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Mr. REECE. The proposed amendment to which you refer probably ought to be repeated again by way of emphasis. In exempting foods, drugs, cosmetics, it provides these items shall be exempt from the provisions of this act to the extent of the application or the extension thereto of the Federal Food, Drug, and Cosmetics Act.” Thus when you make sure that there would be no gap that would be uncovered
Mr. Hoge. That is right.
Mr. REECE. In your statement. But the amendments were proposed with a view to overcoming the overlapping jurisdiction, and, I inight, if the witness will pardon me, deviate here to say that as a member of the subcommittee dealing with food and drugs, Mr. Chairman, and the subcommittee dealing with the advertising provisions under the Wheeler-Lea Act, it is my recollection that the committees took great pains to try to prevent overlapping of the jurisdiction.
There was a very keen interest, we might also say an anxiety on the part of some, for fear there would be an overlapping
of jurisdiction, that the whole subject should go over to the Pure Food and Drug Administration.
And in the Congress previous to the drawing up of the WheelerLea Act, which resolved the question, as a member of the subcommittee drafting the pure food and drug bill, if I may be pardoned for saying so, I am the one that made the point, so to speak, to give jurisdiction over advertising to the Federal Trade Commission for the reasons set out by the witness here that heretofore it had had general jurisdiction over advertising. It was our thought when it was resolved in the manner that it was resolved, that the
danger of overlapping jurisdiction had been avoided and that labeling remained solely under the jurisdiction of the Pure Food and Drug Administration, and for good reasons because that was the Administration that had grown up in dealing with that subject for the purpose of protecting the health of the people and had scientific and technical staffs capable of so protecting the public.
And I hope you will pardon me, for I am merely stating this for my own satisfaction, and, for one, I was very much disappointed when this conflict in jurisdiction arose.
The witness has recited some of the cases, but there are cases of record, Mr. Chairman, where the Federal Trade Commission had dealt with a particular labeling, in a particular case, and reached a conclusion, the Food and Drug dealt with the same case and reached a different conclusion, and vice versa, and in each case the court took cognizance of the previous action by another governmental body on the same subject matter. It became clear to me that was an unwise situation as well as one that was unfortunate, both from the standpoint of protection to the public and the standpoint of the litigants that might be concerned in the proceedings between the two bodies. So well do I recall that it was that phase of the case then, Mr. Campbell, Director of Pure Food and Drug Administration, and later his successor, Dr. Dunbar, who then, I believe, was his assistant, were concerned with when this matter was up. All parties, as I recall, who were concerned when this matter was under consideration, reached the conclusion that the possibility of conflict had been removed, and it was so stated in the report of the committee, and so
stated by the chairman, the now chairman—then chairman of the subcommittee, in his address to the Congress.
And for one, after the conflict arose, having had some part in bringing about the situation, Mr. Chairman, that resulted in the conflict, I felt some responsibility to all parties concerned, to undertake to clarify, to be of assistance in clarifying, and to remove the conflict if possible.
And I want to beg the committee's pardon as well as the pardon of the witness, in stating this, but I am stating my views on this subject because I have felt a responsibility that I have not been very happy about. That phase of the situation is responsible for my interest in introducing this bill in the first instance.
And then when I went into the subject, I branched out and included other aspects of the case.
And in presenting the bill and in any consideration that has been given it, it has not been my purpose, and I am sure not the purpose of the committee, and I feel, not the purpose of any of the witnesses to reflect upon the administration of the Federal Trade Commission, because I have the highest regard for that body, and the important position which it holds and I hope that no one will construe the position that anyone might take on this particular legislation as in anywise indicating a lack of confidence in this estimable agency of the Government, nor of its personnel, because, so far as I am personally concerned, all of the personnel whom I know are my friends, and I consider the Commission my friend, and those considerations are entirely outside of the purview of the matter that is before us.
I again beg your pardon.
