Frischer & Co. v. Bakelite Corporation , 39 F.2d 247 ( 1930 )

GRAHAM, Presiding Judge.

This matter comes to this court on appeal from the United State Tariff Commission under the provisions of section 316 of the Tariff Act of 1923, 42 Stat. 858, 943 (19 USCA §§ 174-180').

O'n December 16, 1925, Bakelite Corpora^ tion, a corporation organized under the laws of tbe state of Delaware, Abse Bros., a co-partnership, with its principal place of business in New York, and the Embed Art Corporation, a corporation organized under the laws of the state of New Jersey, filed with the United States Tariff Commission a complaint, under oath, asking relief under said section 316 from unfair competition in the importation and sale of beads and others materials or articles made of synthetic phenolic resin, or Bakelite.

On April 10', 1926, certain manufacturers of cigar and cigarette holders, to wit, Kaufmann Bros. & Bonde, of New York, Reiss-Premier Pipe Company, of Union City, N. J., S. M. Frank & Co., Inc., of New York, Wm. Demuth & Co., of New York, L. & H. Stem, Inc., of Brooklyn, and M. Linkman & Co., of Chicago-, petitioned for leave to join in said complaint, and that any order made therein might cover and apply to cigar and cigarette holders made of synthetic phenolic resin. On April 16, 1926, the said Commission set the several matters mentioned in said application for hearing on May 24,1926, and gave public notice of said hearing. On the same day the said Commission reported to the President and recommended that, pending completion of the investigation, the articles complained of be forbidden entry, in accordance with the provisions of said section 316, subsection (f), 19 USCA § 179.

On April 23, 1926, the President issued an order, which was duly circulated to the collectors of customs under date of April 24, 1926, directing that synthetic phenolic resin of Form C, and all articles manufactured wholly or in part thereof, except articles made by molding synthetic phenolic resin when mixed with other articles, be forbidden entry into the United States. Thereafter, on April 26,1926, the Secretary of the Treasury, in pursuance of the provisions of said statute, instructed the various collectors of customs to the same effect. T. D. 41512, 49 Treas. Dec. 715. On May 12,1926, Frischer & Co. Inc., a corporation organized under the laws of the state of New York, Richard Ganz, doing business as Randes Import Company, of New York, Transatlantic Watch & Clock Co., Inc., a corporation organized under the laws of the state of New York, and Western Briar Pipe Company, a corporation organized under the laws of the state of Illinois, appeared and filed their joint and several answer to the foregoing complaint, in and by which answer the right of the complainants to the relief or any part thereof prayed by them was denied. In connection with this answer various sworn statements were filed. Said answer also contained a motion that the said order of the President declaring a temporary embargo upon synthetic phenolic resin and products be rescinded and dissolved. That portion of the answer consisting of said motion was set for hearing before said Commission on May 17, 1926-, and on that date was duly heard. The motion was thereafter, on May 24, 1926, taken under advisement until the decision of the matter on the merits. This hearing on the merits began on May 24,1926, and continued thereafter, from time to time, until it was completed.

The complaint was based, in part, upon the alleged violation of certain patent rights involved in United States letters patent Nos. 942,700 and 942,809, both of which were issued to Leo H. Baekeland on December 7, 1909, and which were owned by Bakelite Corporation at the time of the filing of the complaint with said Commission.

On December 2, 1926, the said Commission reported to the President that the said patents would expire on December 6, 1926, and recommended that the temporary order of exclusion be modified to take effect at that time.. On December 7, 1926, by direction of the President, the Secretary of the Treasury instructed customs officers to exclude, after December 6, 1926, “only products composed of different colored sections of synthetic phenolic resin of Form C (except articles made by molding synthetic phenolic resin when mixed with other materials) joined together by applying a fusible phenolic condensation produet to the surfaces to be joined, which fusible product has been converted to the infusible state by means of heat or heat and pressure.” T. D. 41895, 50 Treas. Dec. 519'.

On December 18, 1926, respondents filed a motion "that the proceedings be dismissed, or, in the alternative, that they be reopened for the taking of further evidence with respect to United States patent 1,424,738’. This patent was issued August 1, 1922, to Lawrence Y. Redman, Archie J. Weith, and Frank P. Brock, and at the time of said hearing was the property of Bakelite Corporation. It appears from the record a very extended litigation had occurred between the patentees and the General Bakelite Company, which’ litigation had resulted in a combination of the C’ondensite Company, the Redmanol Chemical Products Company, and the General Bakelite Company into Bakelite Corporation, which operated under various patents, among which were said patents 942,700, 942,809, and 1,424,738. A decision on the motion to dismiss was reserved until a hearing •on the merits was had and the alternative motion for an additional hearing was allowed, which hearing was duly had on February 11,1927, continuing until the same was completed. In ordering said hearing, the said Commission included therein the question of unfair methods of competition, or unfair acts by way of infringement of United States trade-marks Nos. 75,266 and 170,-772, as well as of said patent No. 1,424,738.

The first of said trade-mark registrations was made on September 14, 1909, by Leo H. Baekeland and consisted of the word “Bakelite,” and was applied to condensation products of phenol and formaldehyde. The second was made July 24/1923, and consisted also of the word “Bakelite” and was applied to pipes and pipe parts, namely, mouthpieces and bits and bowl parts, and cigar and cigarette holders. These trade-marks were also owned by Bakelite Corporation at the time of these proceedings.

