Roman-Raichert Company, Inc.

Text (OCR of the scan at left; may contain errors)

IN THE MATTER OF Ro~ran-RAICHERT COMPANY, INC. ET AL.

COMPLAINT, FINDINGS, AND ORDERS IN REGARD TO THE ALLEGED VIOLATION F SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 5886. Complaint, June 1951-Decision, Apr. 24, 1952 When articles of merchandise, including sewing machines, are exhibited and offered for sale by retailers to the purchasing public not marked or not adequately marked showing that they are of foreign origin, or with markings covered or otherwise concealed, such public understands and believes them to be wholly of domestic origin.

There is among the members of the purchasing public a substantial number who have a decided preference for products originating in the United' States over products originating in whole or in part in foreign countries, including sewing machine heads.

The names "Cadillac" and "Zenith" are the names or part of the names of corporations doing business in the United States which are well and favorably known to the purchasing public and long established in various industries, some of which also use said words as trade names, marks or brands "Zenith for their products-particularly "Cadillac automobiles and radios -and there is a preference among members of the purchasing public for products made by the concerns whose identity is connected with said words.

Where a corporation and its three officers, engaged in the competitive interstate sale to retailers of sewing machine heads imported from Japan and of completed sewing machines which incorporated said heads through attachment of a motor thereto, in process of which the words "Made in Occupied Japan or "Japan" were covered- (a) Failed adequately to disclose on said heads that they were made in Japan, notwithstanding the presence upon the front of some of them of a medallion which bore in small and indistinct words the legend "Made in Occupied Japan" or "Japan (b) Falsely represented that their sewing machine heads were made by certain well-known firms through printing on the front of the horizontal arms in conspicuous letters the words "Cadillac" or "Zenith", and through use in their advertising of such trade names; and enhanced thereby the belief on the part of the public that said heads were of domestic origin; and (c) Made such statements in their advertising as "20 year guarantee, without disclosing the terms and conditions of the guarantee, effect of which was to confuse and mislead the public and purchasers; With result of providing dealers, in whose hands they placed said completed sewing machines, a means to deceive the purchasing public as to the place of origin of said heads and the manufacturers thereof; and with tendency and capacity to lead substantial numbers of the purchasing public into the Complaint 48F. T. CL erroneous belief that their said products were of domestic origin and made by well-known domestic manufa.cturers; and to induce thereby purchase of such sewing machines, and thus unfairly divert trade and commerce to them from their competitors, to the substantial injury of competition in commerce:

H e7cl, That such acts and practices, under the circumstances set forth, were' all to the prejudice and injury of the public and of their competitors and constituted unfair methods of comvetition in commerce ami unfair and: deceptive acts and practices therein.

Before 1li1'. a'm.B8 A. Purcell hearing examiner. lIIi' . lVilliam L. Taggcwt for the Commission. f( o1'slwk Rotll7rwn, of Chicago, Ill., for respondents. CO:MPLAINT 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 Roman-Raichert Company, Inc., and Roman Raiehel't, Leonard Raiehert and Edward Raichert, individually and as officers of said corporation, hereinafter' of said Actreferred to as respondents, have violated the provisions 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 Roman-Raichert Company, Inc. , is a corporation organized and existing under and by virtue of the laws of businessof the State of Illinois with its office and principal place located at 3855 North Lincoln Avenue, Chicago, Illinois. Respondents Roman Raichert, Leonard Raic.heart and Edward Raichert are, President and Vice President, Secretary and Treasurer, respectively" of corporate respondent and acting as such officers, formulate, direct of said corporation. Theand control the policies, acts and practices address of the individual respondents is the same as that of the corpol' ate respondent.

