No. 81-2920.United States Court of Appeals, Third Circuit.Argued September 15, 1982.
Decided December 3, 1982. As Amended January 4, 1983.
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Samuel W. Murphy, Jr. (argued), David S. Versfelt, Donovan Leisure Newton Irvine, New York City, John J. McGrath, Jr., John P. Dean, Donovan Leisure Newton Irvine, Washington, D.C., for petitioner; Charles F. Hagan, American Home Products Corp., New York City, of counsel.
John H. Carley, Gen. Counsel, Howard E. Shapiro, Deputy Gen. Counsel Ernest J. Isenstadt, Washington, D.C. (argued), Acting Asst. Gen. Counsel, for respondent.
petition for review from the Federal Trade Commission.
Before ADAMS, HUNTER and BECKER, Circuit Judges.
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[1] OPINION OF THE COURT
ADAMS, Circuit Judge.
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— even where it is only the failure to reveal material facts that renders the advertisement misleading.[2]
[8] Extensive hearings were conducted in connection with the complaint against AHP. On September 1, 1978, the Administrative Law Judge (“ALJ”) issued an Initial Decision and Order (App. 85-344), meticulously reviewing the record evidence and resolving most issues in favor of the complaint counsel. On cross-appeals the Commission, in an Order and Opinion issued September 9, 1981, upheld the ALJ in almost all respects (App. 345-426). The ALJ’s findings of fact and conclusions of law were adopted except to the extent inconsistent with the Commission’s opinion. App. 346. Whereas the ALJ found AHP’s practices “unfair and deceptive,” the Commission chose to speak only in terms of deception. Both the ALJ and the Commission focused on the capacity of AHP’s advertisements to mislead, and, as the Commission remarked in denying rehearing, the difference in approach was “more of form than of substance.” App. 430. [9] The Commission’s Order has several sections.[3] Although the Commission’s findings related solely to Anacin and APF, some portions of the Order were directed to other products as well. Part I of the order applied to Anacin, APF, and “any other non-prescription internal analgesic product” of AHP’s. In I(A) — the “establishment” provision — the Commission demanded that when AHP represents that the superior freedom from side effects or superior effectiveness of one of these products to any other products has been “established or proven,” AHP must be able to support this representation with at least two well-controlled clinical investigations. I(B) of the Order — the “substantial question” provision — takes I(A) a step further, and, in effect, imposes the I(A) support requirements on AHP whenever its advertisements claim superior effectiveness or freedom from side effects, even when those advertisements do not overtly claim that this superiority has been established or proven.[4] If AHP cannot provide two or more well-controlled clinical studies to support its superiority claims, it is prohibited from making such claims in an unequivocal manner. It is allowed, however, to assert superiority, provided it discloses that the superiority is open to substantial question. [10] Part II of the Order applies to all of AHP’s non-prescription drug products, not merely the non-prescription internal analgesics. II(A) prohibits AHP from representing that a product contains an unusual or special ingredient when the actual ingredient is commonly used in other non-prescription drugs intended for the same uses. Under II(B), AHP must cease “[m]aking false representations that [any non-prescription drug] product has more of an active ingredient than any class of competing products.” The misrepresentation of test or survey data concerning effectiveness or freedom from side effects is proscribed by II(C). II(D), an especially far-reaching provision in the Order, requires that AHP cease even noncomparative claims of effectiveness or freedom from side effects unless it possesses a reasonable basis for these claims.Page 685
[11] Under Part III of the Order, AHP is required, whenever an advertisement makes a performance claim for Anacin or APF, to disclose in a clear and conspicuous manner that the analgesic ingredient in the product is aspirin. [12] Part IV of the Order — the “tension relief” provision — covers only Anacin. It directs AHP to cease any representations that Anacin “relieves nervousness, tension, anxiety or depression. . . .” [13] The Order is prospective only. It is designed to ensure that future advertisements will neither mislead the public further nor confirm entrenched misimpressions induced by previous advertisements. Although the Commission found, and AHP in large part no longer disputes, that AHP has engaged in large-scale deception, the Order reflects no punitive intent. The Order does insist that AHP’s advertisements make disclosures under many circumstances, but requires disclosures only where AHP makes certain types of claims. Thus the affirmative obligation to provide information to the public is not unconditional under the Order, but will be triggered only when AHP advances certain claims for its products. [14] A motion for reconsideration filed by AHP was denied on January 21, 1982 (App. 429-34). In separate statements, two commissioners maintained that the Commission as an exercise of discretion should stay the Order, or vote to reconsider it, because of the possibility that the decision might require modification to guarantee that the treatment of AHP be consistent with that of AHP’s competitors, Bristol-Myers and Sterling Drug, which had Commission proceedings pending against them. [15] AHP then petitioned this Court for review pursuant to 15 U.S.C. § 45(c). It asks that Parts I, II(D) and III be vacated, and that II(A), II(B) and II(C) be limited to Anacin and APF. No relief from the strictures of Part IV is requested. We shall first take up AHP’s challenge to the findings of deceptiveness that underlie Part I of the Order, and AHP’s administrative due process challenge to Part I(B). We shall then turn to a consideration of whether Part II of the Order must be modified as excessively broad or vague, despite AHP’s apparent acceptance of the factual findings on which Part II is predicated. The final portion of the opinion will focus on AHP’s First Amendment challenge to Part III of the Order.[5] [16] II. Part I of the OrderPage 686
course of the proceedings. AHP’s substantive objections to Part I(B) are analogous to those made against Part I(A): that the proscribed claims were never made and would not be misleading even if they were. It should be stressed that all the advertising claims at issue — both those that the Commission found to have been made and those that AHP acknowledges were present — are susceptible of objective measurement and intended to be taken seriously. AHP does not defend its advertisements as lawful “puffing.”[6]
[18] A. The Standard of Review of Findings of Deceptiveness[21] 380 U.S. at 385, 85 S.Ct. at 1042 (footnote omitted).[7] [22] The Commission’s familiarity with the expectations and beliefs of the public, acquired by long experience, is especially crucial when, as with the advertisements proscribed by Parts I(B) and III of the Order in this case, “the alleged deception results from an omission of information instead of a statement.” See Simeon Management Corp. v. FTC, 579 F.2d 1137, 1145 (9th Cir. 1978).[8]necessarily gives the Commission an influential role in interpreting § 5 and in applying it to the facts of particular cases arising out of unprecedented situations. Moreover, as an administrative agency which deals continually with cases in the area, the Commission is often in a better position than are courts to determine when a practice is “deceptive” within the meaning of the Act. This Court has frequently stated that the Commission’s judgment is to be given great weight by reviewing courts. This admonition is especially true with respect to allegedly deceptive advertising since the finding of a § 5 violation in this field rests so heavily on inference and pragmatic judgment.
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[23] B. How Advertising is to be Interpreted[25] Bakers Franchise Corp. v. FTC, 302 F.2d 258, 261 (3d Cir. 1962).[9] [26] It is true that on some crucial points in the case at hand the Commission lacked direct evidence that consumers were in fact misled. But the Commission need not buttress its findings that an advertisement has the inherent capacity to deceive with evidence of actual deception.[10]Do these advertisements create a false impression as to the value of “Lite Diet” bread as compared with other articles of food? The Commission’s judgment is what controls here unless a court finds that the judgment is unsupported by evidence or is capricious or arbitrary or what you will. We think an examination of the advertisements clearly supports the Commission’s finding that by implication and innuendo the deceptive impression had been created.