On May 25, 1927, the said Commission fíléd and made public its decision, said decision consisting of three parts: First, a general discussion of the law and facts involved in the controversy; second, findings of law and fact; and, third, three recommendations to the President as to action which might be taken by him in the premises. This report was signed by Commissioner Thomas O. Marvin, Chairman, and by Alfred P. Dennis, Vice Chairman, and E. B. Brossard, Commissioner. Appended thereto was the following notation: “Commissioner Dixon concurs in Recommendation No. 3; and dissents from the findings as to Patents No. 942)809 and No. 1,424,738, and from Recommendations No. 1 and 2 above, as he doubts the jurisdiction of the Tariff Commission to determine the validity of contested patents which are involved in said findings and recommendations.” Commissioner Costigan dissented. The court will take judicial notice that at the time said report was made the said Commission consisted of six members, the sixth member being Sherman J. Lowell. Nothing appears in the record as to whether Commissioner Lowell participated in .the said decision, findings, and recommendations except as hereinafter stated. His name is not attached to any of the papers.

On July 13, 1927, the respondents filed their petition for review and made 35 assignments of error which will be more fully referred to hereinafter.

On December 14,1927, Bakelite Corporation and the other original complainants filed herein their motion for a dismissal of said appeal, stating as grounds therefor two propositions, viz.: First, that the United States Court of Customs Appeals was and is an inferior, constitutional court, created by Congress and existing under and by virtue of article 3 of the Constitution; second, that the various matters and things involved in said appeal were administrative only, did not constitute a case or controversy, and that hence this court had no jurisdiction thereof .

This motion came on for hearing before this court, and on May 25, 1928, we entered an order denying said motion. In re Frischer & Co., Inc., et al., 16 Ct. Cust. App. 191, T. D. 42827. The grounds of denial, as stated in the opinion of the court here, were, briefly, that the United States Court of Customs Appeals was and is an inferior constitutional court, as contended, but that the matters involved in the proceedings before the United States Tariff Commission, under said section 316 (19 USCA §§ 174-180), constitute a case or controversy, and that therefore there seemed to be no constitutional objection to the jurisdiction of this court in that respect.

Thereupon the Bakelite Corporation and the other complainants filed their petition for a writ of certiorari in the Supreme Court. This writ was denied October 29, 1928. Bakelite Corporation v. Frisher & Co., 278 U. S. 641, 49 S. Ct. 36, 73 L. Ed. 556. Bakelite Corporation, also, at about the same time, filed in the Supreme Court its petition for a writ of prohibition. After a return thereto this matter came on to be heard and the petition was denied May 20, 1929. Ex parte Bakelite Corporation, 279 U. S. 438, 49 S. Ct. 411, 417, 73 L. Ed. 789: The Supreme Court, in denying the writ of prohibition, did so upon the theory that the United States Court of Customs Appeals was and is a legislative court and not one created under article 3 of the Constitution, and that therefore there could be no constitutional objection to the jurisdiction of this court over matters of an administrative nature. In finally disposing of the matter, the court did so in these words: “As it is plain that the Court of Customs Appeals is a legislative and not a constitutional court, there is no need for now inquiring whether the proceeding under section 316 of the Tariff Act of 1922, now pending before it, is a case or controversy within the meaning of section 2 of article 3 of the Constitution, for this section applies only to constitutional courts. Even if the proceeding is not such a case or controversy, the Court of Customs Appeals, being a legislative court, may he invested with jurisdiction of it, as is done by section 316.”

Section 316 (19 USCA §§ 174-180), under which these proceedings are had, appears in a marginal note.¹

Our attention is first called to a constitutional question. It is maintained by the respondents that said section 316 is invalid because it is an attempted delegation to the President of the legislative power which is granted to the Congress by section 8 of artide 1 of the Constitution: “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises. * * * ”

This point has very recently and closely engaged the attention of this court in Hampton, Jr., & Co. v. United States, 14 Ct. Cust. App. 350, T. D. 42030. In that ease, the President had issued a proclamation increasing the duties upon barium dioxide, under and by virtue of the provisions of section 315, Tariff Act of 1922, 42 Stat. 858, 941 (19 USCA §§ 154-159). The validity of the section was challenged as an unconstitutional delegation of legislative authority to the President. This contention was found to be without merit tand the statute was upheld. A writ of certiorari having been granted by the Supreme Court, the judgment of this court was affirmed. Hampton, Jr., & Co. v. United States, 276 U. S. 394, 48 S. Ct. 348, 352, 72 L. Ed. 624.

Section 315, under consideration in the Hampton Case, supra, attempts to provide a remedy in eases where it is impossible for articles wholly'or in part the growth or produet of the United States.to compete with similar articles or products from foreign countries, because of differences in costs of production. In such cases the statute provides that when the President “shall find it thereby shown that the duties fixed in this Act do not equalize the said differences in costs of production in the United States and the principal competing country,” he shall ascertain said differences and proclaim increases or decreases in the duties in order to equalize said differences in cost of production. He is also authorized by the statute, in ease he shall find that such equalization cannot be made by increasing or decreasing the duties as specified, to proclaim the same and cause said imported articles to be valued upon their American selling price, within certain limitations. The statute further provides that certain elements may be taken into account by the President in making his findings, and that investigations to assist the President in ascertaining differences of costs of production shall be made by the United States Tariff Commission, and that no proclamation can be made thereunder until such investigation shall have been made. The section further provides that when the President determines that it is shown that the differences in costs of production have changed or no longer exist, he shall modify or terminate his former order.