PAR. 2. Respondents are now, and have been for several years last past, engaged in the sale of sewing machine heads imported from mac.hines of which said heads are a Japal1, and completed se,,'ing part, to retailers who in turn sell them to the purchasing public. the course and conduct of their business, respondents cause their said of business inproducts, when sold, to be transported from their place the State of Illinois to purchasers thereof located in various other States and maintain, and at all times mentioned herein have maintained, a course of trade in said products in commerce among and HOMAN-RAICHERT co. , INC. ET AL. 1247 1245 Complaint bet"ween the various States of the United States. Their volume trade in said commerce has been and is substantial. PAR. 3. when the sewing machine healls are received by respondents, the words "~lade in Occupied Japan" or "Japan" appear on the back of the vertical arm. Before the heads are sold to the purchasing public as a part of a complete sewing machine, it is necessary to attach a motor to the head in the process of which the aforesaid words are covered by the motor so that. they are not visible. In some instances, said heads, when received by respondents, are marked with a medallion placed on the front of the vertical arm upon which the words "l\'Iade in Occupied Japan " or "Japan" appear. These words are, however, so small and inc1jstjnct that they do not constitute adeqiwte notice to the public that the heads are imported. PAR. 4. 1Vhen articles of merchandise, including sewing machines are exhibited and offered for sale by retailers to the purchasing l)ublic and such articles are not marked 01' are not adequately marked showing that they are of foreign origin, or if marked and the markings are covered or otherwise concealed, such purchasing public nnderstands, and believes such articles to be wholly of domestic origin. PAR. 5. There is among the members of the purchasing public a substantial number who have a decided preferenee for products ori:1inating in the United States over products originating in whole orin part in foreign countries, including sewing machine heads. m. 6. Respondents have adopted and use the words "Cadillac and "Zenith" for their said sewing machine heads, which ,words are printed on the front horizontal arm of the head in conspicuous letters and use such trade names in their advertising. The names "Cadillac and "Zenith" are the names or part of the names of a number of corporations transacting and doing business in the United States which are and have been well and favorably known to the purchasing public and which are and have been long established in various industries. Some of these corporations use the words "Cadillac" or "Zenith" as trade names, marks or brands for their products, particularly Cadillac automobiles and Zenith radios.

PAR. 7. By using said trade names respondents represent that their product is manufactured by the ,yell known firms with which said names have long been associated, which is contrary to the fact. PAR. 8. There is a preference among members of the purchasing public for products manufactured by wen and favorably known and long established concerns whose identity is connected with the words Cadillac" and " Zenith" and the use of said trade names by respondents on their sewing machine heads enhances the belief on the part of the public that the machine heads are of domestic origin. 213840-54-- Decision 48 F. T. C.

PAR. 9. Respondents in their advertising make such statements asthe rollowing : 20 year guarantee The use or the word "guarantee" without disc.losing the terms and conditions or the guarantee is conrusing and misleading to the public and purchasers and constitutes an unrair and deceptive practice. PAR. 10. Respondents, by placing in the hands or dealers their said sewing machine heads and completed sewing machines, provide said dealers a means and instrumentality whereby they may mislead and deceive the purchasing public as to the place or origin or said heads and the manuracturer thereor.

PAR. 11. Respondents, in the course and conduct or their business are in substantial competitimi in commerce with the makers and sellers or domestic machines and also with sellers or imported machines, some or whom adequately inrorm- the public as to the source or origin or their said product.

PAR. 12. The railure or respondents to adequately disc.lose on their sewing machine heads that they are manuractured in Oecupied Japan and the use or the words "Cadillac" and "Zenith" as a trade or brand name has the tendency and capacity to lead substantial numbers or the purchasing public into the erroneous and mistaken belier that their said products are or domestic origin and are manuractured by the well and ravorably known domestic manuracturers with which said names have long been associated, and to induce substantial numbers or the purchasing public to purchase sewing machines containing said heads because or such erroneous and mistaken belier. As a result thereor, substantial trade in commerce has been unrairly diverted respondents rrom their competitors and substantial injury has been and is being done to competition in commerce. PAR. 13. The aroresaid acts and practices or respondents, as herein alleged, are all to the prejudice and injury or the public and or respondent' s competitors and constitute unrair methods or competition and unrair and deceptive acts and praetiees in commerce within the intent and meaning or the Federal Trade Commission Act. DECISION OF THE COMMISSION Pursuant to Rule XXII or the Commission s Rules or Practice, and as set rorth in the Commission s "Decision or the Commission and Order to File R~port or Compliance, dated April 24, 1952, the initial decision in the instant matter or hearing examiner James A. Purcell, as set out as rollows, beenme on that date the deeision or the Commission.

