thought to be important. Mr. Digges further stated that the representative, in reply to an inquiry from him, said that he could not testify for respondent without the prior consent of the Federal Trade Commission—that there was an interdepartmental rule of comity in that respect. In answer to a further question of another member of the committee as to whether he did not have the power of subpena in behalf of his client, Mr. Digges correctly stated that plain subpenas might be issued either upon request to the trial examiner or to the Secretary of the Commission, and that he had never had any experience of such a subpena being unreasonably withheld. Upon a further question from the committee as to whether the witness from the Bureau of Standards appeared, Mr. Digges stated: No, sir. The consent and the permission of the trial counsel was not forthcoming, and I didn't get him. As the inability to secure the testimony of the witness, under the circumstances outlined by Mr. Digges, would amount to a denial of due process to respondent, on the day after Mr. Digges testified, I had the following letter written by one of my assistants to Mr. Digges: DEAR MR. DIGGES: Mr. Whiteley has requested that I secure from you some information, if possible, in connection with the incident that you mentioned yesterday in your testimony at the hearings on the Reece bill when you testified in substance that upon an attempt to secure from the National Bureau of Standards of the Department of Commerce a witness to testify in a proceeding before the Commission, you were advised that the Bureau could not furnish the witness unless it had the consent of or permission from the Federal Trade Commission. As Mr. Whiteley recalled, you stated that this occurred in connection with some case you had before the Commission in 1935. Would you kindly advise me the name of the case, the name of the desired witness, if you recall it, and the circumstances under which you made your request. I should also like to know whether or not you reported this matter to the trial attorney for the Commission, the trial examiner, or to the Commission itself, with the request that the attendance of this witness be secured, and, if so, with what result. It would be appreciated if you would supply me this information at your earliest convenience. To this letter Mr. Digges replied: DEAR MR. THOMERSON: Answering your letter of January 30th, the incident referred to occurred during the late winter or early spring of 1940 during the course of the Good Housekeeping case that was a case brought against the Hearst Publishing Co., who publish Good Housekeeping, for alleged false representations made in that publication. We had sought to produce witnesses from the Bureau of Standards in order to show (1) that the consumer testing done by Good Housekeeping was equal if not superior to that conducted by the Bureau, (2) that the Bureau made provision for marginal error in its testing, and (3) that the Bureau has often sought and received the assistance of Good Housekeeping with regard to testing consumer items, and in many cases adopted our own standards. We do not recall the name of the person contacted in the Bureau. We did not, ourselves, bring the matter to the attention of the Commission as we had been advised by the person in the Bureau of Standards that he had sought the Commission's permission and had been denied it. In his testimony before the committee Mr. Digges had stated that he was prevented from securing the testimony of the Bureau of Standards' representative because the "consent and the permission. of trial counsel was not forthcoming." In reply to the letter from my office, he stated: We did not, ourselves, bring the matter to the attention of the Commission as we had been advised by the person in the Bureau of Standards that he had sought the Commission's permission and had been denied it. Whether Mr. Digges was so advised by any responsible person in the Bureau of Standards is not important. An examination of the Commission's files, however, fails to disclose any inquiry or request from the Bureau of Standards with respect to the matter. Had such à request been made orally, it should have come to my attention as I was directly in charge of the trial of cases of this character. If the testimony was, as he stated, important to his client, Mr. Digges must have known, as any trial attorney of much less experience before the Commission knows, that all he had to do was to apply to the trial examiner or to the secretary of the Commission for the issuance of the subpena, and that no rule or policy of comity would prevent the issuance of such a subpena. Mr. Digges indicated that he knows quite well that that is the fact in his statement in answer to a question by a member of the committee that he had never known the Commission unreasonably to refuse to issue a plain subpena. What I want to state most emphatically is that the Commission has never refused to issue a subpena for any such person because of any such rule or policy of comity. Mr. Digges is well aware of the fact that all he had to do in that or any other instance of like character was to inform the Commission that he desired the subpena issued and the requisite directions would have been given by the Secretary of the Commission. If the production of the witness in question was as important as Mr. Digges had led this committee to believe, then his failure to secure a subpena in the manner that he knew was available to him constituted a dereliction in his duty to his client. Be that as it may, I resent the plain imputation that the requirements of due process are not or have not been observed by the Commission, or its officials, in the trial of cases before it. Several of the witnesses appearing in support of the provisions of