Section 316, in pari materia with section 315, is likewise intended to protect American industries and to further- and promote the protection of domestic goods. An analysis of this section discloses that it provides that unfair methods of competition and unfair acts in the importation of articles into the United States, which have a tendency to destroy or substantially injure economically operated industries in the United States, are unlawful. It provides that when the President shall find such unfair methods or acts to exist and they are established to his satisfaction, he shall determine the rate, of duty, within certain limitations, which are necessary to offset such methods or acts, and, when he shall be satisfied and find that there are extreme cases of unfair methods or acts, he shall cause such articles to be excluded from entry into the United States. The section further provides that when the President has reason to believe that articles are being offered or sought to be offered for entry in violation of said section, but is not fully informed, he may cause a temporary embargo to be made until his investigation is completed. Such embargoes are to continue until the President shall find that the conditions existing no longer require the same, when he shall instruct the Secretary of the Treasury to discontinue the' same.

In our opinion the provisions of section 316 do not constitute an attempted delegation of legislative power. Here the Congress has declared certain unfair methods and acts to be unlawful, and has further declared that when such unlawful acts are committed, certain remedies shall be applied. The statute does not provide that the President shall establish any policy, or fix any rates, or levy any embargoes. These are fixed by the statute itself and are the act of the legislative body. The President, in performing his duties, does so as a fact-finding body, and no different principle applies than that which was held to be applicable in the Hampton Case, supra.

In the Hampton Case, we went fully into the authorities on this subject, and it would be needless repetition to again cite and comment upon them here. We therefore content ourselves with a brief excerpt of what we there said in conclusion: “Viewing said section 315 in the light of these authorities and its legislative history, it at once becomes evident that the Congress has endeavored to express therein a general legislative policy. This policy is to levy upon imported products sufficient duties to equalize the differences in cost of production in the United States and the principal competing countries from which such imports come. Under ordinary circumstances, the duties are those specifically named in the act; hut, whenever these are insufficient to accomplish this expressed purpose, they shall he, within certain precautionary minima and maxima, increased or decreased accordingly. There is no uncertainty here as to the congressional intent and policy; no discretion is attempted to be given to the President to determine what the policy shall be; the law imposes upon him no duties and confers upon him no powers except to execute the law, if it be capable of execution. When the President proclaims a change of rate thereunder, the new rate of duty does not Come into being as a result of the proclamation, but the proclamation and the rate of duty result from the law.”

In commenting on this same point, the Supreme Court, speaking through the Chief Justice, in Hampton v. United States, supra, said: “It is conceded by counsel that Congress may use executive officers in the application and enforcement of a policy declared in law by Congress and authorize such officers in the application of the congressional declaration to enforce it by regulation equivalent to law. But it is said that this never has been permitted to be -done where Congress has exercised the power to levy taxes and fix customs duties. The authorities make no such distinction. The same principle that permits Congress to exercise its rate-making power in interstate commerce by declaring the rule which shall prevail in the legislative fixing of rates, and enables it to remit to a rate-making body created in accordance with! its provisions the fixing of such rates, justifies a similar provision for the fixing of customs duties on imported merchandise. If Congress shall lay down by legislative act an. intelligible principle to which the person or body authorized to fix such rates is directed to conform, such legislative action is not a forbidden delegation of legislative power. If it is thought wise to vary the customs duties according to changing conditions of production at home and abroad, it may authorize the Chief Executive to carry out this purpose, with the advisory assistance of a Tariff Commission appointed under congressional authority.”

We are therefore of opinion that there is no valid objection to said section 316, as an unconstitutional delegation of legislative authority to the President.

The thirty-first assignment of error, and one much insisted upon by appellant, is as follows: “31. That the findings of the Tariff Commission are void on the ground that the same were not signed by a majority of the Commission, but only by three members thereof, and on the further ground that the said findings can only be valid if made by unanimous consent of all members of the Commission.”

The United States Tariff Commission was created by the act entitled “An Act To increase the revenue, and for other purposes,” approved Sept. 8, 1916, §§ 700-709, 39 Stat. 795-798 (19 USCA § 91 et seq.). That act provides, in section 700 (19 USCA § 91), for the creation of a Commission to consist of six members, to be appointed by the President and not more than three of whom shall be members of the same political party. It prescribes the duties and functions of said Commission, and provides that “a vacancy shall not impair the right of the remaining members to exercise all the duties of the commission.” The act also provides, section 701 (19 USCA § 92), that the Commission may, “by one or more of its members, or by such agents as it may designate, prosecute any inquiry necessary to its duties.” Nowhere in the act or its amendments is found any reference to the number of members necessary to constitute a quorum and to do business, aside from the above provisions.

The United States Tariff Commission, under the law, is not a judicial tribunal, but an administrative board. Its functions are those of a fact finding commission. United States ex rel. v. United States Tariff Com., 55 App. D. C. 366, 6 E.(2d) 491; 34 Ops. Attys. Gen. 77 (1924). In that respect it is similar to the Federal Trade Commission, which has been held to exercise only the administrative functions delegated to it by the act and tó be without judicial powers. Fed. Tr. Com. v. Eastman Kodak Co., 274 U. S. 619, 47 S. Ct. 688, 71 L. Ed. 1238.

