Original Source Documents: February 27, 1948 - FTC Docket 4959 - Findings as to the Facts and Conclusion
Contributor: Todd Paisley
Source: National Archives II - College Park, MD
UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
At a regular session of the Federal Trade Commission, held at its office in the City of Washington, D. C., on the 27th day of February, A. D. 1948.
COMMISSIONERS:
Robert E. Freer, Chairman
Garland S. Ferguson
Ewin L. Davis
William A. Ayres
Lowell B. Mason
|
In the Matter of WILLYS-OVERLAND MOTORS, INC., a corporation,
UNITED STATES ADVERTISING CORPORATION, a corporation, WARD M. CANADAY, individually and as Chairman of the Board of Directors of Willys-Overland Motors, Inc., and of United States Advertising Corporation, JOSEPH W. FRAZER, individually and as President of Willys-Overland Motors, Inc., GEORGE W. RITTER, individually and as Vice President and Secretary of Willys-Overland Motors, Inc., and as Vice President and Director of United States Advertising Corporation, DELMAR G. ROOS, individually and as Vice President in Charge of Engineering of Willys-Overland Motors, Inc., FRANK H. CANADAY, individually and as a Director of United States Advertising Corporation. |
DOCKET NO. 4959 |
FINDINGS AS TO THE FACTS AND CONCLUSION
Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission on May 6, 1943, issued and thereafter served its complaint in this proceeding upon the respondents named in the caption hereof, charging them with the use of unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce in violation of the provisions of that Act. Answer was filed by the respondents to the complaint. Subsequently, the Minneapolis-Moline Power Implement Company, a corporation, upon petition filed by it, was permitted by the Commission to intervene in the proceeding. Hearings were then hold before a trial examiner of the Commission theretofore duly designated by it, at which hearings testimony and other evidence in support of and in opposition to the complaint were introduced and this testimony and other evidence were duly recorded and filed in the office of the Commission. Thereafter, the proceeding regularly came on for final consideration by the Commission upon the complaint, answer, petition of the intervenor, testimony and other evidence, report of the trial examiner upon the evidence and the exceptions to such report, briefs in support of and in opposition to the complaint, and oral argument; and the Commission, having duly considered the matter and being now fully advised in the premises, finds that this proceeding is in the interest of the public and makes this its findings as to the facts and its conclusion drawn therefrom:
FINDINGS AS TO THE FACTS
PARAGRAPH ONE: Respondent Willys-Overland Motors, Inc., (hereinafter frequently referred to as Willys-Overland) is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its office and principal place of business located in Toledo, Ohio. It is now, and for many years last past has been, engaged in the manufacture, sale and distribution of automotive vehicles, including a vehicle commonly known and referred to as the "Jeep".
It causes and has caused its products, when sold, to be transported from its place of business in the State of Ohio to purchasers thereof located in various other states of the United States and in the District of Columbia. It maintains and has maintained a course of trade in its products in commerce between and among the various states of the United States and in the District of Columbia.
In the sale and distribution of its products, respondent Willys-Overland is and has been in substantial competition with other corporations and with individuals, firms and partnerships engaged in the manufacture of automotive vehicles and in the sale and distribution of such vehicles in commerce between and among the various states of the United States and in the District of Columbia.
Respondents Ward M. Canaday, Joseph W. Frazer, George W. Ritter, Delmar G. Roos and Frank H. Canaday are individuals who are or have been officers of Willys-Overland and who participated in or were responsible for the acts and practices of the corporation hereinafter set forth. The specific offices held by these individuals are as follows: Ward M. Canaday, Chairman of the Board of Directors; Joseph W. Frazer, President (Frazer resigned his office on September 30, 1943, and was succeeded by respondent Ward H. Canaday on January 1, 1944); George W. Ritter, Vice-President and Secretary; Delmar G. Moos, Vice-President in Charge of Engineering; Frank H. Canaday, Director.