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[27] In the present proceeding, the Commission analyzed not only the words used, but also, with respect to the television advertisements, the messages conveyed through the “aural-visual” pattern. App. 254 and 374-75. The Commission’s right to scrutinize the visual and aural imagery of advertisements follows from the principle that the Commission looks to the impression made by the advertisements as a whole. Without this mode of examination, the Commission would have limited recourse against crafty advertisers whose deceptive messages were conveyed by means other than, or in addition to, spoken words. In Standard Oil Co. of California v. FTC, 577 F.2d 653, 659 (9th Cir. 1978), the court upheld a Commission finding “that the predominant visual message was misleading, and that it was not corrected or contradicted by the accompanying verbal message in advertisements.” Colgate-Palmolive, supra, 380 U.S. at 385-86, 85 S.Ct. at 1042-43 also supports the Commission’s right to look beyond spoken words to the message conveyed visually. According to Colgate-Palmolive, “even if an advertiser has himself conducted a test, experiment or demonstration which he honestly believes will prove a certain product claim, he may not convey to television viewers the false impression that they are seeing the test, experiment or demonstration for themselves, when they are not because of the undisclosed use of mock-ups.”[11] [28] C. Part I(A) of the Order[32] App. 255, footnotes omitted. The Commission expressed its approval of this methodology at some length. App. 421-26. Both the ALJ and the Commission amply defended their reasons for awarding limited weight to the testimony of AHP’s expert. App. 255-56; 423-24. The opinion of the ALJ explored in minute detail the survey evidence offered by AHP. App. 210-43. In contrast, the interpretations that AHP presses upon us rely primarily on technical readings of the advertisements in question. If accepted, AHP’s position might well preclude the Commission from taking action against advertisements that, when read with scrupulous care by vigilant and literal-minded consumers, could be seen to be making true claims.[13] [33] One advertisement which appeared in virtually identical form in several magazines is entitled “News about headache relief you probably missed (unless you read medical magazines).” Beneath what was designed to resemble a clipping from a medical journal, the body of the advertisement informed readers:I have primarily relied on my knowledge and experience to determine what impression or impressions an advertisement as a whole is likely to convey to a consumer. When my initial determination is confirmed by the expert testimony of complaint counsel or respondents, I rested. When my initial determination disagreed with that of expert testimony,
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which was often conflicting, I reexamined the advertisement in question, and further considered such record evidence as the ASI copy tests and verbatim responses [a type of survey evidence] before reaching a final determination. In this connection, my determinations agreed in most instances with those of Dr. Ross, complaint counsel’s expert, and disagreed with those of Dr. Smith in most instances.
[34] App. 547. See App. 548-49. The advertisement, read with sedulous attention, proclaims that Anacin has been clinically proven to be as effective as the leading prescription analgesic, and that Anacin is known by doctors to have more of the pain reliever they recommend most than do the other leading non-prescription analgesics. There is no explicit representation that Anacin has been clinically proven to be more effective than any other non-prescription analgesics. The ALJ found that the clinical tests in question did not prove Anacin’s equivalence to the leading prescription analgesic (App. 184-87), and the Commission appears to have agreed (App. 386). But for the purposes of Part I(A) of the Order, the fundamental objection to the advertisement is that consumers, not unreasonably assuming that prescription drugs are more effective than non-prescription products, will be likely to combine the claim of provenIn clinical tests on hundreds of headache sufferers, it has now been proven beyond a doubt that today’s Anacin delivers the same complete headache relief as the leading pain relief prescription. This advertisement in leading medical journals [i.e., the clipping] told the complete story. Doctors know Anacin contains more of the specific medication they recommend most for pain than the leading aspirin, buffered aspirin, or extra-strength tablet. Is it any wonder that last year physicians and dentists distributed over 25 million packets of Anacin tablets to their patients?
Now you know that Anacin gives you the same complete headache relief as the leading pain relief prescription. Next headache, see how fast Anacin relieves your pain.
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[36] App. 550, 551, 552 (emphasis in original). A rigorous analysis reveals that this advertisement does not state that Anacin has been “medically-proven” to “work better,” but, read literally, merely invites consumers to see for themselves whether “medically-proven Anacin” — the respects in which it is “medically-proven” are unspecified — works better for them. But surely it was reasonable for the Commission to conclude that consumers would be likely to take the ambiguous term “medically-proven” to relate to the principal question which the advertisement purportedly addresses: “What’s best to take for tension headache pain?”[14] [37] The Commission, despite primary reliance on its own knowledge in interpreting the advertisements, weighed all the survey evidence in the record. Although AHP produced several types of empirical data, only one type — the Audience Studies, Inc. (ASI) tests — was relevant to determining the meaning of particular advertisements, as AHP’s expert admitted (App. 118).[15] ASI had conducted tests on behalf of AHP’s advertising agency to measure the effectiveness of some advertisements. These tests involved none of the print or radio advertisements but rather were limited to thirty of those that appeared on television. A sample of consumers was shown films in a theater of the advertisements. Thirty or forty minutes later, the consumers wrote down what they recalled, and these responses were then tabulated and coded. AHP’s expert, Dr. Smith, apparently found no consumers who thought that an “establishment” claim was made in the advertisements. The Commission, however, for a number of reasons discounted this result as being of limited usefulness. Dr. Smith’s analysis was found to be flawed because hisWhat’s best to take for tension headache pain? Why not take the fast acting pain-reliever doctors recommend most for headaches? You’ll find it in Anacin Tablets. And today’s Anacin gives you 100% more of this specific pain-reliever than the other leading extra-strength tablet. In minutes Anacin breaks the grip of headache pain, so relaxes its nervous tension, releases pressure on nerves and helps lift pain’s depression. You feel great again after taking Anacin. You see Anacin is a special fortified combination of ingredients and only Anacin has this formula. Next time a tension headache strikes, see if medically-proven Anacin doesn’t work better for you.
[38] App. 425-26. [39] We cannot say that the Commission’s appraisal of this evidence was unsupported. It is also significant that there was considerable record evidence of a widespread consumer belief in Anacin’s superior efficacy, although not a belief in it established superiority. See App. 311, 416. In view of the inability of consumers to discriminate objectively between competing analgesics, discussed infra, the Commission was “convinced that the primary source of this consumer belief in Anacin’s superiority is the advertising of the product.” App. 417. The Commission apparently inferred from this that consumers implicitly hold a belief in Anacin’s proven superiority; however, the Commission seems not to have relied on this inference in interpreting the advertisements. The Commission also concluded that consumers’ belief in superiority, and their implicit belief in established superiority, would be likely to persist unless AHP carried out the directives of the Commission’s Order. App. 418. [40] 2. Were the establishment claims deceptive?approach was to code a response as a “directly-related recall” only if it recited the precise language of the alleged representation. See, e.g., Smith, Tr. 7541. We believe this to be an overly restrictive use of copy test results. Other expert testimony in the record shows, moreover, that a low response rate of verbatims falling into a particular category is meaningless without an assessment of the advertisement tested and all surrounding circumstances, and that even after such analysis it may be impossible to determine conclusively that a given message was not communicated. (Lukeman, Tr. 241-44, 247-48;
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Seltzer, Tr. 367-68). In addition, the open-ended questioning technique used by ASI does not elicit an exhaustive playback from consumers of all the representations that may be perceived in the tested advertising.
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Commission objected that the results were not statistically significant; that the drug product tested against aspirin was not shown to be equivalent to commercially-available Anacin; and that the studies failed to deal with headache pain, which AHP’s witnesses conceded to be different from other types of pain. The ALJ, in a closely reasoned analysis of the McMahon studies (App. 175-83), made additional points, including that bias was introduced into the studies by the ongoing “peeking” at and evaluation of data by AHP (App. 179). We are unable to hold that the Commission acted unreasonably in refusing to assign to these studies the probative force that AHP wishes for them.
[45] AHP also argues that the aspirin “dose response curve” proves Anacin’s superior effectiveness (App. 384). Again, it is apparent that the Commission accorded the proffered evidence a thorough examination and reasonably judged it to be insufficient. A dose-response curve, as the name suggests, charts the degree of average pain relief (“response”) for different dosages of a drug. While a few points on the curve are established by clinical studies, the remainder are extrapolated, and not proven. According to the Commission,[46] App. 385, footnotes omitted. (“F.” refers to the ALJ’s findings). The Commission’s treatment of the dose-response curve is well supported by substantial evidence on the record.[19] [47] A number of expert witnesses testified that Anacin’s superior efficacy has not been established, and some expressed the view that Anacin was not superior. See App. 392. Far from concluding that Anacin’s superiority had been proven, the ALJ suggested that Anacin might be less effective than “ordinary” aspirin. The possibility that the caffeine in Anacin could actually heighten awareness of pain was not ruled out. App. 288. Moreover, there was evidence that caffeine exacerbated aspirin’s gastrointestinal side effects, App. 288, and “in terms of chronic use, the record evidence strongly suggest[s] that more aspirin may be worse [in its side effects] than less aspirin.” App. 285. [48] There are numerous appellate decisions upholding the Commission’s right to require substantiation of advertising claims. In a case involving non-prescription weight-reducing tablets, Porter Dietsch, Inc. v. FTC, 605 F.2d 294, 305 (7th Cir. 1979), cert. denied, 445 U.S. 950, 100 S.Ct. 1597, 63 L.Ed.2d 784 (1980), the court refused to strike down an order prohibiting, among other things, representations that anyeven assuming that the curve as a whole has been established, the evidence indicates that above 600 mg. the curve is either very shallow or levels off to a plateau (Kantor, Tr. 3573; Lasagna, Tr. 4881). In other words, a substantial increase in dosage is necessary to produce even a small increase in pain relief (Kantor, Tr. 3573; Azarnoff, Tr. 642; F. 257), yet Anacin contains only 150 mg. more aspirin than common aspirin. Indeed, several dose-response studies showed no statistically significant differences in pain relief for dosages greater than 600 mg. (F. 246-55). Thus, the aspirin dose response curve cannot establish the superiority of 800 mg. of aspirin over 650 mg., or, consequently, the superiority of Anacin over aspirin (or other analgesic products).
