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circuit court the interests of justice require such modification. This is the primary purpose of the Reece bill and the United States Trade Mark Association supports it.

As the sponsor of this bill, Representative Carroll Reece has pointed out, the amendment proposed under H. R. 2390 is not an innovation in our law.

The Walsh-Healey Act requires that the findings of the Secretary of Labor must be supported by the preponderance of the evidence (U. S. C. title 41, sec. 39). Under the Commodity Exchange Act orders of the Commission reviewing or revoking designations of contract markets must be sup

ported by the weight of the evidence (U. S. C. title 7, sec. 9). With respect to the power of the circuit court of appeals to modify orders of the Federal Trade Commission, it is of interest to note that the second circuit court of appeals modified orders of the Federal Trade Commission several times on the authority of the Royal Million Co. case* but that court has now recognized that it does not have the power to modify. In Herzfeld v. Federal Trade Commission - Judge Learned Hand for the court said

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

purposes supreme. The United States Trade Mark Association believes that in this respect the Federal Trade Commission, or any other commission, should not be supreme but on the contrary and particularly when dealing with trade-marks and where the question is almost always one of degree, that the duty of ultimate decision of such cases should be entrusted to the courts where from time immemorial this duty has been vested.

A review of the cases will disclose that in many instances the courts would have modified orders of the Commission if they had the power to do so. For example, in the Alpacuna case ® the Circuit Court of Appeals for the Third Circuit stated :

Although we sustain the Commission on 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 tue Commission's order as suggested, if the practice as outlined in Federal Trade Commission v. Royal Milling Co. (288 U. S. 212), and Federal Trade Commission v. Hires Turner Glass Co. (3 Cir. 81 F. (20) 362) 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. Order affirmed. It is interesting to note the position taken by the Federal Trade Commission in this case.

After the above-quoted decision of the Third Circuit was handed down in November of 1944, the Siegel Co. petitioned for a rehearing. In its brief in opposition to the petition of the Siegel Co., the Federal Trade Commission vigorously maintained that the court had no power to modify the order of the Commission. Witness the following excerpts from the Commission's brief:

Unless the findings and order are either (a) outside of the line of the evidence, or (b) represent abuses of discretion, there is no power in the courts to disturb such findings and order.?

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8 Congressional Record for Tuesday, March 6, 1945.
* Federal Trade Commission v. Royal Milling Co. (288 U. S. 212 ; 77 L. Ed. 706).
6 140 F. (20) 207 at 209.
Jacob Siegel Co. v. Federal Trade Commission (150 F. (20) 751 at 755, 756).

? Jacob Siegel Co. v. Federal Trade Commission, Brief for Respondent (F. T. C.) on Petition for Rehearing, p. 24.

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And again,

In view of the facts and the law as above presented, it is strongly con

tended that the court has not the power to “modify” the order in this case.8 And again

If there is a 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. It is submitted, however, there is none that will justify a modification of the Commission's order. It is still contended, we repeat, that the court

has no power to modify the order in this case. The court while disagreeing vigorously with the remedy provided by the Commission agreed with the Commission on the point that the court had no power to modify and said (on the petition for rehearing):

After carefully considering the question of possible modification of the Federal Trade Commission's order, we feel compelled to adhere to our original

decision which we confirm. 10 Here we find the Commission saying in effect to the court-if there is hardship on the petitioner return the case to us—we feel there is no such hardship as would require modification of our order. To remand a case to the Commission under such circumstances would be futile.

Perhaps such an anomalous situation is inevitably inherent in a governmental agency which tries to function as prosecutor, judge, and jury at one and the same time. The zeal of the Commission in its role of complainant and prosecutor is hardly consonant with the judicial temperament and impartiality required of the Commission when it sits as trier of the facts. Certainly it is not improper to seek, as does the Reece bill, that a proper safeguard be provided to insure that justice is done.

The Alpacuna case shows clearly the need for the relief provided by the Reece bill. But the Apacuna case is by no means an isolated instance of the need for this relief. The Committee on Interstate and Foreign Commerce is respectfully referred, for example, to the case of Parke, Austin & Liscomb v. Federal Trade Commission," where the second circuit speaking through Judge Chase said:

The petitioners are standing upon firmer ground when they insist that this paragraph in the order is needlessly severe in its sweeping requirement * * *

There may well be some alternative remedy less drastic but adequately effective which might satisfy the requirements of fairness and should be adopted. On this record, however, we cannot be sure that the Commission has abused its discretion. In this respect, and only in that

event should we interfere with its action.12 The United States Trade Mark Association respectfully urges that H. R. 2390 be approved for the reasons set forth above and the association likewise endorses the additional provisions of the Reece bill including those which seek to overcome conflict in jurisdiction with the Federal Food, Drug, and Cosmetic Act 1 and the provisions of the bill which would limit the aggregate amount of penalties. In the opinion of the association the additional provisions are all desirable amendments to the Federal Trade Commission Act. Respectfully submitted.

