James S. Kirk & Co. v. Federal Trade Commission, 59 F.2d 179 (7th Cir. 1932)

*180 Cutting, Moore & Sidley, of Chicago, Ill. (D. F. McPherson and James F. Oates, Jr., both of Chicago, Ill., Frank F. Dinsmore, of Cincinnati, Ohio, and Horace Kent Tenney, of Chicago, Ill., of counsel), for petitioners.

Robt. E. Healy, Chief Counsel, Federal Trade Commission, and Martin A. Morrison, Asst. Chief Counsel, Federal Trade Commission, both of Washington, D. C., and *181 Edward E. Reardon, of New York City, for respondent.

Before ALSCHULER, EVANS, and SPARKS, Circuit Judges.

SPARKS, Circuit Judge (after stating the facts as above).

The basis of the commission's complaint is to the effect that castile soap is one in which olive oil constitutes the sole oily or fatty ingredient. The commission has found this to be true, as a matter of fact, and it is supported by some evidence. The respondent, therefore, insists that such finding is conclusive and that unfair competition is established.

In Federal Trade Commission v. Curtis Publishing Co., 260 U.S. 568, 43 S. Ct. 210, 213, 67 L. Ed. 408, the court said:

"We have heretofore pointed out that the ultimate determination of what constitutes unfair competition is for the court, not the Commission * * *. Federal Trade Commission v. Gratz, 253 U.S. 421, 427, 40 S. Ct. 572, 64 L. Ed. 993.

"Manifestly, the court must inquire whether the commission's findings of fact are supported by evidence. If so supported, they are conclusive. But as the statute grants jurisdiction to make and enter, upon the pleadings, testimony and proceedings, a decree affirming, modifying or setting aside an order, the court must also have power to examine the whole record and ascertain for itself the issues presented and whether there are material facts not reported by the commission. If there be substantial evidence relating to such facts from which different conclusions reasonably may be drawn, the matter may be and ordinarily, we think, should be remanded to the commission the primary fact-finding body with direction to make additional findings, but if from all the circumstances it clearly appears that in the interest of justice the controversy should be decided without further delay the court has full power under the statute so to do. The language of the statute is broad and confers power of review not found in the Interstate Commerce Act."

It is contended first by petitioner that there are certain material facts, not covered by the findings, which were proven by the evidence and were not contradicted, and which conclusively disprove unfair competition.

For instance, by far the greater number of witnesses, from all parts of the United States, testified that castile soap meant to them a pure high-grade toilet soap; or that it implied no special vegetable oil as an ingredient; or that they had never associated any brand of castile soap with olive oil as an ingredient; or that it meant a soap which would lather satisfactorily in hard water. One hundred fifteen witnesses testified that castile soap meant to them a soap made from cocoanut oil; while one hundred ten witnesses testified that the name indicated that the oily or fatty ingredient was exclusively of olive oil. Regardless of which of these witnesses, if any, were giving the proper meaning of the word "castile" when used in connection with soap, the substance of all their testimony proves beyond question, so far as individual opinions are concerned, that the word "castile" when used with soap means different things to different persons. This diversity of opinion is quite a pertinent fact in the determination of the issues before us. It not only bears directly on the issue of whether petitioner's alleged acts have the capacity and tendency to deceive the trade and the general public; but it is quite material in determining the real meaning of the word "castile" when used in connection with soap, or whether it has more than one meaning, as contended by petitioner.

As a general rule we look to the lexicographer for definitions of words; but, on the other hand, the lexicographer bases his definition upon the use which the public has given the word. Unfortunately, or fortunately, there are many words whose meanings, once correctly and definitely defined, have subsequently through usage acquired different or additional meanings, and such enlarged meanings have been recognized and approved in later dictionaries. Indeed, there are many instances in which it is difficult to trace the connection between the root meaning of a word and its present meaning as established and recognized by usage.