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it applied to any of Porter Dietsch’s products, although misrepresentations had been found with respect to only one. Part I(A) of the Order here applies only to AHP’s non-prescription drug products. Second, all representations as to “results” were encompassed, not merely claims to superior safety and effectiveness, even though only one “result” (automatic weight loss) had been deceptively claimed.[20]
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of Anacin and APF existed in the absence of two well-controlled clinical studies supporting their superiority, and that, in the context of this case, failure to disclose this substantial question was misleading. AHP was not denied an opportunity to introduce evidence either as to when a substantial question exists in the medical-scientific community, or as to whether, in this case, failure on the part of the manufacturer to reveal a substantial question was misleading.
[53] AHP contends nevertheless that the ALJ and the Commission denied it due process. It asks us to view the ALJ’s and the Commission’s express reliance on the “substantial question” idea as a subterfuge designed to hide reliance on the “reasonable basis” theory. As evidence that the ALJ based his decision on the “reasonable basis” doctrine, AHP considers it sufficient to note the following statement from the ALJ’s lengthy opinion: “[a]gainst this background, what is the reasonable level of substantiation required under the fairness doctrine for a claim that Anacin is more effective than aspirin . . .?” App. 303. It is not clear why this passage is thought to be incongruent with the “substantial question” test. The ALJ was considering how much support AHP must have, in the circumstances of this proceeding, for its advertising claims of Anacin’s effectiveness. His conclusion was that, if the advertisements are not to be either false or unfair to consumers, Anacin must pass the “substantial question” test:The challenged representation . . . that it has been established that a recommended dose of Anacin is more effective for the relief of pain than a recommended dose of any other non-prescription internal analgesic, is not only unfair to consumers but also false since the greater effectiveness of Anacin has not been scientifically established. In light of the evidence, there existed a substantial question recognized by experts qualified by scientific training and experience to evaluate the efficacy of such drugs as to the validity of such representations.
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[54] App. 184, 303-04. The ALJ’s use of the term “reasonable” in framing the issue in no way implies a reliance on the “reasonable basis” test. [55] In affirming the ALJ, the Commission took a slightly different position regarding the provenance of the “substantial question” doctrine. Though complaint counsel had characterized “substantial question” as a new idea, and the ALJ appears to have agreed, the Commission reasoned that the theory was a logical application of well-established principles:[T]he consumers of OTC analgesic products are entitled, as a matter of marketplace fairness, to rely upon the manufacturer to have a sufficient kind and level of substantiation for the claim. In the circumstances of this case, the only sufficient substantiation for the claim is that the claim is accepted as established by the medical-scientific community. The record is clear that, with respect to OTC [over the counter, i.e., non-prescription] internal analgesic products, the medical-scientific community requires two or more well-controlled clinical studies. . .
[56] App. 390, n. [**].[22] That is, the Commission determined that in some circumstances an advertiser lacks a “reasonable basis” for its claim where there is a substantial question about the truth of the claim. Given this determination, no evidence purporting to establish a “reasonable basis,” and not purporting to eliminate the existence of a “substantial question,” could have been relevant.[23] [57] AHP also asserts, as a procedural objection, that the Commission’s expert witnesses were not asked about the “substantial question” issue. Whether this allegation bears on the Commission’s procedure, or on the merits of Part I(B), it is not persuasive. There was an impressive array of testimony supporting the Commission’s decision as to the procedures the medical-scientific community considers sufficient to establish a claim to superiority for an analgesic. Even if complaint counsel failed to use the actual phrase “substantial question” in examining the witnesses it is unrealistic to suppose that AHP could have failed to realize that the experts were being queried as to when, in the complaint’s terminology, a “substantial question” could be said to exist in the medical community regarding the superiority of an analgesic. [58] E. The Merits of Part I(B) of the OrderThe conclusions set forth herein are merely an elaboration, in the specific context of drug products, upon well-established principles of advertising law requiring that advertisers possess and rely upon a reasonable basis for affirmative product claims. Pfizer, Inc., 81 F.T.C. 23, 60-65 (1972). It has repeatedly been held that failure to possess a reasonable basis for advertising claims is a deceptive practice. [citations omitted] Deception derives from the failure to disclose to consumers the material fact that an affirmative product claim lacks the support that would be presumed absent some qualification of it. The appropriate measure for such support is, of course, to be determined in light of the particular claims made and the products for which they are made. For reasons noted in the text, we believe that such support in the case of drugs consists of the two or more well-controlled
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clinical studies deemed necessary by a broad spectrum of relevant experts to justify assertions as to drug performance.
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As AHP admits, it represented that Anacin contains “more analgesic content than regular or regular buffered aspirin tablets,” “twice as much of the pain-reliever recommended most by doctors,” as the other leading “extra-strength” tablet, and “the analgesic ingredient most recommended by doctors.”[26] Also acknowledged is that AHP represented that APF’s “`double-buffering’ makes it gentle to the stomach.” Petitioner’s Br. 5.
[63] As explained more fully in connection with Part II of the Order, these particular representations — although technically correct — were nevertheless misleading. The Commission’s reasoning that a claim of more pain reliever, which the advertisements explicitly make, would be read by consumers as a claim of more pain relief, seems compelling. Not only credulous purchasers are apt to conflate the idea of more pain reliever with that of more pain relief, but as the Commission explains in its brief, even rational and careful consumers will be apt to place such an interpretation on the advertisements (Respondent’s Br. 21 n. 14):[I]f the presence of more pain reliever in a product did not result in greater pain relief (as may well be true of Anacin), disclosure of the extra amount could be a clear liability, since consumers would logically expect that it contributed to an increased price. Since rational consumers do not expect a rational advertiser to highlight the drawbacks in its own product, and since the ads in question deal solely with the question of comparative analgesic efficacy, the only possible message that rational consumers can draw from American Home’s incessant statements about Anacin’s extra pain reliever is that Anacin is more efficacious.[64] The advertisements thus support the interpretation that superiority to “regular aspirin” and to “the leading extra strength tablet” was claimed.[27] As for APF, the
[65] App. 265-66, citing advertisements.[28] [66] 2. Were the superiority claims deceptive?express claim that APF is gentle to the stomach because of its “double-buffering” or because it is “microfined” clearly convey[s] the message that APF has a larger amount of buffering action than other buffered products and is finer than others and that, therefore, it is the gentlest of all OTC analgesic products on the market.
[68] App. 387-38, footnote omitted. [69] We do not decide whether such reasoning would justify a “substantial question” provision whenever advertisements mak any affirmative product claims for any drugs.When an analgesic advertiser claims its product to be superior in performance, even without the additional explicit claim that it has been so proven, it is reasonable for consumers to construe that claim to be the assertion of a fact that is generally accepted, within the scientific community, as established. By their nature, therapeutic drug products raise special public health concerns, in light of the risks associated with their use.
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In the present case, the Commission declined to apply this reasoning so broadly, and limited Part I(B) to AHP’ non-prescription analgesics and to claims of superior effectiveness or freedom from side effects. The Commission expressly recognized the possibility that comparative claims for some non-prescription drugs might require less substantiation than is demanded here. See App. 407.