SYLVESTER J. LIDDY, Counsel. NEW YORK, N. Y., January 21, 1946.

Mr. RABIN. The district court, as one of original jurisdiction, would try the facts, and the circuit court is an appellate court. That is why, I assume, all these administrative bodies go right to the court that has appellate jurisdiction.

Mr. O'HARA. The trouble is, to go to the reviewing courts you have to have a disputed question of fact. If the court heard the facts, we would have a different situation.

13

8 Same, p. 49.
9 Same, p. 40.
10 150 Fed. (20) 751 at 756.
11 142 F. (20) 437 at 441, 442.

12 See also Indiana Quartered Oak Co. v. Federal Trade Commission (26 F. (20) 340, at 342, 343).

13 U. S. C., title 21, sec. 301, approved June 25, 1938.

Mr. RABIN. I am assuming that this provision be written into the law.

Mr. Kenneth Perry.

STATEMENT OF KENNETH PERRY, REPRESENTING JOHNSON &

JOHNSON, NEW BRUNSWICK, N. J. Mr. PERRY. Mr. Chairman and gentlemen, my name is Kenneth Perry; I am an attorney, vice president and general counsel for Johnson & Johnson, manufacturers of surgical dressings, New Brunswick, N. J.

I should like to address myself briefly to two points; one, preponderance of evidence, and the other, modification of remedy. I appreciate that both of these have been rather carefully surveyed by prior witnesses, but I should like to ask, in an attempt to find a proper solution, what may be said in opposition to the proposals of the Reece bill.

Coming down on the train day before yesterday I read for the first time the letter from the Chairman of the Commission addressed to this committee, dated, I believe, March 27, 1945. It is a history of the long and very distinguished record of the commission, a record of which I am sure every commissioner and every member of the commission staff is justly and properly proud.

The position of the Commission appears summarized in that statement in two words unnecessary and inadvisable. Unnecessary, because as I gather from reading that statement the Commission does decide its cases by the preponderance of evidence, and because its remedies are not unreasonably harsh or severe, therefore inadvisable.

I cannot go along with that position. Justice is a matter of right, not a mater of indulgence or a matter of grant by this commission or any other commission. Someone may say, “Why must that be in?" The Commission has erred. It has been reversed by the circuit court of appeals. It has been reversed by the Supreme Court, particularly prior to the recent decisions of the Supreme Court on the labor law, where the Court has taken the position that it did not take formerly, that the word "modify" in the statute has no meaning. The word “modify" as Dean Stason said, has been written out of the statute by the Supreme Court, and it was not written out until the labor cases came along

Now, in recent weeks, the Alpacuna case, in which either one Commissioner or four Commissioners erred. I don't presume to say which it is, but certainly some Commissioner erred, and possibly four, because there was a dissenting opinion, and Commissioner Freer did not agree with the others, and he was quite strong in his dissent.

Mr. REECE. The fact that we gave the Court of Appeals the right to review the decision of the courts of original jurisdiction is not any reflection upon the inferior courts, and the fact that we gave the Supreme Court the right to review the decisions of the Court of Appeals is not any reflection upon the character, ability, or integrity of the judges who constitute the lower court, and I think it would be unfortunate in this case if in an effort to give a full review by the courts of the actions of the Commission, it should be construed by anyone within the Commission, or elsewhere, as in any way reflecting upon

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the character, integrity, or ability of the members of the Commission or the members of the Commission's staff.

Mr. PERRY. I go whole-heartedly with all of that.

Mr. O'HARA. Of course, some of the judges feel hurt by an appeal from their decision. I think that is not a privilege of the court, but I believe we all feel that we have that right to appeal.

Mr. Perry. Certainly. I would like to comment, since you bring that up at this point upon this matter of review in the district court as distinguished from the circuit court and trial de novo. I am 100 percent for trial de novo in the district court. When I try a case I want a third party as the judge. I don't want my adversary as the judge.

We have been told about the Commission being an investigator, the prosecutor, the jury, and the judge. But there is another thing that it is; it is the litigant, it is a party to the complaint. It is the Federal Trade Commission against Kenneth Perry; it is the Federal Trade Commission against Siegel, and it wants to win its cases. Who doesn't want to win his cases! Every attorney in the Commission wa win his cases; the chief counsel of the Commission wants to win his cases.