Where a governmental body has been created by law, consisting of more than one person, whether legislative, judicial, or administrative, unless the number necessary to constitute a quorum is fixed by law, it has usually been held that a majority of the persons constituting such body shall constitute such quorum and may transact the business for which it is organized. Some jurisdictions have held to the contrary in discussing the powers of courts, but the great bulk of legal authority is as above stated. This doctrine is also subject to the further limitation that where the authority is given jointly to several persons in the matter of some private agency, these persons must aet jointly or their actions are invalid. The rule is otherwise when the authority is of a public nature ; in such eases the authority may be executed by a majority. Cooley v. O’Connor, 12 Wall. 391, 398, 20 L. Ed. 446; Cowan v. Murch, 97 Tenn. 590, 37 S. W. 393, 34 L. R. A. 538; Briscoe v. Bank, 33 U. S. (8 Pet.) 118, 8 L. Ed. 887; Austin v. Harbin, 95 Tenn. 598, 32 S. W. 628; Bank v. Mount Tabor, 52 Vt. 87, 36 Am. Rep. 734; Ex parte Rogers, 7 Cow. (N. Y.) 526; Grindley v. Barker, 1 Bos. & P. 229; Attorney General v. Davy, 2 Atk. 212; Heiskell v. Mayor, 65 Md. 125, 4 A. 116, 57 Am. Rep. 308; State v. Porter, 113 Ind. 79, 14 N. E. 883.

It is therefore apparent that four members of the Tariff. Commission, or a majority, could perform any function whieh the entire body could perform. The query then arises: If four members can transact any of the business of the Commission, must all four concur in order to make valid findings, under the law?

It seems to us that both legal authority and reason indicate the contrary, and that a majority of a quorum is all that is necessary. Where courts are concerned, it has been uniformly held, so far as we can ascertain, that a clear majority of all the legally constituted members thereof shall concur or no valid judgment may be entered except such as may follow no decision. Mugge v. Tate, 51 Fla. 255, 41 So. 603; Deglow v. Kruse, 57 Ohio St. 434, 49 N. E. 477; Denver & R. G. R. Co. v. Burchard, 35 Colo. 539, 86 P. 749, 9 Ann. Cas. 994; Madlem’s Appeal, 103 Pa. 584; Putnam v. Rees, 12 Ohio, 21; Northern R. R. v. Concord R. R., 50 N. H. 166; Johnson v. State, 1 Ga. 271; Ayers v. Bensley et al., 32 Cal. 632; Ill. Cent. R. R. Co. v. Frazier, 47 Ill. 505.

But the trend of modem authority is that in collective bodies other than courts, even though they may exercise judicial authority, a majority of a quorum is sufficient to perform the function of the body. The following authorities are in point: “But if the act is one which requires the exercise of discretion and judgment, in whieh case it is usually termed a judicial act, unless special provision is otherwise made, the persons to whom the authority is given, must meet and confer together, and be present when the act is performed, in which case a majority of them may perform the act; or, after all of them have been notified to meet, a majority of them having met will constitute a quorum or sufficient number to perform the act, and according to some modem authorities, the act may be legally done by the direction or with the concurrence of a majority of the quorum so assembled.” Martin v. Lemon, 26 Conn. 192. Where the issue was the authority of a superintending committee of a town to act, it was held, “A major part of the whole is necessary to constitute a quorum, and a majority of such quorum may act.” Damon v. Granby, 2 Pick. (Mass.) 345. In a city council where an ordinance had been passed making a two-thirds vote of the same requisite to the granting of a permit, it was held that such ordinance was invalid, and that in the absence of legislation to the contrary,, a majority of a quorum could issue such permit. State v. Gitchell, 90 Vt. 57, 96 A. 383; Hutchinson v. Borough of Belmar, 61 N. J. .Law, 443, 39 A. 643. When a quorum of a city council is present, a majority of that quorum can elect an officer provided for by law. Collopy v. Cloherty (Ky.) 39 S. W. 431. In the absence of statutory restriction, the general rule is that a majority of a council or board is a quorum, and the majority of the quorum can act. Merrill v. City of Lowell, 236 Mass. 463, 128 N. E. 862. Where a city council was composed of eight aldermen and a mayor, and the terms of four aldermen had expired, and where the remaining four aldermen and the mayor met, and three of them voted for a certain elective official, such election was valid. People v. Wright, 30 Colo. 439, 71 P. 365. The majority of a quorum is all that is required for the adoption or passage of any resolution or order properly arising for the action of a city council or other collective body exercising legislative, judicial, or administrative functions. Thurston v. Huston, 123 Iowa, 157, 98 N. W. 637. The two-thirds vote in each house whieh is required in proposing an amendment to the Constitution is a vote of two-thirds of the members present, assuming the presence of a quorum, and not a vote of two-thirds of the entire membership, present and absent. National Prohibition Cases, 253 U. S. 350, 386, 40 S. Ct. 486, 64 L. Ed. 946; M. P. Ry. Co. v. Kansas, 248 U. S. 276, 39 S. Ct. 93, 63 L. Ed. 239, 2 A. L. R. 1589.

If it be true, therefore, as contended by appellants, that but five members of the Tariff Commission participated in these proceedings and that but three of said members concurred in said findings, we conclude that such concurrence by three members is sufficient to make valid findings.