[70] The essential idea supporting Part I(B) is readily comprehensible, despite AHP’s attempts to portray this provision as arcane. When a factual, verifiable proposition is unequivocally asserted in an advertisement, the Commission’s view is that a consumer is entitled to assume that the appropriate verification has been performed. It cannot be stressed too emphatically that claims of superior effectiveness or freedom from side effects for a drug are factual, testable claims. When an article of clothing is proclaimed to be more aesthetically pleasing than competitors’ products, consumers cannot expect that this quality of the clothing has been verified. But when a drug is held out to consumers as superior, this is as much a factual representation — even if the verification procedures are more difficult to perform — as a claim that a product is pure gold, or weighs one pound, and consumers can be expected to read it as such. [71] Failure to disclose that a claim regarding a drug product lacks an appropriate level of support, when such support is nonexistent, is misleading. AHP’s principal attack is at bottom nothing more than a disagreement as to how much proof is appropriate to prevent a claim from having the capacity to mislead. Although it is unclear what quantity or quality of proof AHP would consider sufficient,[29] AHP clearly regards the Commission’s standard here — that is, two clinical studies satisfying a number of criteria — as excessive. Thus, AHP’s challenge to the “substantial question” provision is essentially to a factual determination by the Commission that certain advertisements, in the absence of a designated type of proof, are deceptive. [72] We are required to give deference to Commission findings that advertisements are deceptive. There are strong reasons why the Commission’s demand for an especially high level of proof for advertising claims is justifiable under the facts of this proceeding. These reasons can be grouped into two categories: first, those based upon the special nature of the product category; and second, those relating to the particular facts of AHP’s conduct. [73] Pervasive government regulation of drugs, and consumer expectations about such regulation, create a climate in which questionable claims about drugs have all the more power to mislead. The Commission’s reasoning on this point (see especially App. 389 n. [**]) is similar to that approved in Simeon Management Corp. v. FTC, supra, 579 F.2d at 1145 (footnote omitted):[74] The Commission in these proceedings reasonably extended the ideas approved in Simeon from prescription to non-prescription drugs, and from absolute representations about safety and effectiveness to comparative representations. Non-prescription as well as prescription drugs are subject to the FDA’s requirements that absolute safety and efficacy be demonstrated by well-controlled clinical tests. And the Commission concluded that many consumers could reasonably believe that the federal government demanded similarly high standards for claims of comparativeThe Commission found that (1) some consumers will reasonably believe that the government exercises control over the promotion and use of prescription drugs; (2) this belief is intensified by the advertisements’ representations that the weight loss treatments are safe, effective and medically approved; and (3) the representations may therefore reasonably lead consumers into the mistaken belief that the claims of safety and effectiveness are based, not on the advertiser’s own opinion, but on a determination by the FDA. It further found that, in view of the public’s belief that the government strictly regulates drugs, the fact that the treatments involve administration of a drug lacking FDA approval for such use may materially affect a consumer’s decision to undergo the treatment. Accordingly, the Commission declared that the failure to disclose that the weight reduction treatments involve injection of a drug lacking FDA approval for such use
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renders the advertisements deceptive and thus in violation of § 5 of the FTCA.
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[78] App. 366-67, footnotes omitted. (“CX” denotes a documentary exhibit of complaint counsel.)[31] [79] In addition to the special features of the product, AHP’s past behavior also supports the Commission’s demand for a high level of proof. AHP has for many years waged advertising campaigns designed to impress upon the public the superiority of Anacin and APF. At least with respect to Anacin, there is much evidence that the campaigns had considerable success. The Commission, despite its finding of violations, decided that corrective advertising was unnecessary. It explained Part I(B) and other provisions of its order in part as a less intrusive means of undoing the damage caused by AHP’s previous advertisements and as a means of keeping this proven violator from inflicting such damage in the future:Aspirin may cause adverse side effects such as dyspepsia for some individuals (Grossman, Tr. 828; Plotz, Tr. 1044). For others, including asthmatics, a dangerous allergic reaction to aspirin is possible. (Falliers, Tr. 3187; Moertel, Tr. 1021; Stevenson, Tr. 1474). The Report for OTC Internal Analgesics (CX 367) of the Food and Drug Administration’s (FDA) advisory review panel (a panel of outside experts established by FDA to review the safety and efficacy of OTC drugs) summarizes the possible adverse side effects of aspirin, which range from massive gastrointestinal bleeding (which may be fatal) to hepatic (liver) dysfunctions (CX 367014). For example, aspirin may interfere with normal blood clotting, increase internal bleeding, cause peptic ulcers, increase the incidence of neonatal deaths, depress the central nervous system, and cause anemia. For individuals with aspirin allergies, according to the Report, ingestion of asprin [sic] may result in shortness of breath, laryngeal swelling from anaphylactic shock, blocking of air pathways, and a sudden drop in blood pressure (id.).
[80] App. 418. Even if the inherent nature of the products would not in itself justify Part I(B), when the product’s nature is considered in conjunction with the facts of AHP’s past actions, there is ample support for this provision. [81] The courts have accorded the Commission wide latitude in ordering advertisers to make disclosures which limit or counteractA belief in the proven superiority of Anacin is most likely to continue if comparative claims continue to be made in Anacin advertising. But under this order, any future comparative efficacy or side effects claims must be effectively qualified — i.e.,
corrected as to the lack of proof — unless the requisite proof actually exists, in which case there will be no further deception. Moreover, the order will prevent respondent from conveying an erroneous impression of the product’s superiority (proven or not) by means of claims about the unusualness of the ingredient in the product, in that it will prohibit false unusualness claims and will require the disclosure, in many Anacin ads, of the familiar name of aspirin.
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affirmative advertising claims. In National Commission on Egg Nutrition v. FTC, 570 F.2d 157, 160 (7th Cir. 1977), cert. denied, 439 U.S. 821, 99 S.Ct. 86, 58 L.Ed.2d 113 (1978) the Commission allowed an egg industry group to make representations concerning the relation of egg consumption to heart and circulatory disease only if it was “clearly and conspicuously disclosed in immediate conjunction therewith that many medical experts believe that existing evidence indicates that increased consumption of dietary cholesterol, including that in eggs, may increase the risk of heart disease.” The Seventh Circuit upheld the Commission, explaining that this aspect of the order was appropriate to prevent future deception, even though the record did “not show a long history of deception which has so permeated the consumer mind that the `claim was believed by consumers after the false advertising had ceased,'” id. at 164, quotin Warner-Lambert Co. v. FTC, 183 U.S.App.D.C. 230, 562 F.2d 749, 771 (1977), cert. denied, 435 U.S. 950, 98 S.Ct. 1575, 55 L.Ed.2d 800 (1978). The Egg Nutrition
decision supports a provision, such as Part I(B) of the Order here, which requires that the existence of a controversy over the truth of a scientific assertion made in an advertisement be conveyed to the public. Moreover, Egg Nutrition upheld such a requirement even where, in contradistinction to the case at bar, there was no evidence that it was needed to serve a remedial function.
Page 701
that corrective advertising of the sort upheld i Warner-Lambert can be a significant burden on a violator, refused to order it in the present case. See App. 313-14 and 418.[33]
[85] Commissioner Clanton, who concurred with the remainder of the Commission on all other points, dissented from Part I(B) of the Order. He acknowledged that it was[86] App. 355, citations omitted. Commissioner Clanton also agreed that “consumers generally regard product performance claims to have some reasonable support.” App. 358. Indeed, he granted that “reasonable support” in the present case might very well be medical or scientific proof; in other words, that Part I(B) of the order might well be justifiable. His principal objection was that the majority’s approach was too inflexible. In his view, the Commission had adopted a per se rule that any comparative drug claim — and perhaps all non-comparative drug claims, and even many comparative claims outside the drug area — must be supported by scientific proof. But, according to Clanton, the Commission should examine drug claims on a case by case basis to determine whether they must be supported by scientific proof in order to be lawful under the statute. [87] We do not understand the Commission to have adopted such a rigid rule. Although there is some broad language in the opinion to support Clanton’s concern, the Commission gave attention to the particular nature of AHP’s advertisements, to the specific facts regarding the products involved, and to the effects of AHP’s past deceptions. Even if it would have been preferable for the Commission to have had more evidence of consumer beliefs, this would not be a ground to modify or vacate its order. In the very case at hand, the Commission majority declined to impose the “substantial question” provision so relentlessly. Part I(B) applies only to non-prescription analgesics, not to prescription drugs or other non-prescription drugs, or any products other than drugs. Moreover, it applies only to comparative claims of effectiveness and freedom from side effects. If an appeal arises in which it appears that the Commission has employed a “substantial question” provision in an unyielding fashion, without regard for the facts of the case, that perhapstrue, of course, that the Commission need not refer to consumer surveys or similar extrinsic evidence to interpret the meaning of an advertisement . . . Similarly, actual deception need not be shown by complaint counsel to carry its burden of proof. It is necessary only that the advertisement have the tendency or capacity to deceive.
Page 702
will be an appropriate occasion to consider modifying an order.[34] It is worth noting that Clanton’s more particular objection to the “substantial question” provision in the order here under review offers no comfort to AHP. He suggests that, so far from Anacin’s superiority being proven, “most researchers would simply dismiss [AHP’s] purported substantiation as inadequate to establish anything scientifically.” App. 38.