In the common law we have an old motion sui spontani; the court of its own motion vacating or modifying its order or decree. I may be wrong, but I don't know and I don't think there is a case where, after the severe criticism by the circuit court, the Federal Trade Commission, sui spontani, has taken back its order and modified it in accordance with what may be, as in the Alpacuna case, the opinion of one of the Commissioners, or the opinion of the court. It waits to be forced to modify its decree. It is a litigant all the way through.

While it is a litigant it passes upon the rules of evidence. I think that any fellow who has tried a case knows that if he is given the power and the right to lead his own witnesses, he will be quite successful, he will have very little difficulty; and that is precisely what does happen. He leads his witnesses, he gets the testimony he wishes, and then he passes upon the rules of evidence with respect to the introduction of testimony of the adversary.

Mr. ROGERS. Let me ask you this question : Isn't this provision in here tantamount to a de novo trial:

If either party shall apply to the court for leave to adduce additional evidence, and shall show to the satisfaction of the court that such additional evidence is material and that there were reasonable grounds for the failure to adduce such evidence in the proceeding before the Commission, the court may order such additional evidence to be taken before the Commission and to be adduced upon the hearing in such manner and upon such terms and conditions as to the court may seem proper.

Now, if you go to the district court for this review, and you find you have left out some evidence, instead of the court hearing it, they can refer it back to the Commission and the Commission has to hear that evidence, and then it comes back to the court, and it is tantamount to a trial de novo.

Mr. PERRY. Mr. Rogers, in trying a case you like to have a third party pass upon the admissability of the evidence and motions made. You don't like to have your adversary pass upon them. If you have gone to the district court for a review, thereby creating a tug-of-war, with both sides wanting to win its case, and it is then sent back to the commission, I wouldn't expect to get an extraordinary fine result. There is a lot of evidence already in that should not be in, by leading questions and irrelevant and incompetent and immaterial testimony, or hearsay, and by breach of every rule of evidence.

By the same token we have the commission in its letter stating, and I think it is probably a fact-I am not criticizing the administration, I am criticizing the law; I am criticizing the statute, the way it is operating, and the interpretation given by the Supreme Court—that the word "modify” is not in the statute.

The Commission takes the position in its brief to this committee that the substantial evidence rule is the proper one, because more certain. Now, preponderance of the evidence is the rule adopted by the common law over a good many hundreds of years of experience, and it is in force in all our State courts of record, and in our Federal courts, and in the courts of England, and of every other common-law country that I know of. It may be less certain than another rule. I think the scintilla rule is probably the most certain, if we are after certainty, But we are not after certainty, we are after justice, and we are entitled to the preponderance of the evidence rule.

Dean Stason, when he was speaking here yesterday morning was asked a question by Chairman Lea as to whether a fair trial did not obviate the necessity of modification of the remedy, and the Dean said "No," because the evidence, the primary evidence, must be used to reach the ultimate question of fact, which is inference. And I would like to give an instance of that in the Alpacuna case.

The Commission's rule with respect to false and deceptive acts and practices is whether the careless, the ignorant, the illiterate, or the foreign-born will be misled, whether a trade-mark has the tendency or capacity to mislead the careless, the ignorant, the illiterate, or foreignborn. It is not a rule for the wary, or the intelligent, or even the average man.

Now, when questions are asked of the witnesses, they do not say, "Are you careless, are you ignorant, are you illiterate, or are you foreign-born?” There is no primary evidence on that. That is an inference to be drawn from the testimony. And, unfortunately, only drawn one way.

The woman who testified in a trade-mark case that she was misled by the trade-mark, and was asked, "Does the Wilmington Trust Co. belong to the city of Wilmington,” said, "Why, yes." "Is the United States Steel Corp.connected with or owned or sponsored by the United States Government?” She said, “Why, certainly.” Now, she was misled by this trade-mark, and the rule was created for her. And I am not arguing that that is not a proper approach, but the Commissioners do not qualify as careless, ignorant, illiterate, or foreign-born in reaching a decision as to who is misled. They must infer, and their inference as to what the careless, the ignorant, the illiterate or the foreign-born would believe is no better than the district court judge, or the circuit court judge, or yours or mine, or anybody else. They don't even see the witness. They can't even look and see if he is ignorant, or illiterate. A judge in a district court can. The only way the Commissioners can judge is from the record, from which you and I could judge, too, and so could a circuit court. Í say au fortiari, if the preponderance of evidence rule applies in the district court, and if the modifica

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