Federal Trade Commission v. Artloom Corporation

• Decision Date: 05 March 1934
• Docket Number: No. 5072.,5072.
• Parties: FEDERAL TRADE COMMISSION v. ARTLOOM CORPORATION.
• Court: U.S. Court of Appeals — Third Circuit

69 F.2d 36 (1934)

FEDERAL TRADE COMMISSION v. ARTLOOM CORPORATION.

No. 5072.

Circuit Court of Appeals, Third Circuit.

January 30, 1934.

Rehearing Denied March 5, 1934.

P. B. Morehouse, Robert E. Healy, Chief Counsel, Federal Trade Commission, and Martin A. Morrison, Asst. Chief Counsel, all of Washington, D. C., for petitioner.

Frank B. Fox, Fraley & Paul, and Henry N. Paul, all of Philadelphia, Pa., for respondent.

Before WOOLLEY, DAVIS, and THOMPSON, Circuit Judges.

THOMPSON, Circuit Judge.

This case comes before us upon an application for the enforcement of an order of the Federal Trade Commission. The Commission filed a complaint in which it charged that the respondent, the Artloom Corporation, manufactured and sold in interstate commerce certain rugs, and misbranded them as Wilton rugs under the trade-name "Bagdad Seamless Jacquard Wilton." The Commission found that the respondent had been selling its Bagdad rugs as and for genuine Wiltons; that the term "Wilton rug," as applied to a rug fabric on the surface of which is displayed a design of two or more colors, implied a fabric having a weave construction in which the warp pile yarns, when not required upon the surface for the design or pattern, are continued in the subsurface structure of the fabric; that the respondent's Bagdad rugs were made under a process essentially unlike that used in making Wilton rugs; that, when made, the Bagdad rugs consist of a weave construction differing materially from that of Wilton rugs; that the sale of the respondent's Bagdad rugs, as and for genuine Wiltons, constituted an unfair method of competition in commerce, having a capacity and tendency to deceive the public into the belief that, in purchasing the respondent's Bagdad rugs, they were purchasing genuine Wilton rugs; and that trade was thereby diverted from competitors to the respondent. The application for the enforcement order set forth that the Commission had made a cease and desist order which the respondent failed and neglected to obey. This order reads:

"It is now ordered that the respondent Artloom Corporation, a corporation doing business under the name and style of Artloom Rug Mills, its agents, representatives, servants, and employees, in connection with the sale and distribution in interstate commerce of rug and carpet fabrics, do cease and desist from directly or indirectly,

"1. Using the word `Wilton' in describing, designating, or labeling any rug fabric on the surface of which is displayed a design or pattern in two or more colors, which is of the same weave construction as the `Bagdad Seamless Jacquard Wilton' rug fabric now manufactured by respondent, or which is of a weave construction in which the warp pile yarns, when not required at the surface for the said design or pattern, are not continued in the subsurface structure of the fabric."

The statute, by virtue of which this application was made by the Commission, reads as follows:

"Unfair methods of competition in commerce are declared unlawful.

"The commission is empowered and directed to prevent persons, partnerships, or corporations, except banks, and common carriers subject to the Acts to regulate commerce, from using unfair methods of competition in commerce. * * *

"If such person, partnership, or corporation fails or neglects to obey such order of the commission while the same is in effect, the commission may apply to the circuit court of appeals of the United States, within any circuit where the method of competition in question was used or where such person, partnership, or corporation resides or carries on business, for the enforcement of its order, and shall certify and file with its application a transcript of the entire record in the proceeding, including all the testimony taken and the report and order of the...