[88] III. Part II of the Order[92] (Quoted in App. 364).[35] APF advertisements employed similar techniques (see App. 365). The Commission concluded that affirmative misrepresentations of the product’s uniqueness, combined with the failure of the advertisements to reveal that the products contained aspirin, had the capacity to mislead consumers. In addition to its own reading of the advertisements, the Commission relied on the expert testimony of Dr. Ross and on several consumer surveys showing that many consumers were unaware of the presence of aspirin in Anacin, and believed that Anacin was superior to aspirin.[36] [93] AHP’s advertising that Anacin and APF possessed more of an active ingredient than did their competitors’ products was, similarly, an attempt at false product differentiation. One series of television advertisements announced that the consumer shown on camera “found medically proved AnacinAnacin tablets are so effective because they are like a doctor’s prescription. That is, a combination of ingredients. Anacin contains the pain reliever most recommended by doctors plus an extra active ingredient not found in leading buffered aspirin . . . . The big difference in Anacin makes a difference in the way you feel.
Page 703
overpowers headache pain. For most headaches, all three leading pain relievers reach an effective level in your bloodstream in minutes. But in the final analysis the highest level is reached by Anacin. This higher level is the extra pain reliever Anacin provides for your headache.” App. 513-516. The ALJ found that a claim of superiority over the “leading” products in a field would be understood by consumers as implying superiority over the entire category, a principle with which AHP’s expert, Dr. Smith, seems to have agreed to a large extent. See App. 126-27 and 258; and 371-72. Yet other products on the market possess as much aspirin as Anacin and four widely available products — APF, Arthritis Strength Bufferin, Cope, and Midol — contain greater
amounts. App. 157. Even more misleading are those advertisements that convey the impression that Anacin has twice as much pain reliever as all other non-prescription products. For example, one advertisement had it that
[94] Another advertisement proclaims:2 Anacin Tablets have more of the one pain reliever doctors recommend most than 4 of the other leading extra strength tablets . . . . 2 Anacin contain more of this specific pain reliever than 4 of the others.
[95] The ALJ quoted these two advertisements, along with several others. App. 124-25. See App. 194. Despite the implication that Anacin has twice as much pain reliever as any other non-prescription analgesic (or at least as any other that is readily available), as previously noted, four commonly obtainable products actually contain more pain reliever than Anacin. [96] Part II(C) of the Order prohibits AHP from misrepresenting in certain ways any test, study or survey. The findings that form the predicate of this provision were that AHP misrepresented tests comparing Anacin with other analgesics (App. 373-75 and 412), as well as misrepresenting a survey of doctors (App. 399, 412; see App. 195). While Part II(C) applies to all of AHP’s non-prescription drug products, the Commission limited it “to conform to the types of misrepresentations that respondent made: namely, efficacy and freedom from side effects claims.” App. 412 Cf. Litton, supra, 676 F.2d at 371-72.[37] [97] Although Part II(D) of the Order is sweeping — prohibiting any non-comparative representation, without a reasonable basis, of the effectiveness or freedom from side effects of a non-prescription drug product — the finding which supports it is quite narrow. The only non-comparative claim of effectiveness or freedom from side effects, lacking a reasonable basis, which the Commission specifically found was the advertising message that Anacin offers relief from tension. To point out that this finding is relatively narrow is of course not to suggest that it was unimportant or unsupported by the evidence. Indeed, AHP has declined to challenge here the finding regarding tension relief.[38]Anacin’s fortified formula has more of this specific pain reliever than any other leading headache tablet. In fact, Anacin is formulated twice as strong in the amount of this specific pain reliever as the other leading extra-strength tablet.
Page 704
[98] The advertisements in question — and there were a great many — represented that Anacin alleviates various tension-related conditions such as nervousness, tension, stress, fatigue, and depression. There was not the slightest basis for such representations. AHP claimed before the Commission that the advertisements merely made the true claim that Anacin will hel tension-associated pain, but has chosen to abandon this contention on appeal. Two print advertisements in the record, both entitled “When Boredom and Emotion Fatigue Bring on `Housewife Headache,'” advised consumers:[99] App. 535, 536; see also App. 534, 537-39. Television advertisements made the same claims, conjoined with depictions of stressful situations. See App. 397-98. It is not surprising that, as AHP’s own survey showed, consumers exposed to such advertising were far more likely to identify “tension/nervous tension” than “tension headache” as the symptom relieved by Anacin. See App. 398. [100] B. The Commission’s Discretion to “Fence In” ViolatorsMaking beds, getting meals, acting as family chauffeur — having to do the same dull work day after day — is a mild form of torture. This can bring on nervous tension, fatigue and what is now known as `housewife headache.’ For this type of headache you need strong yet safe relief. So next time take Anacin. Anacin gives you twice as much of the strong pain reliever doctors recommend most as the other leading extra strength tablet.
Minutes after taking Anacin, your headache goes, so does its nervous tension and fatigue. Lets you feel better all over. Despite its strength, Anacin is safe taken as directed. It doesn’t leave you depressed or groggy. Next time take Anacin Tablets!
[102] More succinctly, “those caught violating the Act must expect some fencing in.” National Lead, supra, 352 U.S. at 431, 77 S.Ct. at 510. The necessity for allowing the Commission to construct broad remedial orders results in part from the fact that “there is no limit to human inventiveness in this field,” Sears, Roebuck, supra, 676 F.2d at 391, quoting H.R.Conf.Rep. No. 1142, 63d Cong., 2d Sess., 19 (1914). [103] We are cautioned that “courts should not `lightly modify’ the Commission’s orders,” Colgate-Palmolive, supra, 380 U.S. at 392, 85 S.Ct. at 1046. The rule set forth in Jacob Siegal Co. v. FTC, 327 U.S. 608, 612-13, 66 S.Ct. 758, 760, 90 L.Ed. 888 (1946), is that the Commission “has wide latitude for judgment and the courts will not interfere except where the remedy selected has no reasonable relation to the unlawful practices found to exist.” The Jacob Siegal “reasonable relation” test has been applied in numerous cases, e.g., Colgate-Palmolive, supra, 380 U.S. at 392, 85 S.Ct. at 1046; National Lead, supra, 352 U.S. at 428, 77 S.Ct. at 508; Ruberoid, supra, 343 U.S. at 473, 72 S.Ct. at 803; Consumers Products of America Inc. v. FTC, 400 F.2d 930, 933 (3d Cir. 1965); see also Beneficial, supra, 542 F.2d at 618; and Bakers Franchise Corp., supra. 302 F.2d at 262. [104] In Colgate-Palmolive, 380 U.S. at 392, 85 S.Ct. at 1046, however, the Supreme Court hasIn carrying out this function the Commission is not limited to prohibiting the illegal practice in the precise form in which it is found to have existed in the past. If the Commission is to attain the objectives Congress envisioned, it cannot be required to confine its road block to the narrow lane the transgressor has traveled; it must be allowed effectively to close all roads to the prohibited goal, so that its order may not be by-passed with impunity.
[105] Orders worded in such general language that serious questions as to meaning and application exist “are disfavored because they alter the scheme of penalties and enforcement procedures defined by the Act without specific identification of the proscribed conduct.” Standard Oil, supra, 577 F.2d at 661. When an advertiser is accused of violating the statute it receives a full hearing before the Commission, and if the Commission finds against the advertiser, a cease and desist order will issue. In contrast, an accusation that a Commission order has been violated is heard in district court, short-circuiting the agency hearing process envisioned by the statute and subjecting the advertiser to harsher penalties. See id. at 661; and Litton Industries, supra, 676 F.2d at 371. Colgate-Palmolive,warned that an order’s prohibitions “should be clear and precise in order that they may be understood by those against whom they are directed,” [citation omitted]
Page 705
and that “[t]he severity of possible penalties prescribed . . . for violations of orders which have become final underlines the necessity for fashioning orders which are, at the outset, sufficiently clear and precise to avoid raising serious questions as to their meaning and application.” [citation omitted]
[W]e find no defect in the provision of the order which prohibits respondents from engaging in similar practices with respect to “any product” they advertise. The propriety of a broad order depends upon the specific circumstances of the case, but the courts will not interfere except where the remedy selected has no reasonable relation to the unlawful practices found to exist. In this case the respondents produced three different commercials which employed the same deceptive practice. This we believe gave the Commission a sufficient basis for believing that the respondents would be inclined to use similar commercials with respect to the other products they advertise. We think it reasonable for the Commission to frame its order broadly enough to prevent respondents from engaging in similarly illegal practices in future advertisements.[108] 380 U.S. at 394-95, 85 S.Ct. at 1047-48, footnote omitted.[40]
Page 706
[109] Noting that “fencing-in provisions are prophylactic,” a recent decision of the Ninth Circuit asserted that “the ultimate question is the likelihood of the petitioner committing the sort of unfair practices [the provisions] prohibit,” Litton Industries, supra, 676 F.2d at 370. In answering this ultimate question, that court in another recent case summarized the relevant considerations:[110] Sears, Roebuck, supra, 676 F.2d at 392, citations and footnote omitted.[41] Thus, the validity of a multi-product order depends to a large degree on the facts of the particular proceeding. Because a multi-product order requires a prediction of the likely future conduct of a proven violator, and such a prediction is even more dependent on pragmatic inference and accumulated expertise than are most factual determinations, it may be especially appropriate to defer to the Commission’s appraisal of the need for multi-product coverage. [111] In addition to the three Sears, Roebuck criteria, the court may also factor in the seriousness of the potential violations which the fencing-in provisions prohibit. The Commission should be allowed to consider that the consequences of a failure to construct a sturdy “fence” would be severe. This element is of course similar to the first Sears, Roebuck component in looking to “seriousness,” but it differs in focusing on the seriousness of the actions to be proscribed rather than on the violator’s past conduct. There must always be a reasonable relation, however, between the violation and the order; the Commission cannot proscribe conduct which bears no relation to the proven violation merely because such conduct would, if engaged in, have extremely untoward results. When drug advertising is at issue, the potential health hazards may well justify a more sweeping order than would be proper were the Commission dealing with a less consequential area. [112] C. Parts II(A)-(C) of the OrderWhere a fair assessment of an advertiser’s conduct shows a ready willingness to flout the law, sufficient cause for concern regarding further, additional violations exists. Two factors or elements frequently influence our decision — the deliberateness and seriousness of the present violation, and the violator’s past record with respect to unfair advertising practices. Standard Oil Co. of California v. FTC, 577 F.2d 653, 662 (9th Cir. 1978). Other circumstances may be weighed, including the adaptability or transferability of the unfair practice to other products. See Colgate-Palmolive Co., 380 U.S. at 395, 85 S.Ct. at 1047. The weight given a particular factor or element will vary. The more egregious the facts with respect to a particular element, the less important it is that another negative factor be present. In the final analysis, we look to the circumstances as a whole and not to the presence or absence of any single factor.