PARAGRAPH TWO: Respondent United States Advertising Corporation is a corporation organized, existing and doing business under and by virtue of the laws of the State of Illinois, with its office and principal place of business located in Toledo, Ohio. Prior to January 1, 1944, this corporation was actively engaged in the advertising business and in the promotion of the sale of various commodities through the medium of advertisements disseminated by means of newspapers, magazines, and other advertising media. On January 1, 1944, the business of the corporation was transferred to a partnership doing business under the name of United States Advertising Company of Illinois.
Among the clients of respondent United States Advertising Corporation was respondent Willys-Overland, and in the promotion of the business of Willys-Overland respondent United States Advertising Corporation prepared advertisements of Willys-Overland's products and placed them in various newspapers, magazines and other periodicals.
Respondents Ward M. Canaday, George W. Ritter and Frank H. Canaday were officers of respondent United States Advertising Corporation and participated in or were responsible for the acts and practices of the corporation hereinafter set forth. The specific offices held by these individuals were as follows: Ward M. Canaday, Chairman of the Board of Directors; George W. Ritter, Vice-President and Director; Frank H. Canaday, Director.
PARAGRAPH THREE: The intervenor, Minneapolis-Moline Power Implement Company, is a corporation organized and existing under and by virtue of the laws of the State of Delaware, with its principal office and place of business located in Minneapolis, Minnesota. It is now, and for many years last past has been, engaged in the manufacture of farm machinery, farm implements, tractors, motors and motor vehicles, and in the sale and distribution of such products in commerce between and among the various states of the United States and in the District of Columbia.
PARAGRAPH FOUR: In the course and conduct of their business, and for the purpose of enhancing the prestige of and building good will for Willys-Overland and its products and thereby promoting the sale of such products, the respondents have disseminated and caused to be disseminated numerous advertisements, such advertisements being disseminated among the general public throughout the United States by means of magazines, newspapers, and other advertising media. Among and typical of such advertisements were the following:
"THE JEEP CALLS TERMS DADDY . . . .
The Quartermaster Corps of the U.S. Army and the Civilian Engineers of Willys-Overland
We pay public tribute here, to the Engineers of Willys - the most highly lauded automotive engineering staff that the pressure and inspiration of war have brought to light.
These are the men whose engineering skill and creative minds, added to those of the Quartermaster Corps of the U.S. Army, gave birth to the amazing Jeep of today. No other single mobile unit is so typical of modern mechanized war.
And it proves, beyond question, that the Willys Go-Devil Engine and the defense-time Willys Americar were no 'doorstep' babies, but legitimate offspring of fine engineering practice that is both fundamentally sound and reliable.
TODAY do your part. Conserve rubber and other materials vital to war equipment. Buy defense stamps and bonds. Pay taxes with a smile. Whatever the total price you pay, it will be as nothing compared to the value of continued Freedom ….. TOMORROW, make your first new post-war car a Willys -- 'The Jeep in Civvies'."
(Comm. Ex. No. 3)
''Hot From The 'Lines' At 'Willys-Overland
HELL BENT FOR VICTORY
They're rolling off the teeming assembly lines at the Willys-overland plants, in ever-increasing numbers - hell bent for Victory. 'They' are the motorized mustangs of our modern mobile army -Willys-built Jeeps.
Climbing stiff grades, crashing streams, mud and sand - hauling men, guns and other vital materials - the Jeeps are getting more power, more speed, more action and durability out of a ton of steel and a gallon of gasoline, than has ever been done before.
It was the great Willys civilian engineering staff fresh from their triumphs in the Willys-Americar and Go-Devil engine, who collaborated with the Quartermaster Corps of the U.S. Army to create and perfect the jubilant Jeep.
But, proud as we are of this fine achievement, we are still a motor car concern--dedicated to the building of low-cost, dependable transportation for 'the people' as thousands of thankful Willys car owners are realizing at this moment. * * *.”
(Comm. Ex. No. 4)
THE SUN NEVER SETS ON THE FIGHTING JEEP
In the bright, blistering heat of Egypt, as in the humid swamps of Burma; through Russia's clinging springtime mud as through the frigid cold of its winter front ... the Jeep does a fighting man's job - a typical American job.