It is contended by petitioner that the word "castile" when used in relation to soap means nothing as to the constituent elements, but refers to the quality of the soap as a whole. The word "Castile" alone does not mean soap of any kind, nor is it the name of a constituent element of any soap ever made. It is the name of a province in Spain, and the commission finds as a fact that castile soap derives its name from the fact that it was first made in the province of Castile in Spain, in a very early day, and that its oily or fatty ingredient was derived *182 exclusively from olives; that by custom and usage any soap whose sole oily or fatty ingredient is derived from olives is known as castile soap, regardless of its place of manufacture. We are convinced from the record before us that during the earlier years castile soap was recognized and considered as a soap whose sole oily and fatty ingredient was derived from olives, and the dictionaries of the various countries, including America, so defined it, and the pharmacopoeias designated it as the one to be used in all medical preparations and prescriptions in which soap was required because its sole oily or fatty ingredient was olive oil. The words "castile soap" thereby became synonymous with "olive oil" soap, and such synonymity still prevails with many people.

In the earlier years of the last century, however, some foreign manufacturers made and sold soaps which they called "castile" soap whose oily or fatty ingredient was not solely of olive oil, and much of those products was imported into America. At that time the soap industry in America was begun, and many of our earlier soap makers did the same thing and have continued the practice up to the present time. During seventy-five years last past that practice has grown to such an extent that practically all of our soap makers are resorting, more or less, to that custom. So far as the record shows, Holbrook & Co. is the only soap manufacturer in the United States whose entire product is made solely of olive oil as the fatty ingredient and is labeled "Pure Olive Oil Castile." That company admitted that it was not a competitor of petitioner, and that almost all of its product was used by the textile trades.

The United States Pharmacopoeia from its beginning valiantly attempted to preserve the meaning of the words "castile soap" as a soap whose oily or fatty ingredient consisted solely of olive oil, and such a soap was the only one recognized by it as the equivalent of "sapo," which is the medical term for soap.

In the last edition of that work, however, the equivalent of "sapo" is given as "olive oil castile soap." Petitioner claims that this fact is an implied recognition on the part of the authors of the existence of other castile soaps. Such conclusion does not necessarily follow. The action of the authors may well have been an effort to protect the medical profession and the public by designating what they regarded as genuine castile soap as distinguished from quasi castile soap.

A perusal of the very voluminous record in the case convinces us that the present contrariety of opinion as to the meaning of the words "castile soap" is a result of an effort on the part of certain soap manufacturers, both foreign and American, extending from very early times to the present, to corrupt and change the public's understanding of the meaning of those words to the manufacturers' advantage. That this effort has been in a great degree successful can no more be denied than the methods employed can be approved. As a result of such effort it is not at all surprising that the present laity should have such diversified views as to the meaning of the words, for the record supports us in saying that a greater part of the laity knows very little and cares less as to the constituent elements of any soap.

That in former years the methods used did deceive and had the capacity and tendency to deceive is fully supported by the evidence, and were it not for the action of the Bureau of Standards of the United States Department of Commerce that capacity and tendency would still exist. In Federal Trade Commission v. Winstead Hosiery Co., 258 U.S. 483, 42 S. Ct. 384, 385, 66 L. Ed. 729, Justice Brandeis, speaking for the court, said: "The fact that misrepresentation and misdescription have become so common in the * * * trade that most dealers no longer accept labels at their face value, does not prevent their use being an unfair method of competition."

By the Act of March 3, 1901, 31 Stat. 1449, 15 USCA § 271 et seq., Congress established the National Bureau of Standards and authorized that bureau's director to issue bulletins for public distribution containing such information as might be of value to the public or facilitate the bureau in the exercise of its functions. Pursuant thereto, the following bulletin was promulgated and distributed: United States Department of Commerce, Bureau of Standards. Circular No. 62, "Soap," 3d Edition, published January 24, 1923, at page 9: "Castile Soap was originally made from low-grade olive oils. The name now represents a type of soap, the term `castile' being applied to a soap intended for toilet or household use, sold usually in large, unwrapped, unperfumed bars, which are cut up when sold or when used. It is often drawn directly from the kettle *183 without `crutching,' but is sometimes crutched a little or even enough to make it float and is sometimes milled. It is also sold in small bars both wrapped and unwrapped. The type is not one easily defined, so now when made from olive oil it is invariably sold as olive-oil castile. There are soaps made entirely from coconut oil which are sold as coconut castiles or hard-water castiles. Many other castiles are made from a mixture of coconut oil and tallow."