Page 707
set forth in Sears, Roebuck is present here to a significant extent. And since the Commission is attempting to curb misleading drug advertising by a proven violator, it should have especially wide latitude.
[114] It should be emphasized that the findings underlying Part II of the Order are based on settled principles and are unchallenged by AHP at this stage of the proceedings. Although AHP attempts to extenuate its violations by arguing that “the standards by which its advertisements were judged in this case did not exist at the time the advertisements were disseminated,” Petitioner’s Reply Br. 14, this contention would be valid, if at all, only in the context of Part I(B) of the Order. The arguable novelty of the “substantial question” doctrine underpinning Part I(B) cannot support an inference, with respect to Part II, that AHP lacked “a ready willingness to flout the law,” see Sears, Roebuck, supra,Page 708
period,[43] the relative lack of “past record” should be weighed less heavily.
[119] The “adaptability or transferability” of the violations to other products is the next item to consider. Explaining the scope of Part II(A) of the Order, the Commission remarked on AHP’s demonstrated propensity to mislead and the ease with which its deceptive practices could be transferred to other products:[120] App. 411. The decision to impose a narrower order on Clyne than on AHP is a further indication that the Commission’s multi-product prohibitions were carefully tailored to the facts of AHP’s behavior. Although it does not appear that the Commission explicitly appealed, in defense of Part II(B) of the order, to the transferability of false representations that a product has more of an active ingredient, it seems clear enough that such a deceptive practice is as transferable as the practices proscribed by Part II(A). In addition, misrepresenting that doctors prefer a product, or that tests prove the product’s superiority, is a form of deception that could readily be employed for any non-prescription drug product. Thus transferability is a significant factor in favor of allowing Part II(C) to encompass a broad range of products. [121] All the Sears, Roebuck elements, and the additional consideration that the public’s health could be endangered by the conduct that is proscribed, lead us to conclude that the Commission did not abuse its discretion by reining in AHP with Parts II(A)-(C) of the Order. [122] In attacking Parts II(A)-(C) of the Order, AHP cites Standard Oil, supra. But the multi-product order struck down in Standard Oil was, especially under the facts of that case, truly extraordinary; the order against AHP in the present case is considerably milder, and the circumstances here indicate a much more pressing need for some multi-product coverage. In Standard Oil, on the strength of just three implicitly misleading advertisements for a single product, a manufacturer and its advertising agency were subjected to an order coverin thousands of products, including “fuel and lubricant products, waxes, fertilizers, pesticides, garden equipment, and cook books.” 577 F.2d at 661. The manufacturer had never before been accused of false advertising and its agency had had only one consent order entered against it by the Commission. Id. at 663. The deception could not easily be transferred to other products, there was no “blatant and utter disregard of the law,”We believe it essential that Part II.A encompass all OTC drug advertising by AHP, and bar misrepresentations of the specialness of common ingredients other than aspirin. The effort to misrepresent the nature of a quite ordinary ingredient — whether it is aspirin, caffeine, or some other substance [*] — is a technique that could easily be applied to advertising of OTC drug products other than Anacin or APF. And as we have described above in detail, this respondent’s history of misleading advertising raises a serious concern that the order imposed here be carefully drawn if it is to succeed in preventing future violations.[**] [*] Caffeine, like aspirin, is a common substance available in many products (F. 387; Ans of AHP, ¶ 23). Thus, if caffeine is commonly used in products intended for the same purpose as the advertised product (as aspirin is used in many products intended for pain relief other than Anacin), the advertisement may not state or imply that it is an unusual or special ingredient. The fact that the ALJ found that caffeine has not been shown to pose a serious public health problem is irrelevant, since the basis for this disclosure requirement is the need to prevent misleading representations about the ingredient.
[**] Because the advertising agency does not bring to this litigation the same history of advertising violations as AHP, we believe that an order covering only OTC internal analgesics will suffice as to Clyne. Nor does the order require Clyne to make affirmative ingredient disclosure.
Page 709
and the violators made “a good faith attempt to eliminate rapidly the implied misstatements . . .” Id. at 662-63. In the case at hand, only 35 products by AHP’s count — all of them non-prescription drugs — are covered. The deceptions were extensive, involving numerous advertisements over many years. Even though it would be inaccurate to characterize AHP’s behavior as a “blatant and utter disregard of the law,” the violations were serious. Moreover, AHP made no “good faith attempt to eliminate rapidly the misstatements.”
[123] AHP rests its argument primarily on the Sixth Circuit’s reasoning in American Home Products Corp. v. FTC, 402 F.2d 232, 237 (6th Cir. 1968) (the Preparation H case). Preparation HPage 710
had upheld an all-products order; and it approved the Second Circuit decision, Jay Norris, supra, sustaining an all-products order. Id. at 385.[45]
[126] D. Part II(D) of the Order[128] App. 413. A footnote to this passage simply refers to the Commission’s discussion of AHP’s comparative claims. The Commission apparently meant to justify Part II(D) on the grounds that the deceptive comparative claims of effectiveness and safety for Anacin and APF, and the one deceptive non-comparative claim of effectiveness for Anacin (i.e., the claim that Anacin relieves tension) support a fencing in provision directed to all non-comparative claims of effectiveness or safety for all of AHP’s non-prescription drugs.[46] This is a broader and vaguer provision than Parts II(A)-(C), and is premised on a more slender basis. In addition to covering many products as to which no deceptions were found, it encompasses deceptive practices which seem to be quite dissimilar to the deceptions actually found. While a provision such as Part II(D) might in other instances be sustained, Part II(D)’s lack of clarity, in our judgment, is too great under the circumstances of this case to survive review. [129] Part II(D) requires that AHP possess, with respect to any non-prescription drug product, a “reasonable basis” for any non-comparative representation of effectiveness or freedom from side effects. The “reasonable basis” test, as interpreted by the Commission, is flexible: “The appropriate measure for . . . support is, of course, to be determined in light of the particular claims made and the products for which they are made,” App. 390 n. **. While the Commission at one point has apparently suggested that any drug performance claim must be supported by two well-controlled clinical studies (id. 390 n. [**]), the Commission acknowledged in the same opinion “the possibility that comparative claims for [non-prescription drugs other than analgesics] may be adequately substantiated, at least in some instances, by evidence other than two clinical tests . . .” (id.Part II.D of the order requires respondent to have a reasonable basis, consisting of competent and reliable scientific evidence, for any . . . non-comparative representations concerning the effectiveness or freedom from side effects of its OTC drug products. In light of the overall history of advertising violations by AHP, described above, we believe this provision is necessary as a fencing-in measure to prevent respondent from making other unsubstantiated non-comparative claims.
