this proceeding upon the respondent, D . Lisner <~ Co., a corporation, charging it with the use of unfair and deceptive nets and practices in commerce in violation of the provisions of said net. After the issuance of said complaint and tho filing of respondent's answer thereto, a stipulation, dated :March 8, 1946, was entered into by and between Richn,rd P . Whiteley, Assistant Chief Counsel for the Commission, and counsel for the respondent, which provided, among other things, that subject to the approval of the Commission the entire transcript of all hearings in the matter of L. H elle1• & Son, Inc., et al., docket No. 5358, shall be made a part of the record in this proceeding to the same extent as if the testimony taken in the H ellm· case were initially taken in this proceeding. .Another stipulation, dated Octoberg, 1947, entered into by and between Daniel J. Murphy, Assistant Chief Trial Counsel for the Commission, and counsel for the r espondent, provided, among other things, that subject to the approval of the F('dcra.l Trade Commission the statement of facts contained therein D. LISNER & CO. 71 67 Findings may be made n. part of the record herein and considered together with the tmnscript of all hearings held in the aforesaid H eller case, the complaint herein, and the answer thereto. A further stipulation between counsel, dated J une 14, 1949, provided that subject to the approval of the Commi.ssion the briefs and oral argument of counsel in the aforesaid II ellm· case mn.y be considered as briefs and oral argument in this proceeding.1 Thereafter this proceeding regularly came on for final hearing before the Commission upon the complaint, answer thereto, stipulations between counsel (s~tid stipulations hn.ving been approved by the Commission), tPsl imony and other evidence taken in the matter of L . H elle1• & Son, Inc., et al., docket No. 5358, recommended decision of the trial examiner and exceptions thereto, and the briefs and oral argument of counsel in S1licllleller case; and the Commission, having duly considered the matter and being now fully advised in the premises, finds that this proceeding is in the interest of the public and makes this its findings as to the :facts and its conclusion drawn therefrom : :JnNDINOS AS TO TIDil FACTS PARAGHAfii 1. Respondent, D. Lisner & Co., is a corporation organized and existing under and by virtue of the laws of the State of New York, with its office and principal place of business located at 303 Fifth Avenue, New York, N. Y.

PAn. 2. Respondent, for several years lust pn.st, has been engage<l in the ·wholesnh• distribution antl sale of ·domestic and imported<l mcrcha)l(lise of vnriotts kinds, including imitation pearl necklaces and other articles of jewelry, in commerce among and between the various States of the United States and in the District of Columbia. The respondent causes its said merchandise, when sold, to bo sh i ppetl from its place of business in New York to the purchasers thereof located in various other Stn.tes of the United States and in the District of Coluntbia. The respondent has maintained a course of trade in sa.icl products in co1runerce among and between the various States of the United Stales and in the Distt·ict of Columbia.

P,m. 3. In the course and COJlduct of its aforesaid business, respondent, prior to December 7, 1\)41, imported large quanti Lies of imitation pearls from Japan. Such imported imitation pearls were received in the United Sh~tes either on strings, graduated or ungratluated as to size, orin bulk. When imported n.nd when received by the respondent said imitation pearls were all marked with tags or labels, either on the- 'Sec, for findings and order In snl<l cnsc, at1te, at p. 34. -- ·-·-----~ FEDE:R·AL TRADE COMMJSSIION DECI'SIQINS72 Findings 47 F.T.C.

strings or on the containers, so as to disclose the name of the country 5: in which they originated. After being received in the United States n· a minor portion of such imported imitation pearls were processed by the application of additional coats of pen.ruling solution. Respondent s1 ordinarily, however, did nothing more than grade and sort such pearls j) and, using only incidental domestic materials, string them into grad- o uated or ungraduated necklaces, to which clasps of domestic manufac- p ture wore attached, or used them in other articles of jewelry. The a necklaces of such imported imitation pearls, and other articles of jewel- e ry composed in substantial part of said imported imitation pearls, are, n therefore, substantially of foreign origin. Imitation pearls produced in the United States are not generally distinguishable in quality or i lappearance from imported imitation pearls, ~mel both are used for the same purposes in the production of jewelry. PAR. 4. During the handling and processing of imported imitation pearls as described in paragraph 3, respondent causes to be removed all 1 tags, labels, or other means of identification which indicate the foreign origin of such imitation pearls. Respondent then offers for sale, sells, and distributes necklaces of imported imitation pearls, and other articles of jewelry composed in substantial part of imported imitation pearls, without disclosing by any mark or label, or otherwise, that such imitation pearls are of foreign origin.

PAn. 5. A substantial portion of the purchasing public has a general preference for products produced in the United State~ by American labor and containing domestic materials, where other considerations such as style, quality, etcetera, are equal, and has a prejudice against some imported products, particularly those originating in Japan or Spain. A. substantial portion of the purchasing public also understands and believes that imitation pearl necklaces, and other articles of jewelry composed in substantial part of imitation pearls, offered for sale and sold in the United States are products of domestic manufacture in tne absence of a tag, mark, or other identification thereon by which foreign origin is indicated.

PAn. 6. The complaint herem also charges that the practice of offering for sale, selling, and distributing necklaces and other articles of jewelry composed of imitation pearls manufactured in the United States from imported base beads without any label or marking to indicate to purchasers the foreign origin of the base beads constitutes unfair and deceptive acts and practices. For the reasons stated in its opinion accompanying its findings as to the facts and order to cease and desist in the matter of L. Heller & Son, Inc., et al., docke.t No. D. LISNER & CO. 73 67 Order 5358,1 the Commission is of the opu1ion, and finds, That such charge has not been adequately sustained.

par. 7. Respondent's aforesa.id acts and practices of offermg for sale, selling, and distl·ibuting jewelry products composed u1 whole or in substantial part of imported ilnitation pea.rls without any labeling or other mark to indicate the foreign source or origin of such ilnitation pearls have had, and now have, the capacty and tendency to mislead and deceive purchasers and prospective purchasers into the false and erroneous belief that such j~welry products are wholly of domestio manufacture and origin and mto the purchase thereof in reliance upon such erroneous belief. Respondent's said acts and practices also place in the hands of retailers of suc.h jewelry products a means and mstrumentality by which members of the consuming and purchasing public may be misled and d£-ceived illto the false and erroneous belief that such jewelry products are wholly of domestic odgin, and thus into the purchase thereof ill reliance upon such erroneous belief. CONCLUSION The acts and practices of the respondent as herein found are all to the injury and prejudice of the public and constitute unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commissivn Act.

ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission, answer of the respondent, stipulations between counsel, testimony and other evidence introduced before a trial examiner of the Commission ill the matter of L . II eller & Son, Inc., et al., docket No. E358, recommended decision of the trial examiner and exceptions thereto, and briefs and oral argument of counsel in said Helle1• case; and the Commission having made its findillgs as to the facts and its conclusion that the respondent has violated the provisions of the Federal Trade Commission Act : It is ordered, That the respondent, D. Lisner & Co., a corporation, and its officers, agents, representatives, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale, or distribution in commerce, as "commerce" is defined in the F ederal Trade Commission Act, of necklaces of imported imitation pearls, or other articles o-£ jewelry composed in substantial part of imported imitation pearls, do forthwith cease and desist from: • See anti, p. 48.

74 FEDERAL TRA'DE COMMLSSIION DECISIONS Order 47F.T. C.

Offering for sale or selling said products without affirmatively and clearly disclosing thereon, or in immediate connection therewith, the country of origin of such imported imitation pearls. I t is fwrthm· 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.

COLOXIAL BEAD CO., L~C. ET AL. 75 Syllabus