III. The background of Judge Goddard's decision on the mandamus, cf. 18 F. Supp. at page 668, was a Joint Resolution of the two Houses of Congress-Public Resolution No. 61, 74th Congress, approved August 27, 1935, 49 Stat. 929-by which the Federal Trade Commission was authorized "to make an investigation with respect to agricultural income and the financial and economic condition of agricultural producers generally," with a view to Congressional legislation for the improvement thereof.

The Joint Resolution above referred to provides in Sections 2, 3, and 4 thereof, as follows:

"SEC. 2. The Department of Agriculture, the National Recovery Administration, the Department of Justice, and other agencies of the Government are directed to cooperate with the Commission in such inquiry to the fullest extent possible.

"SEC. 3. For the purposes of this resolution the Federal Trade Commission shall have the same right to obtain data and to inspect income-tax returns as the Committee on Ways and Means of the House of Representatives or the Committee on Finance of the Senate, and to submit any relevant or useful information thus obtained to the Congress or to either House thereof.

"SEC. 4. For the purpose of carrying out this resolution the Federal Trade Commission, the Attorney General, and the courts of the United States shall have and may exercise all of the powers and jurisdiction severally conferred upon them by the Act entitled 'An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes,' approved September 28, 1914."

The inquiries addressed to the defendant-as set forth in Judge Goddard's opinion, 18 F. Supp. at pages 669 and 670-were, therefore, not initiated by the Federal Trade Commission of its own motion and on its own order, but constituted an instance in which the Commission was used, quite appropriately, as a convenient instrumentality through which Congress could secure information which it considered relevant to legislation under consideration.

IV. In pursuance of this joint resolution, the Federal Trade Commission on September 19, 1935, passed a resolution providing that the Commission should carry out the investigation thus ordered by Congress.

It was in pursuance of this resolution of the Commission that the questionnaires set forth in Judge Goddard's opinion on the mandamus proceeding were propounded to the defendant and other corporations, and it is implicit in Judge Goddard's decision that the necessary steps were taken to make true answers to the questionnaire obligatory.

V. The mandamus proceeding before Judge Goddard was unsuccessfully resisted by the defendant, and an appeal taken by [331] it from his decision. This appeal was, for reasons not necessary here to discuss, dismissed by agreement of the parties, and the defendant thereafter gave all the information asked for by the Commission and ordered by Judge Goddard to be given.

VI. The United States now asks judgment in the instant action for a fine-under Section 10 of the Federal Trade Commission Act, 15

otherwise, as the commission may prescribe, and shall be filed with the commission within such reasonable period as the commission may prescribe, unless additional time be granted in any case by the commission."

U. S. C. A. § 50-of $100 per day from and including February 16, 1936, to and including March 30, 1937, which covers the period of the litigation regarding the mandamus and the abortive appeal.

[3] VII. That this proceeding for a penalty is not precluded on constitutional grounds, nor by an election of remedies due to the proceeding for a mandamus by the Federal Trade Commission is made clear-without going into further discussion of the authorities-by the case of United States v. Clyde Steamship Company, 2 Cir., 36 F. (2d) 691.

[4] VIII. Reflection on this interesting cause, however, convinces me that the defendant must prevail, for what was involved here was, as is clear in Judge Goddard's opinion, a questionnaire-vid. Federal Trade Commission v. National Biscuit Company, D. C., 18 F. Supp. 667, at pages 668 and 669-and the power of the Federal Trade Commission with regard to questionnaires is found, I hold, only in Section 6 (b) of the Federal Trade Commission Act, 15 U. S. C. A. § 46 (b), which provides for the enforcement of "answers in writing to specific questions," and not in Section 10 thereof providing for "annual and special reports" "required by this Act," for failure to file which, Section 10 exacts the forfeiture herein sought.67

IX. It seems to me that the provisions as to the sanctions for enforcing Section 6 (a) and (b) and Section 10 are different.

Section 6 (a) and (b) are, as Judge Goddard has held, enforced by a mandamus.

Section 10 has as its sanction a penalty.

[5] Furthermore, it is only when the Commission shall have provided by general or special orders under Section 6 (b) for annual or special reports, that the penalties under Section 10 would become operative on failure to make such reports in accordance with the provisions thereof.

In the instant case I have before me a claim for penalty for failure to answer a questionnaire, which would come under the provision of Section 6 (b) giving the Commission a right to require to have filed with it "answers in writing to specific questions."

[6] I think that the "annual or special reports" referred to in Section 10 do not include answers to a questionnaire, and that, consequently, the present action for penalties cannot be sustained.