Page 711
that Part II(D) simply “admonish[es] petitioner not to violate the law again,” Petitioner’s Br. 48, it is also inaccurate to declare that the provision “proscribes a specific subset of deceptive advertising, like and related to the deception that occurred here,” Respondent’s Br. 42. While Part II(D) does not track the statutory language, and sweeps less broadly than the statute, it is nevertheless far-reaching enough to demand that we scrutinize it closely before concluding that the circumstances required such imprecision.
[131] While AHP presumably can “oblige the Commission to give [it] definitive advice as to whether [its] proposed action, if pursued, would constitute compliance with the order,”Colgate-Palmolive, 380 U.S. at 394, 85 S.Ct. at 1047, Jay Norris, 598 F.2d at 1251, and this possibility is a factor weighing in favor of permitting a certain amount of imprecision, we do not believe that it cures the excessive vagueness here. [132] If AHP had committed several different violations of the type proscribed by Part II(D), the breadth and vagueness of this provision would be less troublesome. But the only advertising claim made by AHP that is in the category proscribed by Part II(D) is the claim that Anacin relieves tension. This was a non-comparative representation of effectiveness. There were no non-comparative misrepresentations of freedom from side effects. [133] Although AHP has demonstrated a propensity to represent improperly the superiority in various respects of Anacin and APF over the products of its competitors, the Commission has said little to support a contention that AHP has an inclination to misrepresent non-comparative effectiveness, and nothing to support a charge that AHP has a tendency to misrepresent the non-comparative freedom from side effects of any product. As noted, supra, n. 5, the heart of this case is AHP’s attempt t differentiate its products from those of competitors. Any attempts by AHP to misrepresent, in absolute terms, some qualities of its products, seem to have been somewhat more peripheral to its advertising strategy, even if such attempts led to serious violations. [134] The Commission has not recommended any improvements that might be ordered in the event Part II(D) is found to be unsupportably vague. Though it is undisputed that false non-comparative claims of efficacy have more serious consequences than comparative ones (Petitioner’s Reply Br. 3 n. 9), the Commission has not argued that a false claim of ability to relieve tension is readily transferable to any non-prescription drug. [135] In sum, the following factors persuade us that Part II(D) should be vacated in its entirety: the only violation of the sort interdicted by Part II(D) that AHP actually committed is specifically covered by the uncontested Part IV; there is no indication that this violation is easily transferable; the record is ambiguous as to the likelihood that AHP will in the future disseminate false non-comparative claims; the provision is quite imprecise; Part II(D) would be equally imprecise, and still quite broad, even if limited to non-comparative effectiveness claims; the Commission has not explained why the circumstances require such imprecision.[47] [136] IV. Part III of the Order: The Aspirin Disclosure ProvisionPage 712
Anacin and APF have special or unique ingredients, there is no longer any deception, and for the Commission to impose further requirements is a violation of First Amendment free speech rights.
[138] The Commission appears to have justified the disclosure requirement on two grounds. First, as AHP no longer disputes, past advertisements misled the public as to the contents of Anacin and APF. Without disclosure, the public’s misimpressions would tend to persist. Second, unless a disclosure requirement is imposed, AHP, with its “striking history . . . of related advertising violations . . . will devise ways to continue misrepresenting the nature of its product.” [139] AHP’s attempts to conceal the presence of aspirin in Anacin and APF were aptly summarized as follows:[140] App. 364. The point is not that a failure to disclose aspirin in advertisements for aspirin-based products is necessarily misleading, but that it was misleading at least in the context of AHP’s attempts to distinguish Anacin’s ingredient as special or unique.[48] [141] The Commission’s judgment that Part III is needed in addition to Part II(A) is acceptable under the “reasonable relation” test of Jacob Siegal, supra and the “fencing in ” precedents. The cases are uniform that the Commission’s evaluations of the likelihood that a proven violator will devise new deceptions deserve much deference. What is more, Part II(A) seems insufficient to overcome the effects of past misrepresentations that Anacin does not have aspirin. We cannot hold that the Commission is authorized to require aspirin disclosure only in the same contexts that failure to disclose was specifically found misleading. [142] AHP seems to recognize that the “fencing in” doctrine provides powerful support for the Commission’s Order. It appears, instead, that AHP is arguing that the fencing in doctrine is unconstitutional in its application here.[49] AHP alleges that Part III is an unconstitutional and “burdensome prior restraint.” It is difficult to locate the burden, however; and even if there would be a significant burden, Part III would be vindicated by the very free speech cases on which AHP relies. [143] The disclosure requirement is not burdensome except insofar as it may inhibit illicit attempts to derive a market advantage from promoting misimpressions about Anacin and APF. It would consume far less space — and presumably less of AHP’s advertising budget — to admit that the products have aspirin than to indulge in circumlocutions designed to conceal this fact. To take just one example, according to an AHP advertisement, “Anacin starts with as much pain reliever as the leading aspirin tablet. Then adds an extra core of this specific fast-acting ingredient againstOn the basis of the small actual differences in formulation between the Anacin (and APF) compounds and plain aspirin, respondents’ advertisements have created an impression that the products are based on some special, unusually strong pain reliever entirely different from and superior to aspirin. Whenever aspirin is named in the Anacin ads, it is used in such a way to contrast it with Anacin and associate it with Anacin’s competitors. None of the challenged Anacin advertisements discloses that the analgesic ingredient in Anacin itself is, in fact, aspirin; instead, the identity of Anacin’s ingredient is in every single instance obscured with phrases like “the pain reliever doctors recommend most” and “this specific fast acting ingredient against pain.”
Page 713
pain.” App. 364. Compliance with Part III could easily be accomplished by substituting “aspirin” for “pain reliever,” or perhaps by replacing “this specific fast-acting ingredient against pain” with the word “aspirin.” Modifications of this sort would save space, comply with Part III, and yet convey essentially the same information as the original version. The Commission has represented that if situations arise in which the disclosure of aspirin in advertisements covered by Part III would pre-empt space, it will “entertain a request” for a modification. Appellee’s Br. 33 n. 23.
[144] Exempted from Part III are advertisements that incorporate no performance claims — for example, those that merely inform the public where and at what price the products are available, or perhaps those that avoid product information in favor of merely creating a “mood” associated with the products. Thus Part III is not a true “corrective advertising” provision in that its disclosure requirements are only triggered when AHP makes certain types of claims. Thus some advertisements, especially the more abbreviated ones, would avoid Part III’s strictures. Part III merely requires that if AHP takes the space to make performance claims, it must also state that the product for which the claims are made contains aspirin. [145] AHP misconceives the commercial free speech cases. These cases would not aid AHP’s cause even if AHP were correct that Part III of the Order is burdensome. AHP relies heavily on Beneficial, supra, a decision which if anything lends weight to the Commission’s position. In Beneficial, the Commission had forbidden an advertiser from using the slogan “Instant Tax Refund.” The so-called “Instant Tax Refund” was in fact an ordinary loan, and the phrase tended to mislead consumers into supposing that a special service, keyed to the individual’s anticipated tax refund, was offered. This Court nevertheless set aside the Commission’s prohibition, because of the failure “to consider fully the possibility of requiring merely that advertising copy be rewritten in lieu of total excision of the offending language.” 542 F.2d at 619. Qualifying explanatory language is in general a preferable remedy. Id. at 618-620.[50] In the present case, the Commission has acted precisely as Beneficial directed. It determined that, while the advertisements were misleading, there was no necessity to ban particular words or phrases. Rather, AHP is permitted to employ any language it chooses, provided that a qualifying explanation is included. It may, for example, continue to refer to “this specific fast-acting ingredient against pain,” but it must also convey that this ingredient is aspirin. [146] Recent extension of First Amendment protection to commercial speech is founded on the philosophy that commercial speech warrants the “degree of protection . . . necessaryPage 714
to insure that the flow of truthful and legitimate commercial information is unimpaired,” Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, 425 U.S. 748, 772 n. 24, 96 S.Ct. 1817, 1831 n. 24, 48 L.Ed.2d 346 (1976). The Supreme Court did not “prohibit the State from insuring that the stream of commercial information flow cleanly as well as freely.” id.
at 772, 96 S.Ct. at 1831. When health is involved, the interest in assuring a “clean” flow of information is enhanced. National Commission on Egg Nutrition, supra, 570 F.2d at 162. The rationale of the commercial speech cases, “to open the channels of communication,” Virginia State Board of Pharmacy, 425 U.S. at 770, 96 S.Ct. at 1829, can have no application here. Indeed, it would be a subversion of commercial speech doctrine to hold that AHP’s interest in preventing the nature of its products from being unveiled in its advertisements invalidates the Commission’s disclosure order.
