Affirming order in FTC Dkt. 6914.
HASTINGS, Chief Judge: This case is before us on a petition for review of an order issued by the Federal Trade Commission after an administrative proceeding based on an amended complaint charging petitioners*fn1 and others*fn2 with unfair acts and practices and unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act, 15 U.S.C.A. § 45, 66 Stat. 632.*fn3
Petitioners were charged in the amended complaint with false and deceptive advertising relative to the distribution of watches imported from Switzerland and which carried on the face or dial of the watch the name "Waltham Premier 25." The watches were referred to as "25-jewel Walthams," when in fact they were 17-jewel watches. The watches were represented as being manufactured in their entirety in the United States by the well known and long established Waltham Watch Company, when in fact they were made up of watch movements manufactured in Switzerland and watch cases from either Switzerland or the United States.
After a hearing, the examiner found the allegations of the amended complaint to be true and entered a cease and desist order against petitioners.
Upon review by the full Commission, the examiner's findings were upheld in most particulars and the Commission entered its final order in a slightly modified form.*fn4 A Commission opinion by Commissioner Elman was filed.
Waltham Watch Company, a Massachusetts corporation, had been a widely known manufacturer of watches and clocks for many years in Waltham, Massachusetts. In 1956, it ceased manufacturing watches there. It opened an office in New York City and began purchasing watch movements from Switzerland and watch cases in both Switzerland and the United States, and to assemble such watches.
In 1956, petitioners Joseph and Melvin Axler, and others associated with them, acquired control of this corporation. They were officers and directors and formulated and controlled the policies and practices of the corporation. In the same year the Massachusetts corporation licensed Hallmark, Inc., to use the trademark "Waltham" on watches sold by it in the United States.
About July, 1957, Waltham Watch Company, by means of a "spin-off," transferred its watch business to a new Delaware corporation which adopted the same name. Its office and principal place of business was in New York City. Joseph and Melvin Axler were officers and directors of the Delaware corporation and controlled its operation.
The Massachusetts corporation was renamed Waltham Precision Instrument Company, Inc. It continued in business in Waltham, Massachusetts, engaging in the manufacture of various precision instruments, other than watches.
In 1959, Waltham Watch Company of Delaware was merged with Hallmark, Inc., under the name of Waltham Watch Company. The offices were transferred to Chicago, Illinois. At that time, the Axlers terminated their association with the company.
Most of the advertising and labeling shown in the proceeding record was disseminated during the existence of the Massachusetts corporation as the Waltham Watch Company, and while under control of the Axlers.
The facts pleaded in support of the charges were the facts as they existed prior to July, 1957. However, as shown above, the Delaware corporation succeeded to the watch business of the Massachusetts corporation. The record shows the alleged deceptive advertising was continued after its merger with Hallmark, Inc.
The advertising and distribution of the watches were on a national scale. Typical of such ...