Take the matter of a stipulation before the Federal Trade Commission; you cannot go over there and negotiate a stipulation. They only allow you to admit you said this or that, and admit that all of this is wrong; admit that it has a likelihood to be unfair competition. or has a capacity to mislead and then you finally accede that the statement may be used against you in any criminal or other proceedings. You do not negotiate with those people, but you are handed their stipulation.

If you handled your case in the district court, there a man might come in and say, "Sure, I made a mistake. This advertisement should never have gone out. If Your Honor will permit, I will submit a decree. We quit it 2 weeks ago. Let us be quit of this thing and let me out and go on with my business and make some money." You cannot do that before the Federal Trade Commission. You take the stipulation that they hand you and you sign that or you go through the protracted and expensive procedure necessary.

No court would entertain their procedure.

I am confident that the procedure before the district court itself is competent technically to handle all these issues, and I think far more flexible from the standpoint of meeting the needs of the businessman who is confronted with this kind of a problem.

I think that about covers what I have in mind. I hope I have not retried these cases, but I merely tried to bring out the points that if this goes to the district courts, I think we will have a more flexible, we will have a more economical procedure. I think that the Commission will unburden itself of a great many trivialities with which it has been occupied and with which it has harassed business for a long time. Thank you.

Mr. BENNETT of Michigan. Under this bill, would the Federal Trade Commission be deprived of all right to investigate or hear any kind of complaint?

Mr. Оомs. No.

Mr. BENNETT of Michigan. Would every complaint have to go to the district court?

Mr. OOмs. No; the bill is confined to those which arise under one sestion of the Federal Trade Commission Act. I do not remember these numbers very well. But the bill is so confined that the Commission is left with all these very complex functions it has under the two last bills; the bill to amend the Federal Trade Commission Act

Mr. BENNETT of Michigan (interposing). It would require the Commission to bring into court the kind of cases that you have been discussing?

Mr. Oомs. Yes; it would.

Mr. BENNETT of Michigan. They would have no power to hear that kind of a case?

Mr. ОOмs. That is correct. They would still have their investigative power and their prosecuting functions, but they would not have the power to decide, and then, of course, they would lose control over all of these preliminaries with which a man is dragged around the country.

Mr. BENNETT of Michigan. They would still have the right to bring one in before the Commission in the course of their investigations, and have a hearing?

Mr. Oомs. I do not think they would have a hearing on that issue, on the kind of complaint on which they now have hearings. I suppose that they would continue investigating. If they found that a man had acceded to what they thought the law required, they would dismiss the investigation or if he would not agree, then file a complaint in the district court to which he could file a consent decree. I I think, under the Food and Drug Act, they do that right along.

Mr. BENNETT of Michigan. What I mean is in the kind of cases you have been talking about. Suppose the Commission wanted to investigate those cases? Would this bill, if passed, permit them to call in witnesses and take testimony in the course of their investigation?

Mr. Ooмs. I do not think that they would take testimony in the formal sense. They would go out and take statements from witnesses, probably. I assume that they do that now before they file a complaint. I hope that they proceed with some evidence of some soundness of their grievance before they file a complaint. I do not think that that function would be disturbed. It would be just as the Department of Justice does in making their investigations. They send out investigators who make inquiries as to what has gone on and ascertain the facts to determine whether the facts warrant the filing of complaint. I think that function would remain undisturbed.

Mr. BENNETT of Michigan. What I am trying to get at is, that would probably be essentially the same kind of proceeding, except that the Commission would not have the right to make any decisions. Mr. Ooмs. No; they could not impose the requirement on the respondent that he attend and all of that.

Mr. BENNETT of Michigan. If he wanted to attend; he might want to attend.

Mr. Ooмs. As a general proposition in those investigations, they do not want to have you attend and they do not permit you to attend. I hope I have answered what you have in mind.

Mr. BENNETT of Michigan. Yes.

The CHAIRMAN. Are there any further questions, gentlemen?
Mr. HALE. Mr. Chairman.

The CHAIRMAN. Mr. Hale.

Mr. HALE. In all these cases that you specify, does the Federal Trade Commission act on its own motion?