The term “false advertisement” means an advertisement, other than labeling, which is misleading in a material respect; and in determining whether any advertisement is misleading, there shall be taken into account (among other things) not only representations made or suggested by statement, word, design, device, sound, or any combination thereof, but also the extent to which the advertisement fails to reveal facts material in the light of such representations or material with respect to consequences which may result from the use of the commodity to which the advertisement relates under the conditions prescribed in said advertisement, or under such conditions as are customary or usual.
[1.] Bayer Co. v. United Drug Co., 272 F. 505 (S.D.N.Y. 1921).Aspirin: homey, familiar, time-tested aspirin has long been an honored staple in the American family’s arsenal against common maladies. So homey is this ingredient that it evokes no aura of mystery or magic, though indeed its therapeutic properties are significant; so familiar that the firm that pioneered its development was stripped of its trademark in private litigation 60 years ago;[1] so commonplace that a maker of one aspirin-based pain reliever seeking to differentiate its product from the rest faces a formidable marketing task. What better way to meet this challenge than to establish a new identity for the product, dissociated from ordinary aspirin, and then to represent it as special and more effective than its competitors? That effort may solve the marketer’s marketing problem — but if the representations of specialness and superiority are not adequately supported, they can be, simply put, deceptive.
Two appellate decisions dealing with advertisements for hemorrhoid preparations disagree with the Commission’s determination that certain representations were misleading American Home Products Corp. v. FTC, 402 F.2d 232 (6th Cir. 1968); Grove Laboratories v. FTC, 418 F.2d 489 (5th Cir. 1969). But neither court found that the Commission was mistaken in its interpretation of what the advertisements were representing and both courts ordered that most of the provisions of the orders under review be enforced. Significantly, both courts appear to have given the Commission’s findings substantial weight.
FTC v. Sterling Drug, Inc., 317 F.2d 669 (2d Cir. 1963) an FTC v. Simeon Management Corp., 532 F.2d 708 (9th Cir. 1976), affirmed district court refusals to grant the Commission injunctive relief under 15 U.S.C. § 53(a). The Commission had sought such relief pending final resolution of the administrative proceedings. Far different considerations come into play when, as in the present case, a court of appeals is asked to review a final cease and desist order of the Commission after the full panoply of administrative proceedings have been conducted. See Sterling Drug, 317 F.2d at 678 (Marshall, J., concurring) Simeon Management, 532 F.2d at 717. See also Simeon Management Corp. v. FTC, 579 F.2d 1137 (9th Cir. 1978) (affirming, after final Commission determination, that advertisements at issue in the previous Simeon Management case were in violation of the statute.)
Advertisements having the capacity to deceive are deceptive within the meaning of the FTCA; actual deception need not be shown. Goodman v. Federal Trade Commission, 244 F.2d 584, 602 (9th Cir. 1957). It is well settled that “[t]he Federal Trade Commission has the expertise to determine whether advertisements have the capacity to deceive or mislead the public. Consumer testimony, although sometimes helpful, is not essential.”
(quoting Resort Car Rental Systems, supra.) I Colgate-Palmolive, supra, 380 U.S. at 391-92, 85 S.Ct. at 1046, it was not considered “necessary for the Commission to conduct a survey of the viewing public before it could determine that the commercials had a tendency to mislead. . . .” According t Beneficial, supra, 542 F.2d at 617.
the FTC has been sustained in finding that advertising is misleading even absent evidence of that actual effect on customers; the likelihood or propensity of deception is the criterion by which advertising is measured.
Other cases authorizing the Commission to rely on its own interpretations, without resort to consumer testimony or surveys, include Carter Products, supra, 323 F.2d at 528; J.B. Williams, supra, 381 F.2d at 890; and E.F. Drew Co. v. FTC, 235 F.2d 735, 741 (2d Cir. 1956), cert. denied, 352 U.S. 969, 77 S.Ct. 360, 1 L.Ed.2d 323 (1957).
AHP appears to hint that under In re R.M.J., 455 U.S. 191, 204-205, 102 S.Ct. 929, 938, 71 L.Ed.2d 64 (1982) there is a First Amendment violation when a finding that an advertisement is misleading and an order predicated on this finding is not based on empirical evidence that the public was in fact misled. See
Petitioner’s Br. 38 n. 57. This would be a distortion of R.M.J. See e.g. Young v. American Mini Theatres Inc., 427 U.S. 50-68, 96 S.Ct. 2440-2451, 49 L.Ed.2d 310 (1976): “[R]egulatory commissions may prohibit businessmen from making statements which though literally true, are potentially deceptive.” (emphasis added).
Many other advertisements could be cited. The Commission summarized some of them in App. 373-76. For example, one advertisement announced: “Medical research has definitely established that the most reliable medication in the treatment of arthritis . . . is the compound in today’s Anacin tablets. . . .” In various advertisements, it was claimed that a study or test “proves,” “substantiates,” “shows” or proves “beyond doubt” that Anacin is on a par with the leading prescription drug. Such claims were often coupled with descriptions of clinical procedures employed in the tests, and with misleading references to doctors’ surveys. Imagery in the advertisements, including technical graphs, chemical formulas, and medical texts, reinforced the establishment claims.
Consider our community as a “factory”: in this “factory” some people have the “job” of wearing gold wedding rings; other people have the “job” of selling gold wedding rings; still other people have the job of telling whether or not something is really gold. It is not at all necessary or efficient that everyone who wears a gold ring (or a gold cufflink, etc.) or discusses the “gold standard,’ etc., engage in buying and selling gold. Nor is it necessary or efficient that everyone who buys and sells gold be able to tell whether or not something is really gold in a society where this form of dishonesty is uncommon (selling fake gold) and in which one can easily consult an expert in case of doubt. And it is certainly not necessary or efficient that everyone who has occasion to buy or wear gold be able to tell with any reliability whether or not something is really gold.
H. Putnam, Meaning and Reference, in Naming, Necessity, and Natural Kinds 125 (S. Schwartz ed. 1977).
See also the “substantiation” cases noted supra typescript at 22, especially Porter Dietsch and Firestone Tire. Part I(B) is both a “substantiation” provision and a “disclosure” provision in that it requires AHP to substantiate its claims, to disclose the lack of substantiation, or else to cease making the claims. Porter Dietsch, 605 F.2d at 306-7, in addition to affirming a substantiation requirement, sustained in modified form a warning that the Commission required the company to include in all advertisements for certain products. In contradistinction to this the Commission here has not required any warning at all, and has required affirmative disclosures only to the extent certain claims are made. In Firestone Tire, 481 F.2d at 251, the Sixth Circuit upheld a finding that an advertising claim that tires “stop 25% quicker” was misleading “without substantial scientific test data to support it,” regardless of the absence in the advertisements of any allusion to scientific or other proof of the claim. The order there upheld is thus quite similar to Part I(B) here.
The record shows that Porter Dietsch is continuously testing and marketing new products and, as a wholesale operation not faced with the expense of modifying manufacturing facilities to add new products to its line, it can do so comparatively cheaply. Fraser and wholly-owned subsidiaries of Porter Dietsch have violated the Federal Trade Commission Act in the past. These facts and the evidence of petitioners’ readiness, in carrying out the advertising campaign for X-11, to go at least to the very limits of what the law might be argued, with some modicum of plausibility, to allow, justified the breadth of the order against the principal offenders.
In ITT Continental Baking Co. v. FTC, 532 F.2d 207, 222-23 (2d Cir. 1976), the Court refused to modify an order directed to any
food product, although an advertising violation had been found with respect to only one. Another decision upholding a multi-product order is Jay Norris, supra, 598 F.2d at 1250-51.
There have also been a few appellate court decisions narrowing multi-product orders, e.g., Standard Oil, supra. The possible relevance of these decisions will be more apparent after the precise basis of Parts II(A)-(C) of the order has been explained.
unscrupulous merchandisers (and we do not imply that Sears falls in that category) might be encouraged to transfer unlawful but successful advertising techniques from product to product, leaving the Commission the job of instituting separate proceedings to secure new orders for each unlawfully advertised product. Because so drastic a limitation on the Commission’s enforcement procedure would conflict with . . . [Congressional intent] . . . would consume enormous resources, and would afford no particular protection to lawful advertisements and little protection to consumers, the Commission need not wait until a “transfer” occurs before issuing multi-product orders in cases like the one before us. It may issue and enforce such orders to avert an “apprehended effect.”
Id. at 395, footnote omitted. The same considerations apply when, as in our case, the Commission chooses a “deception” rationale instead of basing its decision on “unfairness.”
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