X. Pursuant to agreement each side has moved for a verdict in its favor.

[7] I direct a verdict for the defendant, and assume that the plaintiff takes objection-in accordance with the Rules of Civil Procedure, No. 46, 28 U. S. C. A., following Section 723c, under which I understand no formal exception is necessary-to this ruling on the ground that it is contrary to law and to the facts herein.

67 Section 10 of the Federal Trade Commission Act, 15 U. S. C. A., 50, reads, so far as here relevant, as follows [italics mine]:

"If any corporation required by this Act [subdivision of this chapter] to file any annual or special report shall fail so to do within the time fixed by the commission for filing the same, and such failure shall continue for thirty days after notice of such default, the corporation shall forfeit to the United States the sum of $100 for each and every day of the continuance of such failure, which forfeiture shall be payable into the Treasury of the United States, and shall be recoverable in a civil suit in the name of the United States brought in the district where the corporation has its principal office or in any district in which it shall do business. It shall be the duty of the various district attorneys, under the direction of the Attorney General of the United States, to prosecute for the recovery of forfeitures. The costs and expenses of such prosecution shall be paid out of the appropriation for the expenses of the courts of the United States."

FIORET SALES CO., INC., ET AL. v. FEDERAL TRADE COMMISSION

(U. S. Circuit Court of Appeals, Second Circuit. Dec. 5, 1938)

No. 121

[100 F. (2d) 358. Commission's order issued February 19, 1938, Docket 3164]

1. TRADE-MARKS AND TRADE-NAMES AND UNFAIR COMPETITION.

The findings of Federal Trade Commission having support of substantial evidence are binding on Circuit Court of Appeals, and where evidence is conflicting finding must stand. 15 U. S. C. A. § 45.

2. TRADE MARKS AND TRADE-NAMES AND Unfair COMPETITION.

As respects whether perfume importers were manufacturers using unfair methods of competition, "manufacture" is transformation or the fashioning of raw materials into a change of form for use. 15 U. S. C. A. § 45.

3. TRADE-MARKS AND TRADE-NAMES AND UNFAIR COMPETITION.

Importers of perfume concentrates or compounds which were blended mixtures of various oil extracts from plants, which were blended in the United States with alcohol, who marked finished product in bottle bearing a label in foreign language that contents were made abroad, and warning against infringement, followed by English inscription "bottled in U. S. A.", were "manufacturers" using unfair methods of competition, justifying a cease and desist order. 15 U. S. C. A. § 45.

4. TRADE-MARKS AND TRADE-NAMES AND UNFAIR COMPETITION.

The Federal Trade Commission's cease and desist order will be sustained if there is a probable tendency by conduct to deceive of petitioner seeking to review the order. 15 U. S. C. A. § 45.

5. TRADE-MARKS AND TRADE-NAMES AND UNFAIR COMPETITION.

To warrant proceeding to restrain unfair competition, probable injury to particular interests is unnecessary, since it is the totality of all interests conceived as the "public interest" which is decisive. 15 U. S. C. A. § 45.

Appeal from the Federal Trade Commission.

Petition by Fioret Sales Company, Inc., and others to review and set aside an order of the Federal Trade Commission directing petitioners to cease and desist unfair trade practices in violation of section 5, Federal Trade Commission Act, 15 U. S. C. A. § 45.

Order affirmed.

W. T. Kelley, Chief Counsel, Federal Trade Commission, Martin A. Morrison, Asst. Chief Counsel, and S. Brogdyne Teu, II, and James W. Nichol, Sp. Attys., all of Washington, D. C., for respondent.

Munn, Anderson & Liddy, of New York City (John H. Glaccum, of New York City, of counsel) for petitioners.

Before MANTON, SWAN, and CHASE, Circuit Judges.

MANTON, Circuit Judge:

Petitioners are engaged in the importation and sale in this country of perfumes in competition with others engaged in interstate com

merce. They were charged before the Commission with unfair trade practices in connection with their manufacture and sales, and were directed to cease and desist such practices. The Fioret Company imports from France its perfumes in the form of concentrates or compounds which are blended mixtures of various oil extracts from plants and are usually combined with some animal essence, such as musk. When these concentrates arrive in this country, they are not sold commercially before they are blended with varying percentages of alcohol. After such blending, they are sold to the public as perfumes. The alcohol acts as a diluting medium for the concentrates so that when the perfume is applied to an object such as a handkerchief, the alcohol evaporates leaving only the odor of the concentrate perceptible to the senses. On this record it can be assumed that the concentrate uncombined with alcohol is not known to the purchasing public as perfume.