the pending bill contend that the provisions of orders to cease and desist issued by the Commission in certain cases were too harsh in that they required respondents to cease the use of registered trademarks or trade names which had been used a number of years. In other words, their contention is that such respondents should have been permitted to continue the use of the deceptive trade-mark or trade name followed by qualifying or explanatory language. One of the earliest cases decided by the Commission, and which has been a landmark in unfair-competition law since that time, was that one of the Winsted Hosiery Co. in which the order of the Commission was sustained by the Supreme Court, in its opinion handed down April 24, 1922. The Commission had found that the word "Merino" as applied to wool meant "primarily and popularly" a fine, long-staple wool which commanded the highest price. It also found that a substantial part of the consuming public understood the words "Merino," "Natural Merino," and "Gray Merino," as applied to underwear, to mean that the underwear was all wool. That by means of the labels and brands of the Winsted Co. bearing such words part of the public was misled into buying as all-wool underwear which in fact was in large part cotton. It was contended on the part of respondent that the labels bearing the word "Merino" had long been established in the trade and were generally understood by it as indicating goods partly of cotton; that the trade was not deceived by them; that there was no unfair competition for which another manufacturer of underwear could maintain a suit against the Winsted Co.; and that even if consumers were misled because they did not understand the trade significance of the label, or because she retailers deliberately deceived them as to its meaning, the result was in no way legally connected with unfair competition. The Supreme Court, however, held that the fact that misrepresentation and misdescription have become so common in the knit-underwear trade that most dealers no longer accept labels at their face value does not prevent their use being an unfair method of competition. A method inherently unfair does not cease to be so because those competed against have become aware of the wrongful practice. Nor does it cease to be unfair because the falsity of the manufacturer's representation has become so well known to the trade that dealers, as distinguished from consumers, are no longer deceived. The Court further said: And trade-marks which deceive the public are denied protection although members of the trade are not misled thereby. In the case of H. N. Heusner & Son, the Federal Trade Commission ordered a Pennsylvania manufacturer of cigars containing only Pennsylvania tobacco but which were branded "Havana Smokers," to cease and desist from using the word "Havana" to designate its product. The Circuit Court of Appeals for the Third Circuit was asked by respondent to modify this order so as to permit the retention of the word "Havana" with the following qualification: Notice these cigars are made in the United States and only of United States tobacco. The Court stated with respect to this request that The difficulty of petitioner's position lies in the fact that the implication of the word "Havana" is totally false. The purchaser can be guided by either label or legend, but not by both. This circumstance came before the Court of Appeals for the District of Columbia in a recent case. After a carefully considered review of the authorities the learned court concluded: 66* * * But the phrase 'Army and Navy' in the name 'Army & Navy Trading Co.' makes the single representation that at least the major portion of the merchandise offered for sale is in some sense Army and Navy goods. This single representation being untrue, it cannot be qualified; it can only be contradicted. The cases urged by the Trading Co. and above discussed justify qualification of a trade name where qualification is possible; they do not justify contradiction" (Federal Trade Commission v. Army and Navy Trading Co., 88 F. (2d) 776, 780). We doubt if petitioner would accede to a true qualification-"Fake Havana Smokers." Of course, they would not. To the same effect was the decision of the Circuit Court of Appeals for the Fourth Circuit in El Moro Cigar Company v. Federal Trade Commission, decided November 6, 1939, in which the brand name "Havana Counts" had been used by the respondent for more than 33 years, 17 of which years had been after the establishment of the Commission, during which time the propriety of its use had not been 85257-46- -17 attacked. The court held that the word "Havana" being false per se, its impropriety could not be cured by the use of the sentence, These cigars are made in the United States entirely and only of domestic tobacco. The court continued, Long use of a misleading brand can vest no right in the user. As was said by Mr. Justice Cardozo, in F. T. C. v. Algoma Lumber Co. (291 U. S. 67) : 66 * * The Federal Trade Commission was not organized till 1914, its jurisdiction then as now confined to interstate and foreign commerce. Silence up to that time is not even a faint token that the misapplied name had the approval of the industry. It may well have meant no more than this, that the evil was not great, or that there was no champion at hand to put an end to the abuse. Even silence thereafter will not operate as an estoppel against the community at large, whatever its effect upon individuals asserting the infringement of proprietary interest (French Republic v. Saratoga Vichy Co., (191 U. S. 427). There is no bar through lapse of time to a proceeding in the public interest to set an industry in order by removing the occasion for deception or mistake * * *" It cannot be successfully contended that