Streaking over fiery sands on hazardous scouting trips ... stabbing Axis tanks, like flaming hornets, in fierce desert fights.... carrying officers, munitions and supplies through suffocating sand storms.. .the Jeep keeps going, day upon day.
Yes, in Egypt the tough, swift, elusive and irrepressible Jeep has won all hearts, as it has on every flaming front of this war. Nothing daunts the Jeep. No climate, no terrain, no job, is too tough. It sets an example of all-out uncomplaining, do-or-die service to the 'cause' that every fighting man, worker and civilian in America must equal, if we are to win this war.
We are proud of the Willys-Overland engineers who assisted the U.S. Quartermaster Corps in designing the Jeep. It is to their credit that the Willys designed 'GO-Devil' Engine drives all jeeps being built for the U.S. Army and our Allies. Willys-Overland Motors, Inc."
(Comm. Ex. No. 7)
"'THE JEEP IN CIVVIES'
We are proud beyond words of the Willys Engineering and Manufacturing Staffs. In close collaboration with the Quartermaster Corps of the United States Army, they created and perfected the rugged, dependable 'Jeep' that is being used as the pattern for all command-reconnaissance cars or this type.
In civilian service, the new 1942 Willys Americar, 'the Jeep in Civvies,' is equally outstanding. resigned by the same engineers, built by the same trained hands, powered by the same fuel-saving Go-Devil engine as the rugged 'Jeeps', it provides dependable transportation at the lowest cost of any full-family-size car in the world.
(Comm. Ex. No. 1)
PARAGRAPH FIVE: Through the use of these advertisements and others of similar import, the respondents have represented, directly and by implication, that respondent Willys-Overland, in cooperation and collaboration with the Quartermaster Corps of the United States Array, created and designed the automotive vehicle commonly known and referred to as the "Jeep" and used by the United States Army for various military purposes.
PARAGRAPH SIX: For a number of years prior to the development of the vehicle here under consideration the matter of developing a powerful but small and light-weight vehicle for reconnaissance and transportation purposes had engaged the attention of the United States Army. Efforts had been made to develop such a vehicle and experiments had been conducted with certain commercial motor vehicles with the view of adapting them to the Army's needs but nothing of a definite or tangible nature had resulted. At that time the lightest vehicle in use by the Army (except motor cycles and motor cycles with side cars) was a half-ton truck. What the Amy wanted was a lighter vehicle, with great power and durability, a vehicle which could operate at reasonable speed over all kinds of terrain and which could be man-handled in the event of accident.
PARAGRAPH SEVEN: It was not until May and June, 1940, that definite steps were taken toward the accomplishment of the Army's objective. In May, while the matter was under consideration by the Army and particularly by the office of the Chief of Infantry and the office of the Chief of Cavalry, one Charles H. Payne, representing the American Bantam Car Company (hereinafter sometimes referred to as the Bantam Company and as Bantam) called at the office of the Chief of infantry and consulted with certain officers relative to the developing of a vehicle which would meet the Army's needs. The regular commercial product of the Bantam Company was a small light-weight car known as the Bantam (formerly called the Austin) and Payne's idea apparently was to use this car or its chassis as a basis for a new vehicle which would be satisfactory to the Army. The Chief of Cavalry testified that, pursuant to conferences with the Chief of Infantry, Mr. Payne and technical advisers concerning the technical characteristics, there was at this time a meeting of the minds as to the main features of the car.
PARAGRAPH EIGHT: On June 6, 1940, following these conferences with Payne, the office of the Chief of Infantry addressed a letter to the Adjutant General, through the office of the Chief of Cavalry, setting out certain characteristics which it was felt the vehicle should possess and recommending that a designated number of vehicles conforming generally to these characteristics be procured for testing purposes. This recommendation was concurred in by the office of the Chief of Cavalry and the office of the quartermaster General, both of which-, along with the Infantry, had been studying the project, and the recommendation was approved by the General Staff. By order of the General Staff the project was referred to the ordnance Technical Committee, which was composed of representatives of ordnance and of the infantry, Cavalry, Field Artillery and Quartermaster Corps (later, after the organization of the Armored Corps, representatives of that corps were added) and this committee recommended that a sub-committee visit the Bantam Company, which was located at Butler, Pennsylvania "for conferences with the officials and engineers of that company in regard to the military characteristics and design of the light command and reconnaissance car * * *”.