There is, however, no showing made by the record that Commissioner Lowell did not participate in such hearings and majority findings. The statute, section 316, Tariff Act of 1922, 42 Stat. 858, 943 (19 USCA §§ 174-180), does not require the findings of such Commission to be signed. The language is (section 316 (c), 19 USCA § 176): “That the testimony in every such investigation shall be reduced to writing, and a transcript thereof with the findings and recommendation of the commission shall be the official record of the proceedings and findings in the case. * * * ” The fact that certain of the commissioners signed said report, and that Commissioner Lowell did not, does not, in itself, and without a showing to the contrary, prove that he did not concur in such findings. The report and findings of the Commission recite, repeatedly, that the various steps taken in this matter, and that the findings and recommendations made, are those of the Commission; There is nothing in the record to contradict this, and the presumption must be that all the members of the Commission acted. A case in point is Scott et al. v. Detroit Y. M. Soc., 1 Doug. (Mich.) 119. There the Governor and three judges were authorized to convey certain property; the deed was signed by the judges, but not by the Governor, and its validity was attacked on this ground. The court said: “In the absence of proof to the contrary, it will be presumed that the Governor was present and consulted with the Judges, touching the grant and conveyance to the Detroit Young Men’s Society, of the lot in question. Where an act of publie duty is enjoined, and has been performed in fact, the law will presume, unless the contrary directly appears, that everything necessary to give it validity was observed in the performance.”

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Announcing the same rule is Downing v. Rugar, 21 Wend. (N. Y.) 178, 34 Am. Dec. 223.

But assuming, for the sake of argument, that at least four commissioners must have concurred in the findings and that Commissioner Lowell cannot be considered as having so concurred, we believe that Commissioner Dixon, by his special concurrence, concurred in sufficient of the findings of the Commission herein which are material for the purposes of the proceeding. Commissioner Dixon’s special concurrence, hereinbefore quoted, agrees to recommendation No. 3 and dissents from recommendations 1 and 2. He also does not join in the findings upon patents Nos. 942,809. and 1,424,738, because he doubts the jurisdiction of the Commission to determine the validity of these patents. The recommendations are as follows:

“It is recommended that the President direct the Secretary of the Treasury to instruct customs officers as follows:

“1. That the following named materials and articles imported prior to December 7, 1926, be excluded from entry into the United States:

“Synthetic phenolic resin, form C, and articles made wholly or in part thereof (except articles made by molding synthetic phenolic resin when mixed with other materials) containing a proportion of free or combined base not exceeding one-fifth of the equimoleeular proportion of phenolie body employed as described in United States patent No. 942,809.

“2. That the following named materials and articles be excluded from entry into the United States, namely:

“Synthetic phenolie resin, form C, and articles made wholly or in part thereof (except articles made by molding synthetic phenolie resin when mixed with other materials) composed of different colored sections of synthetic phenolie resin, form C, united by a bonding agent comprising a phenolic condensation product, as described in United States patent No. 1,424,738.

“3. That the following named articles be excluded from entry into the United States, namely:

“Articles made wholly or in part of synthetic phenolic resin, form C (except articles made by molding synthetic phenolic resin when mixed with other materials), unless it is clearly and unmistakably shown by means of a distinguishing mark, name, inscription, or label, placed upon said articles or attached thereto, that said articles are not made from synthetic phenolie resin, form C, manufactured by the Bakelite Corporation, or unless said articles are otherwise reasonably distinguished so as to prevent confusion between the imported and the domestic articles on the part of the purchasing publie.”

The findings are twenty-five in number and are too voluminous for quotation here. It is apparent from an examination of these findings that there are, irrespective of the findings as to the validity of the patents involved, repeated findings of unfair methods of competition and unfair acts in the importation and sale pf synthetic phenolie resin, form C, and articles made therefrom. Findings 7 to 13, inclusive, refer to patent No. 942,809. This patent having expired on December 6, 1926, and the President having, on that date, released the embargo on importations of products described in said patent, all questions as to said patent become moot here, and will not be further considered.

Findings 1, 2, 3, 4, 5, 6, 19, 20, 21, 22, and 23 are, plainly, findings that the respondents have been guilty of unfair practices and are not at all based upon the validity or invalidity of the patents in question.

It having been concluded that there are before us valid findings of the Tariff Commission it becomes important to consider what these findings are, and whether they find support in the record, as a matter of law. These findings, as further expressed by the report accompanying the same, are, so far as material here, in substance, that the appellants are engaged in the importation of synthetic phenolic resin, form C, and articles made therefrom, which is and are prepared and manufactured in conformity with the method described in United States patent No. 1,424,-738, now owned by the complainant, Bakelite Corporation, and which method consists in joining together two or more different colored sections of an infusible and substantially insoluble phenolic condensation product in such manner as to become substantially homogeneous without the use of mechanical means; that Bakelite Corporation is engaged in the manufacture of these products in the United States and efficiently and economically operates the said industry; that Bakelite Corporation is also the owner of the registered trade mark “Bakelite” and uses the same upon its products; that the appellants are selling the same to jobbers and retailers in the United States at less than their American selling price and value; that the said goods have been and are commonly sold by the retailers, who purchase the same from appellants as “Bakelite”; that the articles and goods thus sold to the public have no marks upon them to indicate that they are not Bakelite, and that therefore the public is confused and purchases the imported material, thinking it to be Bakelite made by the complainant; that the importation and sale of such articles during the life of said patent No. 1,424,738 constitutes an unfair method of competition and unfair act tending to injure or destroy an industry efficiently and economically operated; that the appellants have not practiced any unfair method of competition or committed any unfair act in said importation, except in the violation of said patent right and in failing to mark said goods in such manner as to avoid confusion between the imported and domestic articles; that the fact that such imported goods are imported and sold at less than the United States prices of the domestic product does not, in itself, constitute unfair competition or an unfair act, within the statute.