the interest of the public is not involved. As we said in the Walkers New River Mining case, supra: "That the public interest is involved cannot be doubted. It is manifestly in the interest of the public to prevent the continuance of an unfair practice which tends to deceive the public and divert trade from competitors." I might add also that the court of appeals in this case concluded its opinion in the following language: The findings of fact made by the Commission are supported by the great weight of the evidence. The order made was a proper one and an order will be entered enforcing it. The cases just cited conclusively show that neither registration nor long-continued use of a trade-mark or trade name which is false entitles the trader to any protection, and that where the trade-mark or name is false per se, its use should be absolutely prohibited, since the deception necessarily incident thereto cannot be cured by any qualifying or explanatory language. Several of the witnesses appearing in support of the pending bill have referred to and quoted from the court of appeals' opinion in the Jacob Siegel Co. case. I think every one of the witnesses who criticized the review given. by the appellate courts to the Commission's orders referred to cases with which they had had nothing to do. I think not a single one of them referred to a case that he himself had tried before the Commission. I recall distinctly that Mr. Digges stated that although orders to cease and desist had issued against him by the Commission, and I believe they have issued against his clients in five cases, he had not found it necessary to appeal or to file a petition for review in any one of these cases. And I think the other gentlemen referred to cases which they had not tried. It may have been easier for them. They may not have been so tied down to the real facts. They may have been able to speak more recklessly and loosely when they were discussing cases that they had not tried and with which records they were not familiar. Be that as it may, I want to discuss for a moment the Siegel Co. case, the so-called Alpacuna case, because that has been held up as a sort of horrible example of what happens in the judicial review of the Commission's cease-and-desist orders. That case involved the deceptive and misleading use of the trade name "Alpacuna" for overcoats and topcoats manufactured by the Jacob Siegel Co., of Philadelphia. The contention has been made that it shows the inadequacy of court review of the Fereral Trade Commission's orders to cease and desist. In the Siegel case the respondent, about 1930, adopted the trade name "Alpacuna," a contraction of "alpaca" and "vicuna," for the garments manufactured by it, and widely advertised said trade name. It furnished its dealers suggested advertising copy for use by such dealers in advertising the so-called Alpacuna garments in newspapers published in the trade areas served by such dealers, and frequent and repeated use was made by said dealers of this copy. Among the statements found in such copy was the following: Studying the sources of the famous Alpacuna fabric is a real geography lesson. From the South America Andes we took the warm, light, silky hairs of the alpaca. From the valleys of old Peru we took the fine, lustrous coat of the guanaco. From the plains of Turkestan we took the sturdy, durable hairs of the Angora. From the Texas Panhandle we chose the thickest, warmest, and richest sheep's wool. They were all brought together and scientifically blended into a fabric that's unmatched for richness, luxury, warmth, light weight, long wear. The Commission found that in neither the overcoat nor the topcoat is guanaco hair used, with the exception that occasionally guanaco hairs may find their way into shipments of alpaca by the mill which manufactures the fabric for respondent. In such cases, however, the presence of guanaco hairs is due entirely to accident, and the amount of the same is negligible. The Commission further found that the Angora-goat hair or wool used in the fabrics is not imported from Turkestan, or from any other foreign country, but is a domestic product obtained from Angora goats raised in Texas. It also found that the use of the name "Alpacuna" by respondent was misleading and deceptive because it represented or implied that the coats so designated contained fibers obtained from the South American animal known as the vicuna. In fact, there was no vicuna fibers at all in the garments, the topcoat being composed of approximately 50 percent alpaca, 20 percent mohair, and 30 percent sheep's wool, and the overcoat being composed of about 70 percent of the three fabrics mentioned and of about 30 percent cotton backing. In other words, a great many of the garments contained 30 per cent cotton, and there is not the slightest doubt but that the public understood that all of these garments were represented as being all-wool. A number of witnesses, both persons in the trade and members of the consuming public, testified that to them the name "Alpacuna" indicated that the coat contained both alpaca and vicuna fiber, and that the presence of vicuna fiber was indicated by the suffix "cuna". Upon consideration of the entire record, the Commission found that the use by the respondent of the foregoing representations with respect to its coats, including the use of the name "Alpacuna," has the tendency and capacity to mislead and deceive a substantial portion of the purchasing public with respect to the fiber content of such coats and the origin of the materials used in such coats, and the tendency and capacity to cause such portion of the public to purchase substantial quantities of respondent's coats as the result of the erroneous and mistaken belief engendered by such representations. It further found |