PARAGRAPH NINE: This recommendation was approved and on June 19, 1940, the sub-committee visited the Bantam Company plant and conferred with the company's officials and engineer. These conferences extended over some two days. There was a general discussion of the design and desired characteristics of the proposed new vehicle and a tentative sketch of the vehicle was made. The company's engineering data and blueprints relating to its regular commercial car were examined and certain brief tests of this car were made. Engineering and plant facilities of the company were checked. An engineer of the Spicer Manufacturing Company, of Toledo, Ohio, automobile axle manufacturers, was called in to discuss the adapting of the four-wheel drive to the new vehicle. The Bantam car, as practically all commercial passenger automobiles, had only a two-wheel drive. The conferees used the Bantam car as a basis from which to work.
PARAGRAPH TEN: Shortly after these conferences in Butler, the sub-committee, on June 22, 1940, addressed a memorandum to the ordnance Technical Committee setting forth certain general features and characteristics of the proposed new vehicle and recommending that 70 vehicles of the type described be approved for testing purposes. This recommendation was approved and on July 11, 1940, invitations to bid on 70 "light reconnaissance and command" cars or trucks were issued by the Quartermaster Corps (the procuring of the vehicle having been transferred to that branch of the Army). In the meantime, numerous conferences among themselves had been held by the Army officers working on the project and several conferences or discussions had also been held between the officers and officials of the Bantam Company. These invitations to bid, which were sent to some 135 automobile manufacturers throughout the United States, including Bantam and Willys-Overland, were accompanied by a statement of specifications and an outline drawing. These specifications were for the most part general in their nature, consisting largely of certain performance requirements and limiting measurements. Likewise, the drawing was in broad outline only. Neither the specifications nor the drawing undertook to set forth details of design and construction. These had to be worked out by the bidders.
PARAGRAPH ELEVEN: The bids were opened on July 22, 1940. Only two bids were received, one being from Bantam and the other from Willys-Overland. Willys-Overland's bid was the lower in amount, but the company doubted that a pilot (test) model could be manufactured and delivered within the time specified by the invitation to bid, and it therefore took exception to this time limit. As a result, the contract for the 70 vehicles was awarded to the Bantam Company.
PARAGRAPH TWELVE: Upon receiving; the award of the contract, Bantam proceeded at once with the building of its pilot model and this model was delivered to the Quartermaster Corps at Camp Holabird, Maryland, on September 23, 1940. There then followed a series of tests of the model and the results were favorable. Officials of Willys-Overland were at Camp Holabird in October of 1940 and observed the tests of the Bantam model and the design of the car. This was prior to the submission of the Willys-Overland pilot model to the Army. By December 17, 1940, the remaining 69 vehicles due under the contract had been delivered by Bantam and these were distributed among a number of Army camps for inspection and testing. As in the case of the pilot model, the results of the tests were regarded as favorable.
PARAGRAPH THIRTEEN: A few days after the bids were opened on July 22, 1940, and the contract awarded to Bantam, officials of Willys-Overland contacted officers of the Quartermaster Corps at Camp Holabird and it was suggested by the officers that if the company was still interested in the project it build a pilot model at its own expense, using the specifications and drawing which accompanied the Army's July 11th invitation to bid. Later the officers suggested to the Ford Motor Company (hereinafter sometimes referred to as Ford) that it also build a pilot model at its own expense, using the same specifications and drawing. Both Willys-Overland and Ford proceeded to build pilot models, the Willys-Overland model being delivered to the Quartermaster Corps at Camp Holabird on November 16, 1940, and the Ford model on November 23, 1940. The Army was desirous of obtaining as many engineering suggestions and pilot models as possible, its idea being that the more it received the better would be its chances of working out a vehicle which would meet its needs.
