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rest of the witnesses are withdrawn. But we never get their names; we are never able to use them.

Mr. REECE. Their names do not appear on the record ?
Mr. Mock. Of course, they never appear on the record.

Mr. REECE. All of which gets around to the fact that, unfortunately, we are all human beings.

Mr. Mock. Unfortunately, that happens to be the case. Thank you.

Mr. ROGERS. Just one question. What about the right of respondents to subpena? Do they have the same rights as the Commission as to subpenas?

Mr. Mock. It was explained yesterday that they haven't the same right to subpena duces tecum. They have to get permission, based on an affidavit, of the Commission itself.

Mr. Rogers. They have to disclose their case before they can get it! Mr. Mock. That is correct.

Mr. ROGERS. Would you have any objection to substituting the district courts of the United States for the circuit courts of appeals ?

Mr. Mock. You mean,

Mr. ROGERS. Why shouldn't the respondents have that right? Why should a respondent have to go to the circuit court of appeals when he could go to the district court? Why should he be put to all that expense?

Mr. MOCK. And you mean there would be no further appeal from the district court?

Mr. ROGERS. I don't mean that. I mean why shouldn't we put the original proceedings for review in the district court rather than in the circuit court of appeals?

Mr. Mock. I think the theory of that was this: In establishing the Federal Trade Commission they felt that the Commission was, in a way, on a level, as a judicial body, with the district court, being a court of first instance, and they felt that the district court was really not intended to function as an appellate court. I see a great deal of logic in what you say. I have thought at times it causes great inconvenience and expense to go to the circuit court of appeals where you might go to the district court.

Mr. RABIN. Thank you, Mr. Mock.
Mr. Sylvester J. Liddy.

STATEMENT OF SYLVESTER J. LIDDY, REPRESENTING THE UNITED

STATES TRADE MARK ASSOCIATION

Mr. LIDDY. My name is Sylvester J. Liddy, I am a practicing attorney of New York, and I have been practicing trade-mark law for 20 years. I speak here on behalf of the United States Trade Mark Association.

The United States Trade Mark Association is a nonprofit organization, organized in 1878, which was just 8 years after the passage of the first trade-mark law in the United States. It is, I believe, the oldest organization of its kind in the United States, if not in the world.

The purpose of the United States Trade Mark Association is set forth as follows:

To promote the rights of owners of trade-marks, to secure useful legislation and treaties, and to give aid and encouragement to all efforts for the advance ment and observance of trade-mark rights.

In giving support to the Reece bill the association feels that it is carrying out the purpose of its founders. .

We are concerned here today primarily with those aspects of the situation with relation to trade-marks. I want to say at the outset that our association is well aware and well pleased with the outstanding work that has been done through the years by the Federal Trade Commission, and its great accomplishments. I wish I had the eloquence of Mr. Charles Murphy, who so well stated that yesterday, but since I haven't, I merely wish to endorse wholeheartedly his remarks in that respect.

Trade-mark questions are always questions of degree. That has been very ably set forth by Mr. Justice Learned Hand, of the second circuit, when he said:

In controversies about trade-marks the question is almost always one of degree, that is, how far does the chance of deception outweigh the inconvenience or worse to the merchant inevitable in compelling him to change his mark, his name, or his package. The degree marks the compromise which the court thinks necessary and desirable. It is the resultant of those unexpressed determinants which collectively we conceal under the term “discretion.”

"We do not forget," said Learned Hand, "that from time immemorial this duty has been entrusted to the court.'

And I would like to repeat that point: We do not forget that from time immemorial this duty has been entrusted to courts.

Then Judge Hand continues : But that is irrelevant, Congress having now created an organ endowed with the skill which comes of long experience and penetrating study, its conclusions inevitably supersede those of courts, which are not similarly endowed.

The United States Trade Mark Association believes that the circuit court of appeals should have the power to modify orders of the Federal Trade Commission and that it is the duty of the courts to do so in a proper case.

We also feel that the decisions of the Commission itself should be based on a preponderance of the evidence.

Now, the circuit courts of appeals have many times in trade-mark and trade-name cases, as well as in other cases, modified orders of the Commission where they thought the remedy was too harsh, and they did that following the Royal Milling case. But with the decision in the Herzfeld case, the second circuit said:

However, since Federal Trade Commission v. Royal Milling Company was de cided the Supreme Court has as much circumscribed our powers to review the decisions of administrative tribunals in point of remedy as they have been circumscribed in the review of facts. Such tribunals possess competence in their special fields which forbids us disturbing the measure of relief which they think is necessary; in striking that balance between the conflicting interests involved which the remedy measures, they are for all practical purposes supreme.