As a preliminary to an inspection of the record testimony, for the purpose of ascertaining whether these findings are supported thereby, two legal questions present themselves : First, what degree of evidence is required to support said findings; second, did the Tariff Commission have power and authority to pass upon the validity of the patent rights involved, or shall the validity of such patent right be presumed?

As regards the first question, we are of opinion that if there be in the record any substantial evidence in support of the various findings of the Commission, then such findings should stand. This has been the rule uniformly applied by this court in appeals from the United States Customs Court, in matters concerning the appraisement of imported goods, when this court is- authorized to examine the record, on appeal, upon a question or questions of law only under section 501, Tariff Act of 1922, 42 Stat. 858, 966 (19 USCA § 381). United States v. Vietor & Achelis, 16 Ct. Cust. App. 122, T. D. 42767; Happel & McAvoy v. United States, 16 Ct. Cust. App. 161, T. D. 42791; United States v. Richard & Co., 15 Ct. Cust. App. 143, T. D. 42216; Metz & Co. v. United States, 13 Ct. Cust. App. 412, T. D. 41340.

The same rule has been applied to the review of the decisions and orders of the Federal Trade Commission by the Circuit Courts of Appeal under the provisions of an act entitled “An Act To create a Federal Trade Commission, to define its powers and duties, and for other purposes,” approved September 26, 1914, 38 Stat. 717 (15 USCA § 41 et seq.). The rule was stated in C. of C. of Minneapolis v. Fed. Tr. Com. (C. C. A.) 280 F. 45, 48, as follows: “In all eases where Congress had lodged in administrative officers or boards power to find facts and make orders, such findings and orders are conclusive when supported by substantial legal evidence.”

See, also, Royal Bak. P. Co. v. Fed. Tr. Com. (C. C. A.) 281 F. 744; Fed. Tr. Com. v. Curtis Pub. Co., 260 U. S. 568, 43 S. Ct. 210, 67 L. Ed. 408; New Jersey Asbestos Co. v. Fed. Tr. Com. (C. C. A.) 264 F. 509; Lehigh Valley R. Co. v. Public Service Com. (D. C.) 272 F. 758; Moir v. Fed. Tr. Com. (C. C. A.) 12 F.(2d) 22.

The second question is concerned with the right or duty of the Tariff Commission to pass upon the validity of the patents involved herein. Counsel for both the complainant and respondents proceeded upon the theory, in this court, that the Commission had a right to pass upon the same and much testimony was taken before the Commission on that question. But, whatever the concessions of eounsel may be, we are clearly of opinion that it was neither the right nor the duty of the Tariff Commission to pass upon the question as to whether complainants’ patents were properly issued or not.

The United States Tariff Commission is, as we have noted, merely an administrative, fact-finding, body. It has no judicial powers. T. he right to pass upon the validity of a pafc ent which has been issued by the Patent Office is a right possessed only by the courts of the United States given jurisdiction thereof by law. This original jurisdiction, formerly exercised by the Circuit Courts of the United States, is now enjoyed by the District Courts of the United States and the Supreme Court of the District of Columbia. Act of March 3,1911, c. 231, § 24, 256, 36 Stat. 1091, 1160 (28 USCA §§ 41, 371; section 4921, Rev. St. (35 USCA § 70); Cochrane v. Deener, 94 U. S. 780, 24 L. Ed. 139; McCormick Machine Co. v. Aultman, 169 U. S. 606, 18 S. Ct. 443, 42 L. Ed. 875. Even where jurisdiction is vested in the Court of Appeals of the District of Columbia, and now in this court, to review the proceedings of the Patent Office in the issuance of patents, it was and is expressly provided by law: “But no opinion or decision of the court in any such case shall preclude any person interested from the right to contest the validity of such patent in any court wherein the same may be called in question.” Section 4914, Rev. St. (35 USCA § 62).

Nowhere in the act creating the United States Tariff Commission is there the slightest intimation that it was the purpose to confer jurisdiction upon it to pass upon the validity of patents, matters which are well understood to be cases and controversies within the meaning of section 2 of article 3 of the Constitution. The statute provides, section 316 (e), Tariff Act of 1922 (19 USCA § 176), that the findings of the Commission, “if supported by evidence, shall be conclusive.” It would hardly be contended that a finding by the Commission that a certain patent was or was not valid would be considered as res adjudicata. It may well be doubted whether the Congress could confer any such jurisdiction upon this administrative Commission — certainly, it has not done so. The statement of Mr. Justice Curtis in Murray’s Lessee v. Hoboken, etc., 18 How. 272, 284, 15 L. Ed. 372, is pertinent: “To avoid misconstruction upon so grave a subject, we think it proper to state that we do not consider congress ean either withdraw from judicial cognizance any matter which, from its nature, is the subject of a suit at the common law, or in equity, or admiralty; nor, on the other hand, can it bring under the judicial power a matter which, from its nature, is not a subject for judicial determination.”

In short, when the complainant introduced its certified patents in evidence, they should have been treated as prima facie evidence of their validity. Lehnbeuter v. Holthaus, 105 U. S. 94, 96, 26 L. Ed. 939; Fenton Co. v. Office Spec. Co., 12 App. D. C. 201, 216; Consol. Con. Co. v. Hassam Pav. Co. (C. C. A.) 227 F. 436; R. R. Supply Co. v. Hart Steel Co. (C. C. A.) 222 F. 261, 274. If no such patents had been in faet issued, or if they had by their terms expired, or if some court of competent jurisdiction, whose judgment would be binding upon the Commission, had held them to be invalid, and such facts had been shown, these circumstances might have been considered by the Commission, if the existence of the patents was material to the inquiry. This, however, in our judgment, was as far as the Commission could legally go in this respect. As no denial was made by respondents as to the issuance of the patents in question and no attack made upon them except that they were improvidently issued, they should have been treated as-valid by the Commission.