Mr. HOGE. am awfully glad Mr. Reece said that. Might you just permit me apropos of what he said to say this, too, as Mr. Reece remembers, I was before this committee in those years when these two laws were being worked out. I gave a great deal of my thought to the laws then. I have given a great deal of my thought and time to them since.
I like to think that I have given a great deal of my life to these laws and that I have a very deep and abiding interest in strong and effective food, drug, and cosmetic legislation in the United States.
I think that the finest thing that ever happened for the manufacturers in this line of business was when the Food and Drug Act, that fine, comprehensive law of 1938, was passed.
There is no difference ultimately between the interests of the consumer and the interests of the manufacturer. And any law which insists upon that standard and enforces it is a fine law. But the situation that has developed is not in the public interest. This situation is not what you gentlemen intended, as Mr. Reece has just said.
We all know that was not intended and I speak just as you did, Mr. Reece, without any animus whatsoever as respects any member of the Federal Trade Commission or its staff. I have the utmost respect for those gentlemen, and I like to think of all of them as personal friends. I am not speaking of individuals. I am speaking of laws here this afternoon and systems under laws, and policies, Mr. Chairman, of the Congress in the formulating of laws.
And what we intended in 1938 has not been realized.
Confusion does exist between these two agencies and the enforcement of these two laws.
I do not believe it can be seriously disputed. And I say to you that it is a matter which the Congress ought-and I think the introduction of this bill, Mr. Reece, and the kind of attention that you gentlemen are giving us show the disposition of the Congress—to give attention to it.
I have no brief for the bill as it stands. If there are better ways of doing it, I should subscribe to any bill that will correct this situation.
And let me say one thing more. I hold no brief whatsoever for any license in the dissemination of false advertising. I am just as opposed to that as the Federal Trade Commission or any other person in this room. I ask no license for that, but I do ask to change the picture from what it is today, and I ask it, not only on behalf of business, but in the interest of the public.
Mr. REECE. I would also, since I have referred to the Federal Trade Commission, likewise express my very great admiration for the manner in which the Food and Drug Administration has administered the authority which is vested in it.
There is no agency that rendered any higher service to the public or which has been, or is being, more ably administered; and there is no part of my service, during the 24 years that I have been on the Hill, in which I take greater pride than any small service I might have rendered in connection with the formulation and adoption of the Pure Food and Drug Act, and this other aspect over which the Federal Trade has jurisdiction, of course, along with that. And my only purpose is to resolve it in the best way.
I had a letter from Dr. Dunbar, director of Pure Food and Drug Administration, which I would also like to make a part of the record for the consideration of the Congress.
(The matter previously referred to by Mr. Hoge is as follows:)
UNITED STATES CIRCUIT COURT OF APPEALS FOR THE THIRD CIRCUIT
No. 8407. October Term, 1943 JACOB SIEGEL COMPANY, PETITIONER, v. FEDERAL TRADE COMMISSION, RESPONDENT
PETITION TO REVIEW ORDER OF THE FEDERAL TRADE COMMISSION TO CEASE AND DESIST
Before Biggs, JONES, and MCLAUGHLIN, Circuit Judges
OPINION OF THE COURT
(150 Fed. 20) 751, certiorari granted January 2, 1946)
(Filed November 30, 1944) By MCLAUGHLIN, Circuit Judge: The petitioner in this case has been manufacturing overcoats in the City of Philadelphia, Pa., for the last 30 years. In 1930 it dereloped a cloth for such coats consisting of a combination of alpaca, mohair, and wool fibers, on a cotton backing. This was inexpensive and designed for warmth and long wear. The purpose of adding the cotton was to obtain a denser face for the garment than possible with animal fibers alone. That same year the petitioner corporation gave the name “Alpacuna” to the coats. Within two years, the petitioner brought out a topcoat which it also called “Alpacuna.” The topcoat had the same animal fibers as the overcoat but in order to make it lighter, the cotton backing was eliminated.