With all due deference to the Federal Trade Commission, our association feels they should not be supreme in that respect. On the contrary, and particularly when dealing with trade-marks, where as I pointed out, the decision is almost always one of degree, this duty of ultimate decision in such cases should be entrusted to the courts, where from time immemorial the duty has been vested.

A review of the cases will show that in a number of instances the circuit courts of appeals would have modified the decision of the Com

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mission as to the remedy if it had thought it had power. The Alpacuna case has been referred to several times. I shall not spend too much time on it, but in its decision, Judge McLaughlin, of the third circuit, had this to say, and I think it is most significant:

Although we sustain the Commission and its finding as to the name “Alpacuna” because of substantial evidence supporting that finding, we think strongly that the order is far too harsh. It destroys a widely and favorably known trade name, in existence for 14 years; it causes serious injury to the petitioner and its retail outlets. The infraction, as the case now stands, is slight, and could be cured by simple qualifying language. We could dispose of the problem by modifying the Commission's order as suggested, if the practice as outlined in Federal Trade Commission v. Royal Milling Company, and Federal Trade Commission v. Hires Turner Glass Company was still the law.

It is evident, therefore, that the discretion as to the remedy in such controversy as this has now been vested in the Federal Trade Commission. That discretion has been exercised to totally prohibit the use of the name “Alpacuna” to the petitioner. Since the Commission has such power, we are unable, in view of the evidence, to say that the power has been abused in this instance, though under the same facts and circumstances, if we were still in control of the remedy, we would modify the order as above indicated.

I want to point out that in the decision of the Commission itself there was a very strong dissent by Commissioner Freer. It is short, but forceful.

Commissioner Freer dissents from so much of the order as wholly prohibits the continued use of the name “Alpacuna” for the reason that this trade name, which has been in use for more than 13 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.

That was the dissenting opinion of the Commission.

After this decision of the third circuit came down, a petition was filed by the Siegel Co. for rehearing. In opposition to that petition for rehearing the Federal Trade Commission filed a brief. The committee has heard several excerpts from that brief, and they are in the record. I am going to read one that was not mentioned, and which is very short. Throughout the brief, I might say, the Commission repeatedly stated that the circuit court of appeals has no power to modify the order in this case. That was repeated several times, but the particular excerpt I wish to read is as follows:

If there is hardship or inconvenience in the instant matter which requires consideration, that is a matter which should be at least specifically referred back to the Commission for primary consideration as stated in the El Moro case.

Now, the very next sentence

It is submitted, however, that there is none that will justify a modification of the order.

Here we have the Commission saying to the court, “If you feel that there is hardship, send it back to us for consideration. We feel that there is no hardship that would justify a modification of the order." Obviously a remandment under such circumstances would be futile. Perhaps such an anomalous situation is inevitably inherent in a governmental agency that tries, impartially, to be sure, to function as judge and prosecutor at one and the same time. It seems to us the zeal of the Commission, in its role of complainant and prosecutor is hardly consonant with the impartiality and fairness required of a Commission when it sits as a judge.

Mr. RABIN. If the Commission's position were correct, then that word "primary" would be surplusage?

Mr. LIDDY. We think, as does the Reece bill, a proper safeguard should be provided to see that justice is done.

Mr. REECE. The provisions of H. R. 2390, in this respect, do not undertake to remove any power from the Federal Trade Commission, but simply, being in the position that it gets in, under the law, gives the court power for a full review of its action.

Mr. LIDDY. That is my understanding exactly.

There are several other cases. This is not an isolated instance. But I am not going to burden the committee with further references now. I am going to file a memorandum on that.

I want to conclude with just one general observation, but I believe it is pertinent. In the history of our country I may well say that the present is the product of our past, and, by the same token, if there is going to be an outgrowth of this present; so what his gneeration does unquestionably is going to shape our future. If, therefore, we fail wherever possible to restore to the courts the powers which have been inherently and traditionally theirs, then I see we are bound, in the course of time, to upset that system of checks and balances which the founders of this country insisted on and found so necessary, and I honestly feel that no one, intentionally or otherwise, would want to upset that balance.

I thank the committee for its courtesy.

Mr. O'Hara. Why should there be anything wrong about permitting a person aggrieved by an order of the Federal Trade Commission to have his appeal in a district court? In your opinion, would there be so many appeals to such a court?