We have examined the voluminous record with care and are satisfied that there is substantial evidence in support of each finding of the Commission. This evidence disclosed that the industry conducted by the complainant, Bakelite Corporation, was efficiently and economically operated; that the importers, appellants, were importing materials and goods and selling them to retailers in the United States which were identical with the goods of complainant and made by the processes described in complainant’s patent 1,424,738; that these goods were not marked, except as to their country of origin; that these goods were being sold, by said dealers, generally throughout the United States, as “Bakelite”; that they are called and billed as such; that they are sold at much less than the cost of complainant’s product; that such practices have greatly reduced the sales of the complainant’s “Bakelite” and have the tendency and effect of destroying and substantially injuring the said industry; that the complainant uses the name “Bakelite” as its trade-mark and has duly registered the same, which registration is in full force and effect; that the complainant Bakelite Corporation has spent large sums of money hr advertising its product and its trade-name of “Bakelite” until, as a result thereof, the name “Bakelite” fully identifies such produets as the manufactures of said complainant; that the said practices of dealers is destroying the usefulness of such trade-name and taking from the said complainant the legitimate profits which it is entitled to make because of its said expenditures; that no adequate remedy exists by suits in law or equity; and that the only method which will save the industry from destruction is an embargo.

The sole remaining question for decision is whether such facts are sufficient, in law, to constitute “unfair methods of competition and unfair acts in the importation of articles into the United States, or in their sale by the owner, importer, consignee, or agent of either,” as provided in said section 316 (a), 19' USCA § 174.

H. R. 7456, which afterwards became the Tariff Act of 1922, did not, as it passed the House of Representatives, contain the present section 316. This section was inserted by the Senate Committee on Finance and, as originally reported to the Senate, provided that the President might designate any executive department or independent establishment of the government, or both, to investigate any alleged violation and report their findings in the same to him.. As the bill passed the Senate, the United States Tariff Commission was substituted as a fact finding agency “on complaint under oath or upon the initiative of such department ,or independent establishment.” In conference, this section assumed the form in which it appears in the law. In reporting the bill to the Senate, the report of the Finance Committee states: “The provision relating to* unfair methods of competition in the importation of goods is broad enough to prevent every type and form of unfair practice and is, therefore, a more adequate protection to American industry than any antidumping statute the country has ever had.”

In view of this statement, and having in mind that one of the express objects of the Tariff Act of 1922, as stated in its title, was “to encourage the industries of the United States,” it is very obvious that it was the purpose of the law to give to industries of the United States, not only the benefit of the favorable laws and' conditions to be found in this country, but also to protect such industries from being unfairly deprived of the advantage of the same and permit them to grow and develop.

What constitutes unfair methods of competition or unfair acts is ultimately a question of law for the court and not for the Commission. Fed. Tr. Com. v. Gratz, 253 U. S. 421, 427, 40 S. Ct. 572, 64 L. Ed. 993; Standard Oil Co. v. Fed. Tr. Com. (C. C. A.) 273 F. 478, 17 A. L. R. 389; Am. Tobacco Co. v. Fed. Tr. Com. (C. C. A.) 9 F.(2d) 570; Fed. Tr. Com. v. Curtis Co., 260 U. S. 568, 580, 43 S. Ct. 210, 67 L. Ed. 408. Each ease of unfair competition must be determined upon its own facts, owing to the multifarious means by which it is sought to effectuate such schemes. Fed. Tr. Com. v. Beech-Nut Co., 257 U. S. 441, 453, 42 S. Ct. 150, 66 L. Ed. 307, 19 A. L. R. 882.

The appellants were importing material whieh constituted an infringement of the patent rights, of the complainant Bakelite Corporation. The fact that the respondents purchased the same in a foreign country where their manufacture was in accordance with law, and that they may have lawfully imported the same into this country, does not alter the case. It has been held that where a person was authorized, under the laws of Germany, to sell a certain product there, purchasers from him could not be thereby authorized to sell the articles in the United States in defiance of the rights of patentees under a United States patent. The sale of articles in the United States, under a United States patent, cannot be controlled by foreign laws. Boesch v. Graff, 133 U. S. 697, 10 S. Ct. 378, 33 L. Ed. 787.

The same is true as to the registered trademarks of Bakelite Corporation. The monopoly in ease of a United States patent is more extensive, but there is no sufficient reason for holding that the monopoly of a trade mark is less complete. Where imported goods were marked with a French trademark, it was held that they could not be sold in the United States when such mark was the same as the trade-mark of the plaintiff in the United States. Ownership of goods does not carry the right to sell them with a specific mark. Bourjois & Co. v. Katzel, 260 U. S. 689, 43 S. Ct. 244, 67 L. Ed. 464, 26 A. L. R. 567.