PARAGRAPH FOURTEEN: By October, 1940, tests of the Bantam model had proceeded sufficiently far to indicate the suitability of a vehicle of this general type for military use and the Army felt that a much larger number than the 70 then on order would be needed. In other words, by October 1940, based on the favorable tests of the Bantam the general characteristics of the vehicle had been formulated and the creative stages had been substantially completed. Subsequent thereto the vehicle was developed and perfected. As of that date Willys-Overland had not submitted a pilot model to the Army. In October of 1940 the Adjutant General by order of the Secretary of War directed that 1500 additional cars be purchased from Bantam. Willys-Overland protested against this award. The authorities subsequently decided not to purchase the additional vehicles solely from Bantam for the reason that this important new unit should be purchased from two or three sources of supply so that the combined facilities of such companies would be available in the event of a major emergency. It was finally decided to order, by negotiated contract, 1,500 from each of Bantam, Ford and Willys-Overland, the contract to be continent in each case upon the building by the company and the acceptance by the Army of a satisfactory pilot model. The original pilot model submitted by Willys-Overland was recommended for rejection by the Ordnance Technical Committee because of overweight. Subsequently a contract for 1,500 vehicles was awarded to Willys-Overland. In the meantime, the Army had determined, as a result of its tests and further study of the matter, upon certain changes in the specifications and requirements and these changes were incorporated into the new contracts. The contracts were subsequently extended. to call for a total of 7,842 vehicles, of which Bantam produced and delivered 2,642, Ford 3,700 and Willys-Overland 1,500.
PARAGRAPH FIFTEEN: The three types of vehicle produced by the three manufacturers all conformed generally to the Army's over-all specifications and requirements but the three types differed materially in detail. In June, July and August, 1941, the three models were subjected by the Army to extensive comparative tests. The over-all performance of each of the models was good. Each was found to be superior to the others in certain respects and inferior in other respects. The superiority of the Willys-Overland model was chiefly in its more powerful engine, the Bantam in its lower fuel consumption and ability to stop within shorter distances, the Ford in its arrangement of gear shift and hand brake levers and greater driver comfort and leg room.
PARAGRAPH SIXTEEN: By July 12, 1941, the Army had decided to procure 16,000 more of these vehicles and on that date called for bids on that number on an all-or-none basis. The purpose of the Army was to standardize on one model and have one manufacturer produce all of the vehicles according to this one model so that there would be complete interchangeability of parts. As a result of the recent tests, the Army had made further revisions in its specifications and drawings and these revised specifications and drawings accompanied the invitation to bid. Bids were submitted by Bantam, Ford and Willys-Overland and also by the Checker Cab Company, but the bid of the Checker Cab Company was rejected because no pilot model had been submitted. Of the remaining three bids, Willys-Overland was low and was awarded the contract. Following the award there were conferences between the Army engineers and Willys-Overland and further changes were made in the vehicle.
PARAGRAPH SEVENTEEN: In October, 1941, the Army concluded that as a precautionary measure it was desirable that there be a second source of supply for this ''standardized" vehicle. Willys-Overland agreed to turn over to any other manufacturer designated by the Army copies of all of its blueprints and other data concerning the vehicle, and the Army worked out an arrangement with the Ford Motor Company whereby it also would produce the vehicle. While there were certain minor differences between the vehicles produced by the two companies, essentially they were the same and there was complete interchangeability of parts. Large quantities of the vehicle were purchased by the Army from both manufacturers. As of November 30, 1944, Willys-Overland had delivered 282,420 vehicles and Ford 237,163. And purchases continued after that date. During the course of production many further changes in the vehicle were made. Sometimes these changes would be suggested by the Army, sometimes by Willys-Overland, and sometimes by Ford.
PARAGRAPH EIGHTEEN: It is impossible to state with certainty just when the name ''Jeep" was first applied to this now famous vehicle, known to engineers as the 1/4-ton 4 x 4 (4-wheel drive) truck. The name appears to have been applied to the vehicle for the first time by some soldier or non-commissioned officer while the earlier models were being tested by the Army, and appears to have been taken from a newspaper comic strip which included a character known as the "Jeep". In any event, the name caught on rapidly and soon was very widely used to designate the vehicle.
