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Fashion Originators Guild v. FTC Cases of Interest >  IP >  Trademark
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Fashion Originators Guild v. FTC

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Facts: The Fashion Originators Guild of America (Guild) is mostly made up of designers, manufacturers, sellers, and distributors of women’s garments. The garment manufactures claim to create original designs of clothes and that other manufactures make and sell copies of them at lower prices. The Guild refers to this practice as “style piracy.” The Guild admits to destroy competitions they have as a group boycotted and declined to sell their products to retailers who follow a practice of selling clothes copied by other designers. Guild members have agreed to sell their products only to those manufacturers who have in turn agreed to sell only to cooperating retailers. The Guild has a system of trial and appellate tribunals to determine whether a garment is a copy of a Guild member’s design and the Guild audits its member’s books. Violators are subject to heavy fines. The Guild also prohibits its members from participating in retail advertising, regulates the discount they may allow, and prohibits selling at retail.
Procedural: The Court of Appeals affirmed a Federal Trade Commission decree ordering petitioners to cease and desist from certain practices found to have been done in combination and to constitute unfair methods of competition tending to monopoly.
Issue: Whether or not the FTC and the Court of Appeals erred in ordering the Guild to stop certain practices found to be unfair methods.
Holding: The Commission upon adequate and unchallenged findings, correctly concluded that the Guild’s practices constitute an unfair method of competition
Reasoning: The Guild practices run counter to the public policy declared by the Sherman and Clayton Acts and the FTC can suppress actions when they violates paragraph 3 of the Clayton Act declaring it unlawful for any person engaged in commerce to make a sale or contract for sale of goods on the condition, agreement or understanding that the purchaser thereof shall no use or deal in he goods of a competitor or competitors of the seller where the effect of such sale, or contract for sale may be to substantially lessen competition or tend to create monopoly in any line of commerce.
-Also the Guild goes against the Sherman Act by narrowing the outlets to which garment and textile manufacturers who decline to comply with the Guild’s program takes away the freedom of action of members and results in the direct suppression of competition
-It acts as an extra-governmental agency.
-The purpose and object of the Guild, its potential power, its tendency to monopoly, the coercion it could and did practice upon a rival method of competition, all made it a prohibited organization.

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