Procter & Gamble Co. v. Federal Trade Commission

DONAHUE, Circuit Judge. This is a petition to review the proceedings and orders of the Federal Trade Commission, upon a complaint charging these petitioners with unfair methods of competition in commerce in-violation of the Federal Trade Commission Act (38 Stat. 717 [Comp. St. §§ 8836a-8836k]). Since 1837 the Procter & Gamble Company have been engaged in the manufacture of soap and soap products. The Procter & .Gamble Distributing Company sells these products. In 1904 the Procter & Gamble Company began the manufacture of a soap known and advertised in the trade as “P. & G., the White Naphtha Soap,” and later commenced the manufacture of “Naphtha Soap Chips” and “Star Naphtha Washing Powder.” These products have a very large sale throughout the United States. It is charged, among other things, in the second amended complaint, that the respondents, by direct statements in published advertisements, and by names, brands, and labels, falsely represent to the public that these products made and sold by them contain naphtha in an amount sufficient to be effective as a cleansing ingredient. The Commission found from the evidence that the petroleum distillate found in the soap products of the respondents manufactured between 1912 and 1920-21, was kerosene; that kerosene is uniformly distinguished from naphtha by the trade and the purchasing and consuming public; that the market price of kerosene is, and for more than seven years has been, substantially lower than that of naphtha, and that the designation of kerosene in soap or soap products as naphtha was a misrepresentation to and a deception upon the public purchasing such soap and soap products; that the soap and soap products manufactured and sold by respondents since 1920 contain less than one-half of 1 per cent, of naphtha, and that the use of the trade-names and brands containing the word “naphtha,” and the use of the word “naphtha,” constitute misrepresentations and deception upon the purchasing public, for the reason that neither of these products contains naphtha in an amount sufficient to be *48 effective as a cleansing ingredient, or to enhance substantially their value and cleansing power. Based upon these findings, the Commission entered an order that the respondents, the Procter & Gamble Company and the Procter & Gamble Distributing Company, their respective officers, agents, representatives, servants, and employes, “do cease and desist, in the course’of commerce as defined in said act of Congress, from: “(1) Using the word ‘naphtha,’ or its equivalent, in the brand name of any soap or soap product offered for sale or sold by respondents, or otherwise incidental to its advertisement and sale, if and when such soap or soap product contains the petroleum distillate known and sold as kerosene, and the word ‘naphtha’ is so used to designate the addition of said kerosene to or its presence in such soap or soap product. “(2) Using the word ‘naphtha,’ or its" equivalent, in the brand name of any soap or soap product offered for sale or sold by respondents, or otherwise incidental to its advertisement and sale, if and when such soap or soap product normally contains at the time of and upon its sale to the consuming public, no naphtha or naphtha in an amount of 1 per cent, or less by weight thereof.”' Under the provisions' of section 5 of the Federal Trade Commission Act (Comp. St. § 8836e) the findings of fact by the Commission, if supported by testimony, are conclusive. We do not think it important whether kerosene is, or is not, naphtha in a scientific or legal sense. The question is whether the consuming public recognizes a distinction between the two, and believe and understand that a soap containing naphtha.is a better cleansing agency than a soap containing ker.osene. Upon this proposition the finding of ¡the Commission is sustained by substantial evidence. The findings by the Federal Trade Commission that the soap products manufactured by the respondent and marketed under the names above mentioned contain sometimes no naphtha, and never more than approximately one-half of 1 per cent, by weight, and that this amount of naphtha is not sufficient to be effective as a cleansing ingredient, or substantially to enhance their value and cleansing power, are sustained by substantial evidence. It is claimed, however, on the part of the petitioners, that the amount of naphtha to be used as an ingredient in the manufacture of soap or soap products, in order to be effective as a cleansing ingredient is a matter of opinion only. With the conclusion drawn by the petitioners we cannot agree. Some difficulties may be encountered in determining the minimum amount of naphtha necessary to be used in order to enhance the cleansing power of soap and soap products; but whether defendant’s products do' or do not contain a sufficient amount to be effective in any degree as a cleansing ingredient is an ultimate fact that may be definitely established by the evidence. For this reason we think the ease of American School of Magnetic Healing v. Mc Annulty, 187 U. S. 94, 23 S. Ct. 33, 47 L. Ed. 90, has no application. This court is also of the opinion that the naming, labeling, and advertising of a soap or soap product as naphtha soap, which does not contain sufficient naphtha to be effective as a cleansing ingredient, and substantially to enhance their value and cleansing power when used by the consuming public, are unfair methods of competition in commerce, and constitute a violation of the act of Congress approved September 26, 1914, entitled “An act to create a Fedferal Trade Commission, to define its powers and duties, and for other purposes.” These conclusions reached by this court upon the questions presented by this record would require an affirmance of order No. 2, entered by the Commission, were it not for the fact that it further appears from the evidence that naphtha is a volatile matter, and that, if soap or soap products containing naphtha do not speedily reach the consumer, a large, but indeterminate, amount of naphtha will escape by evaporation. For this reason the order of the Commission that the soap or soap products, of the respondents must contain naphtha in ah amount of more than 1 per cent, by weight at the time they are sold to the consuming public is, for the reasons stated, wholly impossible of performance, unless an unreasonably large amount of naphtha is used in their manufacture. The amount of naphtha that may evaporate before reaching the consumer depends largely upon circumstances over which the respondents have no control. For this reason we think the order, if any order is to be made, should be directed to the amount of naphtha respondents should be required to put into their soap and soap products at the time of manufacture. This is a question that involves the consideration of a great many facts not disclosed by the record. For this reason, order No. 2 is vacated, and the cause remanded to the Federal Trade Commission, to take such *49 further evidence as it may think necessary and pertinent, and to make such further order, if it so desires, in reference thereto, as it may conclude to he necessary and proper. Order No. 1 is affirmed.