PARAGRAPH NINETEEN: It is evident from the facts herein set forth that the Jeep was not the product of any one manufacturer, either acting alone or in collaboration with the Army. Rather, the Jeep represented the result of the combined efforts of the Army and the several manufacturers who participated in the project. Great credit is due the Army for originating the project and for its tireless efforts toward developing and perfecting the vehicle. Bantam contributed greatly by its assistance during the early stages of the project and by supplying the first pilot model. Willys-Overland made an outstanding contribution in its powerful engine, as well as in other features of the vehicle. Ford also made valuable contributions to the vehicle. The Spicer Manufacturing Company is likewise deserving of credit for working out the Jeep's 4-wheel drive.
PARAGRAPH TWENTY: Respondents' advertisements were erroneous and misleading in that they attributed to Willys-overland, along with the Army, the entire credit for the Jeep. As shown above, Willys-Overland did not participate in the creating or designing of the Jeep, although it did participate in and contribute to the developing and perfecting of the vehicle.
PARAGRAPH TWENTY-ONE: Respondents urge that their advertisements did not relate to all models of the Jeep (the Bantam and Ford models) but only to the model produced by Willys-Overland, their contention being that Willys-Overland did, in collaboration with the Army, create, design and perfect its own model. The advertisements, however, were not so limited but referred to the Jeep generally. Moreover, the record establishes that the public does not distinguish between the various models of the Jeep. To the public the Jeep is the small, lightweight, quarter-ton, 4-wheel drive, low silhouette, olive drab vehicle used by the Army, without regard to differences in detail or the manufacturer who produced it. Not only is this established by the testimony of witnesses, but it is apparent also from an examination of photographs of the various models introduced in evidence. The models are so similar in general outline and external appearance that it is difficult, without close examination and comparison, to distinguish between them.
PARAGRAPH TWENTY-TWO: It is also urged by respondents that the word "create" does not necessarily connote originality or conception, that in the modern sense the word means merely to make, build, produce, or manufacture. While the word is sometimes used in that sense, it is also used to denote originality. An examination of respondents' advertisements leaves no doubt that they were intended to and did convey the latter meaning-that Willys-Overland, in cooperation with the Army, conceived and originated the Jeep, that the vehicle was the product of the inventive genius of Willys-Overland and the Army.
PARAGRAPH TWENTY-THREE: Among the products of the intervenor, Minneapolis-Moline Power implement Company, is a large tractor, known in the Amy as a prime mover. Some 1,018 of these vehicles were sold by the intervenor to the Army and Navy during the late war and were used primarily for moving heavy artillery and other heavy equipment. The vehicle weighs approximately 6-1/2 tons (the Jeep weighs approximately one ton). Some of these tractors were referred to in the Army and elsewhere as "Jeeps". The Commission, however, makes no findings as to the relative rights of the intervenor and Willys-Overland to apply the name to their respective products, this issue not being raised in the Commission's complaint and being essentially a private controversy between the two companies.
PARAGRAPH TWENTY-FOUR: While certain charges in addition to those herein discussed were made against respondents in the complaint, the Commission is of the opinion and finds that, such additional charges are not sustained by the record.
PARAGRAPH TWENTY-FIVE: the Commission is of the further opinion that the public interest does not require the retention in this proceeding of any of the individual respondents.
PARAGRAPH TWENTY-SIX: The use by respondents Willys-Overland Motors, Inc., and United States Advertising Corporation of the erroneous and misleading representations herein set forth had and has the tendency and capacity to enhance the prestige of and promote good will for respondent Willys-Overland and its products, and thereby to induce a substantial portion of the public to purchase the products of Willys-Overland in preference to those of its competitors. In consequence thereof, substantial trade has been and is being diverted unfairly to Willys-Overland from its competitors.
CONCLUSION
The acts and practices of said respondents as herein found are all to the prejudice and injury of the public and of the competitors of respondent Willys-Overland, and constitute unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.
By the Commission.
R. E. Freer,
Chairman.
Dated this 27th day of
February, A.D., 1948.
ATTEST:
Otis B. Johnson,
Secretary.