ROMAN-RAICHERT CO., INC. ET AL. 1249 1245 Findings INITIAL DECISION BY JAMES A. PURCELL, HEARING EXAMINER Pursuant to the provisions of the Federal Trade Commission Act the Federal Trade Commission on June 27, 1951, issued and subsequently served its complaint in the above-entitled proceeding upon respondents Roman-Raiche.rt Company, Inc., a corporation, and Roman Raichert, Leonard Raichert and Edward Raichert, individually and as officers of Roman-Raichert Company, Inc., they being respectively President and Vice-President, Secretary, and Treasurer thereof, charging them with unfair methods of competition and unfair and deceptive acts and practices in commerce in violation of said Act. On July 20, 1951, respondents filed their answer to the complaint. Thereafter, at a hearing held in Chicago, Illinois, November , 1951, respondents moved the hearing examiner for leave to withdraw the aforesaid answer and to file in substitution thereof an -answer admitting all of the material allegations of fact set forth in the complaint, which motion was granted on the record and confirmed by rormal order filed herein on November 16, 1951. Such substituted answer reserved to respondents the privilege to submit Proposed Findings and Conclusions as provided by Rule XXI or the Commission Rules or Practice, and also certain other reservations to respondents not necessary to be here set forth. Therearter the proceeding regularly came on for final consideration by the above-named hearing examiner, theretofore duly designated by the Commission, upon said complaint and substituted answer thereto, proposed findings and conclusions submitted on behalf of the respondents, none such having been filed by the attorney in support or the complaint; and said hearing examiner, having duly considered the record herein, finds that this proceeding is in the interest of the, public and makes the following findings as to the facts, conclusion drawn therefrom, and order: FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent Roman-Raichert Company, Inc., is a corporation organized and existing under and by virtue of the laws of the State of I11ino:;8 with its office and principal place or business located at 3855 North Lincoln Avenue, Chicago, Illinois. Respondents Roman Raichert, Leonard Raichert and Edward Raichert are President and Vice-President, Secretary and Treasurer, respectively, of corporate respondent and acting as such officers, formulate, direct and control the policies, acts and practices of said corporation. The addre,ss or the individual respondents is the same as that of the corporate respondent.

, ,,,,, Findings 4H F. 1'. C. PAIL 2. Respondents are nm-v, and have been for several years last past, engaged in the sale of sewing machine heads imported from Japan, and completed se,wing machines of which said heads are a part to retailers ,,-ho in turn sell them to the purchasing public. III the course and conduct of their business, respondents cause their s,tid products hen sold, to be transported from their place of business in the State of Illinois to purchasers thereof located in various other States and maintain, and at all times mentioned herein have maintained, a course of trade in sail products in commerce among and between the various States of the United States. Their volmne of trade in said c.commerce has been and is substantial. \.H. 3. 'Vhen the se,,- ing machine heads are received by respondents, the ,,~orcls " )lade in OC'cupied .Japan ~~ 01' " Japan" appeal' on the back of the vertical arm. Before the heads are sold to the purchasingpublic as a prn.t of a complete sewing machine, it is necessary to attach a motor to the head in the, process of which the aforesaid ,words are covered by the motor so that they fire Hot visible. In some, instances said heads hen reeeivec1 by respondents, are marked ,,-ith a medallion placed on the front. of the vertiea.! arm upon which the words "j\Iac1e in Occupiec1Japan ~ or " Japan appeal'. These ,,- ords are, however, so small and indistinct that. they do not constitute adequate notice to the public that the heads are imported.

\R. 4. "Then articles of merchandife, including sewing machiJ1e~" are exhibited and offered for sale by retailers to the purchasing pn blic and such articles are not marked or are not adequately marked shmying that they are of foreign origin, or if marked and the markings are covereel or otherwise concealed, such purchasing public understands and believes such articles to be wholly of domestic origin. PAR. 5. There is among the members of the purchasing public a substantial nmlllJer ,,-ho have a decided preference for products originating in the United States over products originating in whole. or in part ill foreign countries, including sewing machine heads. PAR. 6. Respondents hate adopted Hnd use the ,yards "C,lllillac and "Zenith:' for their saiel sewing machine heacls, which wm'ds are printed on the front horizontal arm of the head in conspicuous letters and use such trade names in their advertising. The names "Cadillac and ';Zenith~~ are the names 01' part of the names of a nmnber of corporations transacting and doing business in the United States which are ami have been ,,- ell and fa vora bly known to the purchasing public and which are and have been long established in YHrious industries. Some of these corporations lise the words "Cac1illHc'~ or " Zenith~~ as trade names, marks or brands for their procluds, particularly Cadillne automobiles and Zenith radios.