Mr. LIDDY. I think, sir, if I may answer your question this wayif the court of appeals, or whatever the reviewing court may bein this instance it is the circuit court of appeals—had the power to modify, and if a case came up to them on the preponderance of evidence rule, so that they themselves could weigh the evidence, which they cannot do now, then I think it would not be necessary to have this trial de novo in the Federal court. I am not opposed generally to the idea of trial de novo, but let me say this: The Federal Trade Commission has been set up for this purpose, and as I said before, has done an excellent job. Perhaps if all of that work were to go to the district courts, a second time, there would be unnecessary duplication, sir. I am always personally in favor of having a proper and full review by the court, whatever court that may be, but I do feel we should avoid, wherever possible, duplication. Does that answer the question!

Mr. O'Hars. Well, partially.

Mr. ROGERS. I just want to get your reaction on this: Why should a respondent be required to go to the circuit court of appeals instead of using the district courts? Isn't it usual for a respondent to have his case tried in the lower court?

Mr. LIDDY. I think we could, sir, have appellate jurisdiction in the district court.

Mr. Rogers. Don't you think you would get the same relief in the district court that you get in the circuit court of appeals?

Mr. LIDDY. I think you would, but it adds an additional step. You see this litigation is pretty lengthy, perhaps of necessity. Now, if we go first to the district court, we should again have the right to go to the circuit court of appeals, and in a proper case, to the Supreme Court of the United States. Unless there would be very strong reasons for it, I myself would not want to add an additional step to prolong that litigation, just as in some instances we skip a court in other fields. But I myself would have no objection to it. I personally feel that the more opportunities our courts have to review judicial matters, with the experience and training that they have, I say give it to the courts, whatever court that may be.

Mr. Rogers. Don't you think it would be less expensive for a litigant to go into district court, rather than way up to the circuit court?

Mr. Lipdy. I haven't thought that through, sir. I would say it perhaps would be a little less expensive, but not materially so in the long run.

(A brief submitted by Mr. Sylvester J. Liddy, on behalf of the United States Trade Mark Association, is as follows:)

MEMORANDUM OF UNITED STATES TRADE MARK ASSOCIATION IN SUPPORT OF THE

REECE BILL (H. R. 2390)

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The United States Trade Mark Association is a nonprofit organization founded 68 years ago, in 1878. Its purpose as established by its founders is to promote the rights of owners of trade-marks, to secure useful legislation and treaties, and to give aid and encouragement to all efforts for the advancement and observance of trade-mark rights.

In giving support to H. R. 2390, the Reece bill, the association believes that it is carrying out the purposes of its founders.

A large number of cases coming before the Federal Trade Commission have involved the use of trade-marks. For example, one of the recent and important cases, is that of Jacob Siegel Co. v. Federal Trade Commission, decided by the United States Circuit Court of Appeals for the Third Circuit on November 30, 1944, involved the use of the well known “Alpacuna" trade-mark, This case will be referred to in more detail hereafter.

It is with cases of this kind that the United States Trade Mark Association is primarily concerned. As the courts have so well said In controversies about trade-marks

the question is almost always one of degree, i. e., how far the chance of deception outweighs the inconvenience, or worse, to the merchant inevitable in compelling him to change his mark, his name, or his package. The decree marks the compromise which the court thinks adequate and necessary; it is the resultant of those unexpressed determinants which collectively we conceal under the term “discretion". We do not forget that from time immemorial this duty

has been entrusted to courts, but this is irrelevant. The court then continued, however, in commenting upon the limitations imposed upon it in reviewing decisions of the Federal Trade Commission

Congress having now created an organ endued with the skill which comes of long experience and penetrating study, its conclusions inevitably

supersede those of courts, which are not similarly endowed." The United States Trade Mark Association believes that the circuit court of appeals should have the power to modify orders of the Federal Trade Commission and that it is the duty of the courts to do so in a proper case. This is a particularly necessary safeguard where, as in the case of the Federal Trade Commission, the Commission is complainant, judge, and jury. We wish to say parenthetically at this point that our association is well aware of the outstanding work of the Commission but believes nevertheless as a matter of principle that the Commission should be required to base its rulings on a preponderance of the evidence and that the reviewing court should have the power to modify the ruling of the Commission when in the opinion of the

1 Learned Hand, Jr., in Herzfeld v. Federal Trade Commission (140 F. (20) 207 at 209, C. C. A. 2d Cir.).

2 John Bene v. Federal Trade Commission (229 F. 468).

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