The opinion of the court was delivered by: EGAN
This matter was certified to the Attorney General by the Federal Trade Commission pursuant to Section 16 of the Federal Trade Commission Act as amended (15 U.S.C.A. § 56) for the purpose of recovering civil penalties as provided in Section 5(l) of the said Act as amended (15 U.S.C.A. § 45(l), Supp. V, 1952), in the amount of $ 30,000 from the defendant, Vulcanized Rubber and Plastics Company, a Maine corporation, whose general offices and factory are located at Morrisville, Bucks County, Pennsylvania.
The penalties are claimed to be due because it is alleged that defendant, a manufacturer of combs for use in human hair, violated a cease and desist order issued by the Commission. Six separate violations are charged for which a penalty of $ 5,000 each has been imposed by the Commission.
Under Title 28 U.S.C. § 1345, the several District Courts of the United States are vested with original jurisdiction of all civil action suits or proceedings commenced by the United States, including suits for the recovery or enforcement of any fine, penalty or forfeiture incurred under any Act of Congress; and under 28 U.S.C. 1395(a), which provides that any civil proceeding for the recovery of pecuniary fines, penalties and forfeitures may be prosecuted in the district where a defendant is found.
The Commission's complaint in 1954 was directed against the labeling of defendant's combs as 'rubber' and 'hard rubber'.
The Commission's order issued in 1957 after extensive hearings
and was to the effect that defendant 'cease and desist from representing * * * that (defendant's) combs are 'rubber' or 'hard rubber' or are made of 'rubber' or 'hard rubber' unless such combs are in fact made of vulcanized hard rubber.'
Pursuant to the order of the Commission, the defendant terminated any branding or advertising of its product as 'rubber' or 'hard rubber.' Thereafter it labeled the combs 'rubber-resin' and so advised the Commission in a compliance affidavit.
About six months after the Commission's order issued, the Commission wrote to defendant construing its order to mean that the use of the legend 'rubber-resin' was also prohibited within the meaning of its order, even though the materials of which the combs were then made were rubber and resin.
A timely petition for review of this construction by the Commission was filed by defendant in the United States Court of Appeals for the District of Columbia Circuit. The Court of Appeals, noting that 'this interpretation may be changed or it may never be enforced,' held that 'there is no controversy calling for judicial review of the interpretation at the present time.' Accordingly, the petition for review was dismissed. No petition for certiorari was filed.
Thereafter the dispute between the parties persisted. The Commission continued to insist upon its disapproval of the use of the legend 'rubber-resin' and defendant continued to contend for its right to use it.
The Commission issued no new complaint and held no further or additional hearings but commenced this suit to recover penalties.
Defendant filed an answer wherein it admitted all the material allegations of fact charged in the complaint. Both sides moved for summary judgment.
For many years defendant has been engaged in the manufacture of combs for use in human hair. Until 1950 it made all such combs by the sulphur vulcanized method. Under this process rubber and sulphur are vulcanized under heat, the result of the process being a distinct and definite product known in the industry as 'hard rubber.' Oliver-Sherwood Co. v. Patterson-Ballagh Corp., 9 Cir., 1938, 95 F.2d 70, 77.
Late in 1950 defendant commenced making the combs from a patented product manufactured by the United States Rubber Company under patents owned by it and sold by it under its trade name 'Kralastic.' The patented product is made up of ...