Petitioners in blending used domestic alcohol and marked the finished product in a bottle bearing a label in French, the English translation of which tells that the contents of the bottle was made by Fioret of Paris "and are the exclusive property of FIORET, Inc. for the United States of America where they are completed. All infringements will be vigorously prose [359]cuted." Following this French inscription, appears in English, "Bottled in U. S. A.”

The Commission found that petitioners were manufacturers of perfume, that the manufacture in the United States was inconsistent with their advertisements describing their products as "imported perfumes," that the use of the label tended to further the impression thus conveyed to the public that they were manufactured in France and held that such practices constituted unfair competition.

[1] The findings of the Commission having support of substantial evidence are binding upon us. Federal Trade Comm. v. Standard Ed. Society, 302 U. S. 112, 117, 58 S. Ct. 113, 82 L. Ed. 141. And where the evidence is conflicting, the finding must stand. L. & C. Mayers Co. v. Federal Trade Comm., 2 Cir., 97 F. (2d), 365, 367.

[2] The issue presented to us is whether on the facts so found, petitioners are manufacturers of perfume and, if so, are they using unfair methods of competition. The findings, sufficiently supported by the evidence, justify the conclusion that petitioners do not import a perfume but only some of its ingredients which are then combined with American alcohol to produce a marketable product known as perfume. Concentrates alone are not what petitioners usually sell, but their dilutions with alcohol, and it is the alcohol that makes the finished product. Our necessary concern here is to ascertain by whom and where the product is made for use. "Manufacture is transformation the fashioning of raw materials into a change of form for use." Kidd v. Pearson, 128 U. S. 1, 20. 9 S. Ct. 6, 10, 32 L. Ed. 346. See Allen v. Smith, 173 U. S. 389, 399, 400, 19 S. Ct. 446, 43 L. Ed. 741. [3] The petitioners must be regarded as manufacturers of perfume within the unfair competition laws. To be sure they are importers of concentrates; but blending the concentrates with a French alcohol which is imported results in a perfume of different chemical properties and of different odor. The difference between French and American alcohol in its effect upon the blending of perfumes stands uncontradicted in this record.

By representing their product as an imported perfume, petitioners unfairly compete. The purchaser is unversed in the art of making a finished perfume and to say that a given perfume is imported must mean to him that the entire fluid is imported, not that only 5% of it is. To the purchasers of perfumes imported products are preferable to domestic products. By their conduct, petitioners are infringing upon the interest of the consuming public which purchases under the mistake that it is buying an imported perfume, a product rendered marketable and fit for use. They also compete unfairly with those importers of perfume whose concentrates and alcohol are blended in France and with those tradesmen who import, like petitioners, the concentrates and dilute them with domestic alcohol but who, unlike petitioners, sell their products accurately represented and advise the purchasing public that they are selling a domestic perfume.

[4] There is the representation that the contents is "Bottled in U. S. A.," but there is possible a misleading idea that the fluid was in its entirety made in France and merely bottled here, having been imported in bulk. Again, the inscription in French tends to mislead the public into the belief that the perfume was completed in France; that is to say, the warning in French to infringers of violations of its trade-mark without any corresponding English legend, clearly lends itself to stimulating the suggestion already implanted in the purchaser's mind, that the entire product is one imported from France. Such misleading use of a foreign language was said by this court in Coty, Inc., v. Prestonettes, Inc., 2 Cir., 285 F. 501, to be objectionable. Confusion in words created in the public mind has been held to constitute an unfair competition. Coty, Inc., v. Le Blume Import Co., D. C., 292 F. 264. It is sufficient to sustain the order, if there is a probable tendency, by petitioner's conduct, to deceive. Coty, Inc., v. Parfums De Grande Luxe, Inc., 2 Cir., 298 F. 865, 870.

[5] Probable injury to particular interests is unnecessary since it is the totality of all interests conceived as the public interest which is decisive. Federal Trade Comm. v. Algoma Lumber Co., 291 U. S. 67, 81, 54 S. Ct. 315, 78 L. Ed. 655; Federal Trade Comm. v. Royal Milling Co., 288 U. S. 212, 217, 53 S. Ct. 335, 77 L. Ed. 706; Federal Trade Comm. v. Raladam Co., 283 U. S. 643, 651, 51 S Ct. 587, 75 L. Ed. 1324, 79 A. L. R. 1191. The unfair practice may well be avoided by a legend stating that the contents of the package or bottle was bottled and diluted in the United States.

The petition is denied and the order affirmed.