Source: https://www.legalcrystal.com/case/95837/ftc-vs-royal-milling-co
Timestamp: 2019-04-25 14:43:01+00:00

Document:
Federal Trade Commission v. Royal Milling Co.
Proceeding under § 5 of the Federal Trade Commission Act, and upon findings supported by evidence, the Commission ordered respondents to cease and desist from the use of such tradenames and from making such representations.
(1) The methods of respondents were unfair, and were methods of competition within the meaning of § 5 of the Act. P. 288 U. S. 216 .
(2) It sufficiently appeared that the proceeding was in the interest of the public. P. 288 U. S. 216 .
valuable assets in the nature of goodwill, this can be done by requiring proper qualifying words to be used in immediate connection with the names. P. 288 U. S. 217 .
2. The purchasing public is entitled to protection against a species of deception whereby they are deceived into purchasing an article which they do not wish or intend to buy, and which they might or might not buy if correctly informed as to its origin, and its interest in such protection is specific and substantial. P. 288 U. S. 217 .
CERTIORARI, 287 U.S. 590, to review a judgment setting aside certain cease and desist orders issued against respondents by the Federal Trade Commission.
complaints against respondents, each of whom operates a business, either as a corporation, partnership or an individual, in the City of Nashville, Tennessee. All are engaged in preparing for the market self-rising flour and plain flour and selling the same in interstate commerce. None of them grinds from the wheat the flour which they thus prepare and sell, but only mix and blend different kinds of flour purchased from others engaged in grinding. After being mixed and sifted, the flour, either plain or made self-rising, is packed into bags for the market. Most of the concerns grinding wheat into flour and selling in the same market also make self-rising flour and blended plain flour ground from different sorts of wheat.
One of the respondents does business under the names, "Royal Milling Company," "Richland Milling Company," and "Empire Milling Company." The others use tradenames of similar import, all containing the words "milling company," or "mill," or "manufacturer of flour" -- words which are commonly understood by dealers and the purchasing public to indicate concerns which grind wheat into flour.
or milling companies, or hold themselves out in any way as grinders of grain. The business involved is large and the competition among the several concerns substantial, and the use of the enumerated tradenames by the respondents tends to divert, and does divert, business from both the grinders and those blenders who do not use such tradenames or an equivalent therefor. Respondents have circulated written and printed circulars among the trade which either directly assert, or are calculated to convey the impression, that their product is composed of flour manufactured by themselves from the wheat. These statements and the use of the tradenames under which respondents do business have induced many consumers and dealers to believe that respondents are engaged in grinding from the wheat the product which they put out. The respondents, early in the proceeding before the Commission, offered "to place on their letterheads, bags, invoices, etc., in conspicuous lettering the words: Not Grinders of Wheat.'" This offer the Commission evidently thought it unnecessary to consider in view of the more comprehensive conclusion which it reached as to the remedy.
manufacture flour, or that the flour sold by them comes direct from manufacturer to purchaser, etc.
Upon review, the Circuit Court of Appeals set aside all orders of the Commission upon the ground that the proceeding by the Commission did not appear to be in the interest of the public. 58 F.2d 581.
To sustain the orders of the Commission, three requisites must exist: (1) that the methods used are unfair; (2) that they are methods of competition in interstate commerce, and (3) that a proceeding by the Commission to prevent the use of the methods appears to be in the interest of the public. Federal Trade Comm'n v. Raladam Co., 283 U. S. 643 , 283 U. S. 646 -647. Upon the first two of these we need take no time, for clearly the methods used were unfair, and were methods of competition. Federal Trade Comm'n v. Winstead Hosiery Co., 258 U. S. 483 , 258 U. S. 492 -494; Federal Trade Comm'n v. Raladam Co., supra at pp. 283 U. S. 651 -652.
that the article is prepared by the original grinder of the grain. The result of respondents' acts is that such purchasers are deceived into purchasing an article which they do not wish or intend to buy, and which they might or might not buy if correctly informed as to its origin. We are of opinion that the purchasing public is entitled to be protected against that species of deception, and that its interest in such protection is specific and substantial. Federal Trade Commission v. Balme, 23 F.2d 615, 620. Compare Federal Trade Comm'n v. Winstead Hosiery Co., supra; Ohio Leather Co. v. Federal Trade Commission, 45 F.2d 39, 41. There is nothing in the Klesner case to the contrary.
265 U. S. 526 , 265 U. S. 532 ; R. Guastavino Co. v. Comerma, 184 F. 549; Warshawsky & Co. v. A. Warshawsky & Co., 257 Ill.App. 571, 584 et seq. This is a matter which the Commission has not considered, but which, as the body having primary jurisdiction, it should, in the first instance, consider and determine. And, in doing so, it will be enough if each respondent be required by modified order to accompany each use of the name or names with an explicit representation that respondent is not a grinder of the grain from which the flour prepared and put out is made, such representation to be fixed as to form and manner by the Commission, upon consideration of the present record and any further evidence which it may conclude to take. In respect of other particulars, the orders of the Commission are sustained.
The decree below therefore will be reversed, and the proceeding remanded to the Circuit Court of Appeals to be disposed of in conformity with this opinion.
"Whenever the Commission shall have reason to believe that any such person, partnership, or corporation has been or is using any unfair method of competition in commerce, and if it shall appear to the Commission that a proceeding by it in respect thereof would be to the interest of the public, it shall issue and serve upon such person, partnership, or corporation a complaint stating its charges in that respect and containing a notice of a hearing upon a day and at a place therein fixed at least thirty days after the service of said complaint. . . . If, upon such hearing, the Commission shall be of the opinion that the method of competition in question is prohibited by this Act, it shall make a report in writing in which it shall state its findings as to the facts, and shall issue and cause to be served on such person, partnership, or corporation an order requiring such person, partnership, or corporation to cease and desist from using such method of competition."
"The findings of the Commission as to facts, if supported by testimony, shall be conclusive."

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