Mr. Ooмs. I think it does not in any of them. I think in each they are provoked by a competitor; but, of course, under their practice you are never allowed to inquire into that. You find out by devious means. There are no secrets in American business. You know what your competitor is doing all of the time.

Mr. HALE. The competitor never appears, so far as you know? Mr. Оомs. He may appear as a witness, but he is provided with specific exemption from any inquiry as to how the complaint originated.

Mr. HALE. I mean he is not a party in any way and you do not know what you have to meet?

Mr. OOмs. No. He is not a party in any way. You learn what you have to meet from the complaint and from their evidence as they adduce it.

Mr. HALE. In this Scotch Mills case, or whatever it was, the second case, what was the Circuit Court of Appeals' findings, what was their ruling?

Mr. Ooмs. It ruled against us. In the court of appeals we stipulated with the Federal Trade Commission that the respondent_might keep the name "Scotch"; change the name to "Scotch Tailors, Inc."

Mr. HALE. Now, you spoke about the stipulations which the Commission requires you to agree to. What is the character of those stipulations?

Mr. ОOмs. They have a regular form. I could read it. It is too long to read into the record. Would it not be better to procure one of the Federal Trade Commission's regular forms and file it, place it in the record?

Mr. HALE. Can you not summarize what is in the stipulation?

Mr. OOмs. Yes; you practically admit everything that they have in the complaints. You admit that the business is carried on in interstate commerce; you admit that you are selling this in competition with other goods; you admit that you have made a particular statement; you admit that the statement might be misleading and then you finally agree that they can use this in any other or further proceeding against

you.

Mr. HALE. All these cases you speak of relate to misleading names or misleading advertising or names in advertising alleged to be misleading?

Mr. OOмs. That is correct. That is, I think, the bulk of that business under that section which the O'Hara bill seeks to amend.

I may be wrong about that, but the Commission may have statistics on that, Mr. Hale.

Mr. HALE. In the Scotch case, why did the company try so hard to retain that particular corporate name; is it very important?

Mr. Ooмs. A corporate name, regardless of what it is, whether it means anything or not, becomes a very valuable asset. The process of identifying you with your customers is important. The problem of identifying you under another name is one thing that almost every company avoids if it can, because it is so difficult. A man who buys a suit from the Scotch Woolen Mills in some place in the country perhaps does not buy a suit every year. He may have bought one in 1911 and then in 1913 he wants another one, and in the meanwhile if their name has been changed from Scotch Woolen Mills to Excelo Tailors, or something of that kind, he might have lost all thread of connection with them.

I think that the businessmen would agree with me, if I say that that is one of the cherished assets of any business, the name by which it has become known even though the name does not designate the exact character of the business.

You see in this country there has been a slight change in the last 40 years in the attitude about these things. I do not think a business today would willingly choose a name like Scotch Woolen Mills, which is not in itself a particularly good name. But I do think when the name was first selected here that there was an attempt to build up the idea of a large project, Scotch Woolen Mills. You remember the companies used to have a letterhead with a picture of the plant on it four or five times as large as it really was. There was a tendency in

America in times gone by to do that, but if you started with a name like this in 1906, by this time, or by 1946, you are reluctant to change it, because of the custom that you have built up in that name, and particularly with a mail-order business like this, where you have to rely on these communications from afar. You have got to keep that identity in name before your purchasing public. If the name ever had any suggestion of a large foreign corporation it did not retain any such value, because the time has gone by when that would be of any value. No complaint was made that anybody ever was misled or deceived and there was not any complaint of lack of value or anything of that kind. The Commission could not find any customer who bought a suit of clothes because he thought that he was buying something from Scotland or because he thought the company was in an advantageous position as owner of woolen mills.

Have I answered that for you?
Mr. HALE. Yes, very thoroughly.
I think that is all, Mr. Chairman.

The CHAIRMAN. Any further questions?
Mr. LEA. Mr. Chairman.

The CHAIRMAN. Mr. Lea.

Mr. LEA. What kind of a record is made by the Commission where it finds that the charges against the accused are unwarranted?