This circular was discussed in petitioner's briefs and it was ignored by respondent. We deem it quite pertinent and decisive of the question before us. The government, through its agency, the Bureau of Standards, has thus committed itself to the proposition that castile soap may be made of oily and fatty elements other than olive oil. Being solely a question of fact we deem it expedient for other departments of the government, including the judiciary, to accept such construction, if for no other reason than that of consistency.

This being true it necessarily follows that petitioner's methods which are the basis of this action do not constitute unfair competition in so far as they relate to the use of the word "castile."

The commission's findings point out various of petitioner's soaps which are branded or labeled with the words "olive" or "olive oil" and having oil content of less than 100 per cent. olive oil,^[3] and the order to cease and desist prohibits petitioner also from using the words "olive" or "olive oil" in connection with its soap product, except under certain conditions named in the order. The complaint does not refer to the use of those words nor ask any order concerning them, but it is contended by respondent that, inasmuch as the words "castile soap" indicate 100 per cent. olive oil content and are synonymous with the words "olive" or "olive oil" as applied to soap, the allegations of the complaint, and the evidence, are sufficient to support the findings in that respect. But inasmuch as we find against respondent's contention of such synonymity, its contention in this respect cannot prevail.

The order to cease and desist is therefore reversed, with permission to respondent, if it shall so desire, to amend its original complaint against petitioner in such manner as to include petitioner's use of the words "olive" and "olive oil" in connection with soap having oil content of less than 100 per cent. olive oil, or otherwise to proceed in respect to such use of the words "olive" and "olive oil"; and in such case to permit further evidence to be taken, if either party desires so to do, and for all other necessary proceedings not inconsistent with this opinion.

[3] Paragraph 15:

1. "Oreno Olive Oil Castile" of which it was said in catalog illustration of the soap, "Oreno Olive Oil Castile, made in North Chicago, U. S. A., from Genuine Olive Oil." The fatty composition of this soap is tallow, cocoanut oil, and olive oil, of unknown percentages.

2. "Oreno Genuine Olive Oil Castile" contains 90 per cent. olive oil and 10 per cent. cocoanut oil.

3. "Baby Bath Castile" having on each cake the phrase, "Olive Oil Soap," and on the box end, "Made with pure olive oil." The composition of this soap is 55 per cent. tallow, 10 per cent. cocoanut oil, and 35 per cent. olive oil. Since 1926, there is printed in small type on each cake the words, "Contains olive oil, cocoanut oil, and refined tallow."

4. "Olive Oil Castile" with those words stamped on the soap, and in the catalog the statement, "large white cakes of milled olive oil soap." Its fatty content is 80 per cent. tallow, 10 per cent. cocoanut oil, and 10 per cent. olive oil.

5. "Nursery Olive Oil Castile" fatty content, 90 per cent. olive oil, 10 per cent. cocoanut oil.

6. "Field's Olive Oil Castile" made partly of olive oil and partly of other oils or fats, percentages not disclosed.

7. "Glendora Castile Soap" having stamped on the bars, "Glendora 90% Olive Oil Soap." It has 90 per cent. olive oil and 10 per cent. other oils.

8. "Harmony Olive Oil Castile" having fatty content of 60 per cent. tallow, 10 per cent. cocoanut oil, and 30 per cent. olive oil.

10. "Washrag Castile" having on the labels the words "Olive Oil Castile," and the statement, "This is a real milled olive oil castile soap of highest quality," and beneath an illustration the words, "No. 425 Olive Oil Washrag Castile." Its fatty content is tallow 60 per cent., cocoanut oil 10 per cent, olive oil 30 per cent.

Paragraph 16: "A toilet soap having printed on the wrappers, `Kirk Olive. Trade Mark registered,' and having fatty content of tallow 60%, cocoanut oil 10%, palm oil 15%, olive oil 15%."