ROMAN-RAICHERT co., INC. ET AL. 1251 1245 Conclusion PAR. 7. By using said trade means respondents represent that their product is manufactured by the well known firms with which said 1lames have long been associated, which is contrary to the fact. PAR. 8. There is a preference among members of the purchasing public for products manufactured by well and favorably known and long established concerns whose identity is connected with the words Cadillac" and "Zenith" and the use of said trade names by respondcnts on their sewing machine heads enhances the belief on the part of the public that the machine heads are of domestic origin. PAR. 9. Respondents in their advertising make such statements as the following:

20 year guarantee The use of the word "guarantee" without disclosing the terms and ,conditions of the guarantee is confusing and misleading to the public and purchasers and constitutes an un rail' and deceptive practice. PAR. 10. Respondents, by placing in the hands of dealers their said sewing machine heads and completed sewing machines, provide said dealers a means and instrumentality whereby they may mislead and deceive the purchasing public as to the place of origin of said heads and the manufacturer thereof.

PAR. 11. Respondents, in the course and conduct of their business are in substantial competition in commerce with the makers and sellers of domestic machines and also with sellers of imported machines some of whom adequately inform the public as to the source of originof their said product. PAR. 12. The failure of respondents to adequately disclose on their sewing machine heads that they are manufactured in Occupied Japan and the use of the words "Cadillac'~ and "Zenith" as a trade or brand name has the tendency and capacity to lead substantial numbers of the purchasing public into the erroneous and mistaken belief that their said products are of domestic origin and are manufactured by the well and favorably known domestic manufacturers with which said names have long been associated, and to induce substantial numbers of the purchasing public to purchase sewing machines containing said heads because of such erroneous and mistaken belief. As a result thereof substantial trade in commerce has been unfairly diverted to respondents from their competitors and substantial injury has been and is being done to competition in commerce.

CONCLUSION The aforesaid acts and practices of respondents, as herein found are all to the prejudice and injury of the public and of respondf.nts Order 48 F. T. C.

competitors and constitute unfair methods of competition and unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. ORDER It is orde"fed That the respondents, Roman-Raichert Company, Inc. a corporation, and its officers, and Roman Raichert, Leonard Raichert and Edward Raichert, individually and as officers of said corporation and said respondents' representatives, agents and employees, directly or through any corporate or other device, in connection with the offering for sale, sale or distribution of sewing machine heads or sewing machines in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from: 1. Offering for sale, selling or distributing foreign made sewing machine heads, or sewing machines of which foreign made heads are a part, without clearly and conspicuously disclosing on the heads, in such a manner that it will not be hidden or obliterated, the country of. origin thereof:

2. Using the words "Cadillac " or "Zenith " or any simulations thereof, as brand or trade names to designate, describe or refer to their sewing machines or sewing machine heads; or representing through the use of any other words or in any other manner that their sewing machines or sewing machine heads are made by anyone other than the actual manufacturers.

3. Representing, directly or by implication, that their sewing machine heads or sewing machines are guaranteed for twenty years, or for any other period of time, or that they are otherwise guaranteed unless the nature and extent of the guarantee and the manner in which the guarantor will perform thereunder are clearly and conspicuously disclosed.

ORDER TO FILE REPORT OF COMPLIANCE It is ordered That the respondents herein shall, within sixty (60) days after service upon them of this order, file with the Commission a report in writing setting forth in detail the manner and form in which they have complied with the order to cease and desist (as required by said declaratory decision and order of April 24, 1952J. , NATIONAL INSTITUTE OF PRACTICAL NURSING ET AL. 1253 Syllabus