The Tariff Commission has very ably and succinctly described the conditions confronting the complainants in this proceeding in the following language: “The situation presented by the manufacture in the United States of articles infringing patents is quite different from that presented by the importation of such articles made abroad. In the case of the sale of articles manufactured in the United States the infringing manufacturer can be proceeded against and thus the unfair practice be reached at its source. Domestic patentees have no effective means through the courts of preventing the sale of imported merchandise in violation of their patent rights. Customs officers are forbidden to disclose information concerning importations. Customs Regulations 1923, Articles 1131, 1323. When such merchandise is delivered from customs custody it may be and frequently is distributed throughout the United States. The difficulties which confront a patentee seeking to enforce his rights through the courts are practically insurmountable. He is required to proceed against each individual dealer selling the infringing articles, which of course would lead to a multiplicity of suits with little likelihood that all infringing dealers could be reached. The cost of the numerous suits with the small amount of damages which may be recovered in any one suit discourages resort to the courts. Moreover, a decree obtained against one dealer would have no binding effect upon others, and by the simple expedient of changing the consignees the effect of a decree when secured would be nullified. Unless, therefore, section 316 may be invoked to reach the foreign articles at the time and place of importation by forbidding entry into the United States of those articles which upon the facts in a particular ease are found to violate rights of domestic manufacturers, such domestic manufacturers have no adequate remedy.”

The essence of unfair methods of competition consists in the palming off of the merchandise of one person for that of another. Samson Cordage Works v. Puritan Cordage Mills (C. C. A.) 211 F. 603, L. R. A. 1915F, 1107; Standard Paint Co. v. Trinidad Asphalt Co., 220 U. S. 446,461, 31 S. Ct. 456, 55 L. Ed. 536; Charles Broadway Rouss v. Winchester Co. (C. C. A.) 300 F. 706. It cannot be doubted, on inspection of this record, that the goods which the respondents were importing were continuously being sold to purchasers as the goods of Bakelite Corporation, in violation of not only its patent rights but its right to the exclusive use of its trade-name. This constituted unfair methods of competition and deprived this complainant of the privileges and rights which the laws of this country gave it.

It is, however, contended that the respondents! were not personally guilty of any unfair acts or methods of competition; that they cannot be held responsible for what others may have done with the goods they imported and sold to them. A deliberate effort to deceive is not a necessary element in unfair competition. The question is whether there is actual confusion. Fed. Tr. Com. v. Balme (C. C. A.) 23 F.(2d) 615. It has been held that where a defendant in an infringement suit knew of the existence of the patent and that another person was infringing the same, and sells to such other person supplies without which the infringer could not operate the same, with the intent and purpose that such infringed article should be used by means of said supplies, such defendant assists in the infringing use and is contributory thereto. A presumption arises that there is such intent when the article so sold is only adapted to an infringing use. Henry v. Dick Co., 224 U. S. 1, 33-48, 32 S. Ct. 364, 56 L. Ed. 645, Ann. Cas. 1913D, 880.

A ease in point is Warner & Co. v. Lilly & Co., 265 U. S. 526, 44 S. Ct. 615, 617, 68 L. Ed. 1161. In that case goods were made and sold to dealers without any misrepresentation of the character or origin of the product. The testimony discloses, however, many instances of passing off by retail druggists of the petitioner’s preparation when respondent’s preparation was called for. The Supreme Court held: “That no deception was practiced on the retail dealers, and that they knew exactly what they were getting, is of no consequence. The wrong was in designedly enabling the dealers to palm off the preparation as that of the respondent. * * * One who induces another to commit a fraud and furnishes the means of consummating it is equally guilty and liable for the injury.”

“That a person is a wrongdoer who so furnishes another with the means of consummating a fraud has long been a part of the law of unfair competition.” Fed. Tr. Com. v. Winstead Co., 258 U. S. 483, 494, 42 S. Ct. 384, 386, 66 L. Ed. 729. Even if dealers understand they are buying a counterfeit and not a genuine product, the manufacturer of the counterfeit will be enjoined from selling it to such dealers with the purpose and expectation that it shall be used by the dealers to deceive the consumer. Coca Cola Co. v. Gay-Ola Co. (C. C. A.) 200 F. 720.

The appellants were engaged in the importation and sale of synthetic phenolic resin in violation of complainant’s patent rights. It must have been obvious to them that such goods were being sold as “Bakelite,” and that purchasers were being misled as to the origin of the goods. In such case a burden rested upon these importers to see to it that purchasers should not be deceived by confusion in the goods, and to so mark their goods that such confusion should not result. Samson Cordage Works v. Puritan Cordage Mills, supra; Elgin Nat’l Watch Co. v. Ill. Watch Co., 179 U. S. 665, 674, 21 S. Ct. 270; 45 L. Ed. 365; Auto Acetylene Light Co. v. Prest-O-Lite Co. (C. C. A.) 264 F. 810; Rathbone, Sard & Co. v. Champion Steel Range Co. (C. C. A.) 189 F. 26, 37 L. R. A. (N. S.) 258; Bayer Co. v. United Drug Co. (D. C.) 272 F. 505, 515; Singer Mfg. Co. v. June Mfg. Co., 163 U. S. 169; 16 S. Ct. 1002, 41 L. Ed. 118.

Error is assigned upon the rulings of the Commission in admitting certain evidence, which was claimed to be hearsay, and in failing to order the books of Bakelite Corporation to be exhibited to respondents for examination. There was no error in these respects. The books in question were always open to the inspection of the Commission for any purpose and this is sufficient. Full and free cross-examination was permitted as to all details of the efficiency and economy of the operation of this complainants’ business. The law does not require or intend that one who complains under the statute must disclose all his trade secrets to the respondent.

We find no error of law in the findings of the United States Tariff Commission herein, and they are therefore affirmed.

Affirmed.

LENROOT, Associate Judge, did not participate.