Mr. OOмs. Well, we had one case, the Scotch Woolen Mills-I think you were not here when I stated the facts about this case. This case was brought in 1922. In that instance this record was developed, some 700 pages of typewritten testimony taken between 1922 and 1923 and the Commission merely entered an order dismissing the complaint. The complaint then was that they used the name "Woolen Mills" and they were not really a woolen mill, and the Commission merely dismissed on that record. It was a perfectly complete record insofar as the issues were concerned, but they came back at us in 1942, reopened the case, took another 700 pages of testimony on the complaint now that we were known as the Scotch Woolen Mills although that had been the name for more than 40 years. The same type of

record was made.

Mr. LEA. How do you interpret that first dismissal? As a lawyer, what does that mean to you?

Mr. Ooмs. To me it would have meant complete disposition of the case and a determination which in any subsequent proceedings would be binding on the Government or anybody involved in it.

Mr. LEA. That is all.

The CHAIRMAN. Who issued that complaint?

Mr. Оoмs. The Federal Trade Commission.

Mr. O'HARA. Mr. Chairman.

The CHAIRMAN. Mr. O'Hara.

Mr. O'HARA. Mr. Ooms, that illustrates a question which I would like to ask. A competitor has a right also to go into the Federal court and sue where there is unfair competition, does he not, under the law, generally?

.

Mr. Оoмs. Oh, yes. That has recently also been expanded, Congressman O'Hara, in the Lanham Act, where the use of the trade name which is injurious to one or more competitors, may be enjoined. But under the common law of unfair competition, where the result of unfair competition resulted in diversion of business, you had a per

fectly good suit in a court of equity to enjoin the practice and to recover damages, if you had been damaged by it.

Mr. O'HARA. And in a suit of equity if the plaintiff who brought that action did not come in with clean hands in that case, the case would be dismissed.

Mr. ОOмs. That is correct.

Mr. O'HARA. Now, what happens if a competitor has unclean hands and comes in before the Federal Trade Commission? Would that interfere with the prosecution of that defendant in that instance?

Mr. OOмs. No, it does not. He is completely insulated. You are not even allowed to inquire who he is. If he took the stand and testified against you, you could not ask him whether or not he was the man that instituted this complaint. The courts have held that is irrelevant, his conduct or his position in the industry has no bearing upon the continuation of the proceedings by the Commission. Mr. HALE. Even if he acts in a malicious manner?

Mr. Ooмs. It would not make a bit of difference. I assume if he— this is law-but, I assume if he went to the point of complaining maliciously against you before the Commission and provoked them into instituting a proceedings, and there was no foundation for it, that perhaps the law of malicious prosecution would give you some remedy against him. I am a little doubtful about that, because he does not bring the suit as a principal, but merely encourages the Commission to do so.

Mr. O'HARA. If he did that in a Federal court he would be subject to malicious prosecution on his individual actions in a court of equity, would he not?

Mr. Oомs. He would be subject to a suit for damages at law if he had brought the suit maliciously.

Mr. O'HARA. Well, is there any aura of protection to witnesses who come in and testify for the Federal Trade Commission in those sort of suits, or are they relieved from any responsibility?

Mr. Оoмs. I do not think it is quite that, Mr. O'Hara. It is merely that when the Federal Trade Commission acts it is acting there in the public interest and I think the courts have held that when the Government itself moves in on a case that the question of its motives or origin of the complaint becomes irrelevant and then the issue is one of whether the public interest is to be served by that or not.

Mr. BENNETT of Michigan. They would be in the same position as to that point as they are in court, because the complaint would be filed by the Federal Trade Commission and not by a competitor-or would it under this bill?

Mr. Ooмs. This bill does not change that, so far as I can tell. Whether or not a court would permit the showing of the background of the proceedings, I do not know. I doubt very much whether that would change the procedure. After all their real cause is in the public interest and that makes little difference whether the complaint is brought in by A, B, or anybody else. If it has gone far enough to have a complaint filed the Commission would very probably bring the complaint; but with this kind of trial and procedure you can see who the competitor is who is annoyed with your success and he may very well subject you to a very annoying and burdensome case or annoying and burdensome litigation over trifling matters.