Among other things, the Federal Trade Commission found that the name “Alpacuna” is misleading and deceptive to a substantial portion of the purchasing public in that it represents or implies to such persons that the coats contain fiber
obtained from the animal known as the vicuna. The Commission ordered that the petitioner forthwith cease and desist from “using the word 'Alpacuna' or any other word which in whole or in part is indicative of the word vicuna to designate or describe respondent's coats;
This language is the first part of Paragraph Six of the order. The first five paragraphs and the balance of the sixth paragraph are conceded by the petitioner and do not concern us. The issue has, therefore, been importantly narrowed and simplified.
There was a dissent in the Commission' to the part of the order here disputed. It is very short and we quote it in full:
Commissioner Freer dissents from so much of the order as wholly prohibits the continued use of the trade name “Alpacuna" for the reason that this trade name, which has been in use for more than thirteen years, is a valuable business asset, and is neither deceptive per se, nor is the testimony concerning its tendency or capacity to deceive sufficiently clear and convincing as to render such prohibition of its use necessary in the public interest. The only questions involved are: was there substantial evidence supporting the Commission's finding and whether the remedy provided was within its powers.
According to the petitioner's testimony, which was not contradicted, the name “Alpacuna” was created by its sales manager who used a fanciful variation of the word alpaca, which animal represented 50 percent of the wool fibers in the fabric. To alpaca the suffix "una” was added partly in order to obtain a word that was very easy to pronounce and partly to signify that the Siegel Company was the one manufacturer and the first to make the coat. The head of the Siegel Company testified that he did not have vicuna in mind at all in connection with the name “Alpacuna." He said further : "I was not familiar with it (vicuna] and I have been in business for 30 years and only in the last five years or six years I have heard of Vicuna. I was not interested in it. We never used it." It is undisputed that the vicuna is one of the rarest of animals. It is found principally in the high mountains of Peru and is of the llama family. In order to obtain its hair, the animal itself has to be killed. Such killing is regulated by law. Vicuna hair is one of the softest, finest animal fibers but has poor wearing qualities. Only a small amount of the fiber comes into the United States. The overcoats made from it, are valuable and run as high as $900. The Alpacuna coats retail at $40.
Strong testimony was presented supporting the petitioner's proposition that “Alpacuna" is a proper trade name for the particular coats and that the name does not represent to the public that the coats contain vicuna fiber. There was evidence of a poll taken in the particular section of a large New York department store where such coats were sold. Over 200 customers chosen at random were questioned and not one of them declared that the name “Alpacuna" indicated vicuna to them. There were numerous other witnesses, including: members of the public, reputable people in the clothing trade, department store specialists in protecting customers, a representative of clothing workers, a textile expert, etc. A person connected with the National Better Business Bureau stated he. has never received a complaint regarding the name “Alpacuna.” One of the functions of that organization is to receive complaints as to merchandise. The only person in the country who manufactures vicuna coats sent a letter to the Commission saying that he had no objection to the use of the name “Alpacuna" by petitioner. In addition to the direct defense testimony, some of the government witnesses supported the defense contention affirmatively by testimony to the effect that “Alpacuna“ did not mean vicuna content to them; there were other government witnesses whose testimony was weak; and still others indicating prejudice or bias.
Petitioner also produced testimony tending to show that vicuna in connection with fabrics, denotes a soft finish cloth and argues that it is, therefore, properly applied to petitioner's coats. As to this, the same textile expert describes vicuna finish cloth as a soft finish fabric with no definite indication as to its fiber content. This was corroborated by other witnesses. Petitioner introduced some dictionary definitions defining vicuna wool as the wool of the vicuna or a mixture of wool and cotton used for soft fabrics. Petitioner strongly argues that its product is a vicuna cloth, with the dictionary definitions justifying any possible implication in the name “Alpacuna” with respect to vicuna.
