Statement by

Mr. John Paul DeJoria

Chairman and Chief Executive Officer

John Paul Mitchell Systems

before the

Subcommittee on Courts and Intellectual Property

of the

Committee on the Judiciary

of the

United States House of Representatives

21 October 1999

Mr. Chairman, Mr. Berman, and members of the Subcommittee, thank you for this opportunity to appear at this hearing to discuss H.R. 2100 (the "Antitampering Act of 1999").

With my late partner and friend, Mr. Paul Mitchell, I co-founded a company that distributes high quality hair care products and skin care products, all of which are manufactured in the United States.

During the last twenty years, John Paul Mitchell Systems has invested millions of dollars making consumers aware of our products and consumers have come to rely on our company's integrity.

My company supports H.R. 2100. I would like to now show you a brief video presentation which demonstrates many of the reasons for that support. (Show Video Tape)

However, I am here today not just on behalf of my company, or on behalf of the professional beauty industry. I am here as a consumer. I am here as a parent. I am here as a grandparent.

John Paul Mitchell Systems is a leader in the national effort to protect all consumers from unscrupulous individuals who tamper with and decode products, thus endangering the safety of everyone, especially children.

Yes, this is an important issue to the professional beauty industry. However, the interest of John Paul Mitchell Systems in this issue extends far beyond- to what all of us eat, to what all of us place on our bodies, and to what all of us wear.

H.R. 2100 can help to prevent someone's child from being harmed, scarred, or worse. I simply am astonished as to how any company can oppose this legislation because this legislation will protect their customers. Without customers, manufacturers, distributors, and retailers do not exist.

Unscrupulous business people remove manufacturers' codes on not just shampoo, but on baby food, over-the-counter medicines, and other consumer products, thus placing a trusting consumer at risk.

Eliminating tampering with consumer products is an issue of consumer safety and corporate honesty, not consumer savings and corporate profits.

As a manufacturer, we put codes on all of our products to protect both the consumer and our company. With these codes, we can trace our products back to the date of manufacture and determine the ingredients used in each batch of products. This information is not used too often, but when the information is required it can be because of a life-threatening situation, such as an allergic reaction to an ingredient. These codes are the "safety net" for both the consumer and the manufacturer. We cannot permit dangerous, unsafe or substandard products in the marketplace.

These codes also ensure that the consumer is getting fresh product with a shelf life that allows the complete use of a product in its best condition for both safety and performance. The consumer does not know how old a product is when a product is purchased with the date of manufacture code removed.

All manufacturers continue to encounter an increasing threat from both stolen products and counterfeit products. Date codes and special codes are placed on packaging to authenticate products and to enable an efficient removal of unsafe, old, stolen, and counterfeit products from retail stores. Without these codes, both the manufacturer and law enforcement agencies are helpless to prove when the product was produced, where the product was produced, or whether the product is stolen or counterfeit.

Four recent experiences have led me to the conclusion that the United States government must provide federal protection against product tampering to all consumers:

First, we sued Randall's in Texas to stop the removal and replacement of our codes, the jury agreed, awarding us US$15 million, but the judge overturned the verdict by the jury.

Second, Quality King Distributors of New York was required to destroy more than US$1 million worth of counterfeit PAUL MITCHELL® products. If these products had reached the marketplace, we could not have proven that they were counterfeit. This is not the first instance of Quality King Distributors purchasing and reselling counterfeit products.

Third, when we approached the well-known large chain retailer, Filene's Basement of Massachusetts, and informed them that they had counterfeit products in some of their stores, they refused to remove the products. We then had to sue. The case is now suspended because Filene's Basement Corporation has declared bankruptcy, but the company continues to operate and the product continues to be sold. One of the products is supposed to be a skin and hair moisturizer, but in one instance, this particular product found at a Filene's Basement Corporation store contained a nail polish remover-type substance, clearly a health risk to the consumer. Simple logic would dictate that if you own a store and someone, anyone, comes to you and says that a counterfeit product has been found in the store, that the managers of that store would immediately remove all of the products TO BE SAFE.

Fourth, we have had multiple incidents of truck hijacking, and we have been unable to identify or locate the stolen products. These truck hijackings have been violent, in some cases endangering the lives of truck drivers. In these cases, the purpose for removing manufacturers' codes is to cover-up a crime, the theft of products. The consumer has a right to receive first quality goods for their money. A recent survey found that they are selling our products, and presumably other products as well, above suggested retail prices. Further, they are selling products that are old, products that are out of date, and products with a reduced shelf life.

The consumer is in the dark and cannot realize that they are paying for quality while potentially receiving an inferior product. Consumers have a right to be able to contact each and every manufacturer to question the integrity of the products they purchase, and to feel confident that the integrity of the manufacturer is behind the product.

Just as the consumer has a right to call into question the integrity of the manufacturer, the consumer should be looking at the retailer. Some retailers claim that enactment of H.R. 2100 will prevent them from putting their codes on the bottles for "scanning" purposes. We can all agree that we will put the codes on the bottom or top of each container, leaving the sides free for their use.

Whether the managers want to protect themselves, or want to protect their customers, the goal would be to get the products off of the shelves. In reality, it seems that until a child is hurt, until a child is killed, or many people are hurt, making an issue of product tampering, and, more importantly, seeking a federal law to prevent such activity, is unnecessary. Well, Mr. Chairman, unnecessary to me is waiting for a tragedy to happen before I do something that could have prevented it.

There is a solution if retailers truly want consumers to purchase only quality products. But, is that want the retailer really wants to sell? Or, does the retailer want to sell inferior products, but have consumers believe that they are purchasing quality products, and charge quality prices for inferior products?

Supporting H.R. 2100 will permit all retailers to clearly demonstrate to all consumers that the selling of tampered with products will not be tolerated. If, however, retailers do not support H.R. 2100, then what is their true motive? Is it consumer safety or corporate profits? Mr. Chairman, inferior consumer products are usually less expensive than quality consumer products.

Consumer product tampering is about crime, not about market share, not about maintaining higher consumer prices.

A federal law resulting from this type of legislation will protect the right of a consumer to be confident about the integrity, quality, and safety of the product that they purchase.

Without a federal antitampering law, tamperers have a financial incentive to do what's wrong- and that's not right!

Thank you.