Petitioner next stresses the point that vicuna animal fiber and its qualities are not generally known to the public. It calls attention to the admitted rarity of the animal. One expert for the Commission stated that it is almost extinct. It is suggested that because of the extremely limited quantity of vicuna fiber
available and because of its perishable quality, it would not be practical to attempt to combine it with alpaca from the standpoint of large-scale commercial manufacture. It is contended that the thought of the $40 “Alpacuna” coat capitalizing on the term “vicuna" is farfetched since most of the potential customers do not have the least idea as to vicuna and the few who do, readily understand that a coat for large production and in the lower price field could not be produced from vicuna fiber.
In addition to the above, there are certain other important facts which appear. This proceeding was started in 1938 and in the original complaint there was no charge against the petitioner for using the name “Alpacuna.” After answer had been filed to original complaint, settlement negotiations were entered into at the suggestion of counsel for the Commission and the Siegel Company executed and returned the stipulation for settlement drawn by the Commission's counsel. That settlement was not approved by the Commission and thereafter an amended comp aint was filed which included the allegation regarding the use of the name “Alpacuna.” A group of retail stores who handle the "Alpacuna" coats have filed a brief as amicus curiae in support of the petitioner's stand. Those stores set out that they have a very definite interest in the retention of the name by reason of cooperation in extensive advertising and selling the product over a period of years and that the barring the use of the name “Alpacuna" is a matter of seriousdetriment and direct prejudice to them.
There was also an array of witnesses on behalf of the Commission. The Director of the Bureau of Standards of one of New York's largest department stores said: "I take it this coat is made of a combination of alpaca and vicuna fibers.” A person connected with a leading Philadelphia department store stated : ‘Alpacuna' overcoats conveys to me Alpaca and Vicuna, a combination of alpaca and vicuna.” A housekeeper on cross-examination stated she arrived at the impression that the garment was made of alpaca and vicuna as she said, "Well, from the name itself.” The assistant director of the Washington Better Business Bureau testified to the same effect. A person who had actually sold the coats for five or six years was of the opinion that they contained alpaca and vicuna fibers. The only person testifying who had purchased an “Alpacuna" coat said that he was told at the time he bought it that the coat was made
a vicuna wool-bearing South American animal." A number of other persons, including a construction engineer, housewives, a teacher, a physician, a publicity director of a Philadelphia department store, a director of merchandise research of another Philadelphia department store, a clothing salesman for a third Philadelphia department store, several people connnected with various clothing houses and men's shops, all associated vicuna with the word “Alpacuna.”. Most of these witnesses gave their impression after examining one or more of the various Commission exhibits of advertising matter with reference. to the coats.
The Commission vigorously disputed petitioner's proposition that vicuna does have an established secondary meaning. It produced dictionaries and encyclopedias in which pictures of the vicuna were shown and also various encyclopedias, dictionaries, and textile publications which do not include the secondary meaning of the word as asserted by the petitioner. Other evidence was produced tending to show that vicuna was known to a substantial portion of the public. For example, a letter from a principal of a textile high school in New York City was in evidence and stated that the school had a register of nearly 13,000 students, day and evening, with all of them taking a course in general textiles embracing knowledge of fibers obtained from goats, also sheep, vicuna, alpáca, etc. and that books dealing with the subject, and a wall chart showing pictures with samples of different fibers, vicuna, alpaca, etc. were used in the course. The letter concluded by stating: “I consider that it is part of general education under the head of commercial geography, textiles, and dressmaking for the average high school student to know something of alpaca and vicuna and other goat hairs—as well as sheep wool.”
Obviously, from the above very brief outline of the evidence, the petitioner has made an impressive showing in its efforts to retain the name “ “Alpacuna.” The Siegel Company is a well known and highly regarded concern and its coats. have achieved considerable popularity in their own price range. They are widely publicized and large sums of money have been expended by the Siegel Company and various retail stores in merchandising them. The Siegel Company coined the name for the coats in 1930 and has been using it since that time. At this: