Petition — Warner-Lambert Co. v. Federal Trade Commission

Supreme Court brief1978

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| : } Supreme Court, U. S.

) FILED

| o&C 181977

sae ICHAEL RODAK, JR., CLERK

IN THE

Supreme Court of the Baited States

OcToBER TERM, 1977

No. 77 “855

one

WaARNER-LAMBERT COMPANY, PETITIONER

Vv.

FEDERAL TRADE COMMISSION

/ PETITION (WITH APPENDIX) FOR WRIT OF

CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE DISTRICT OF COLUMBIA

CIRCUIT

LIONEL KESTENBAUM

JaMES H. KELLEY

DonaLp L. Harpison

Larry D. SHARP

Attorneys for Petitioner

BErcson, BorRKLAND,

Marcouis & ADLER

11 Dupont Circle, N.W.

Washington, D.C. 20036

Passes or Braon S. Avams Paintine, Inc., Wasnineton, D.C.

J TABLE OF CONTENTS

Page

ee rn) na eeunbnesudasanantes i

Taste or Cases & AUTHORITIES ...........0-cccccees ii

oe eee ends wuesnieeeeaes 1

IE 5 0c on du dieendentdesuaueadndsedeecsune be 2

GGRUR TUINIIGED oon sc cccccccdscccccsscccccesces 2

CoNSTITUTIONAL Provision aND Statute INvotvep.... 3

i es eek as kesenndenesesenscetee 5

(a) The Federal Trade Commission Decision ..... 5

(b) The Concurrent Food and Drug Administration

En on6.646 6c dua Nees bb ON ten ee nee 8

(d) The Supplemental Court of Appeals Opinion .. 13

Reasons FoR GRANTING THE WRIT ...........-...008. 14

ee ae hae ad ee a a ee 25

APPENDIX

Opinion of the Federal Trade Commission (De-

MD. ni oleae eae eebeneenseene la

Order of the Federal Trade Commission (March

cet deed pdahoewebens tutn cng eens 48a

Order of the Court of Appeals (December 28,

I Be A aes UL es ee clad. 50a

Opinion of the Court of Appeals (August 2, 1977) 5la

Supplemental Opinion on Petition for Rehearing

Ferre er re 87a

Order of the Court of Appeals (September 14,

SEE. ctitkthaeyd dc0ks obs bdbnkeuensneenees 95a

Order of the Court of Appeals (September 14,

EE Nankndnecndsaksedcnsedakedsidensdees 96a

Order of the Court of Appeals (September 14,

BEE. cbkdéseuddncbsbeadenecdéasndedeonees 97a

ii TABLE OF CASES AND AUTHORITIES

CasEs: Page

American Home Products Corp., FTC Docket No.

SD cco ndlendsdeunseshoepaeseeseusdeenadeness 16

Banzhaf v. F.C.C., 405 F.2d 1082 (D.C. Cir. 1968),

cert. denied, 396 U.S. 842 (1969) ...........-45- 19

Beneficial Corp. v. FTC, 542 F.2d 611 (3d Cir. 1976),

cert. denied, 430 U.S. 983 (1977) ........-.0005- 19

Bristol-Myers Co., FTC Docket No. 8917 ........... 16

Campbell Soup Co., 77 F.T.C. 664 (1970) ........... 16

F.T.C. vy. National Commission on Egg Nutrition, 517

F.2d 485 (7th Cir. 1975), cert. denied, 426 U.S. 919

SED ok0%604 64546 040600064 00 OKs been needs < 21

Firestone Tire & Rubber Co., 81 F.T.C. 398 (1972) .. 16

Lambert Pharmacal Co., 38 ¥.T.C. 726 (1944) ....... 21

Miami Herald Publishing Co. v. Tornillo, 418 U.S. 241

EEE a.6e cheaGncdedessuusbenuenebebeenneetess 18

National Commission on Egg Nutrition, 88 F.T.C. 89

(1976), aff’d as modified, Nos. 76-1969 and 76-1975

Spee en i ED dv. 6cc000ckecccesteces 20, 21

PGR, Filta: BO Weeds We CREED 6. 0004dKncckccensees 21

Scientific Manufacturing Co. v. F.T.C., 124 F.2d 640

a MEN 2 een ees 21

S.E.C. v. Chenery Corp., 332 U.S. 194 (1947) ...... 18

Sterling Drug, Inc., FTC Docket No. 8919 ......... 16

United States v. E. 1. duPont de Nemours & Co., 366

Sees See EE once bau dns céuteuscaveunseeuene 15

United States v. Jin Fuey Moy, 241 U.S. 394 (1916) .. 24

United States v. National Society of Professional En-

gineers, 555 F.2d 978 (D.C. Cir. 1977), cert. grant-

ed, 46 U.S.L.W. 3214 (U.S. Oct. 3, 1977) (No. 76-

SD 664s-db05545044405000000 06 s4deeeneaneewes 19

United States v. Thirty-Seven Photographs, 402 U.S.

Pe WHEE kdces cnedccnesadbdeanenssacauusecen 24

Virginia State Board of Pharmacy v. Virginia

Citizens Consumer Council, Inc., 425 U.S. 748

PP . 8 64-504405sse0uennedsaccnes 14, 15, 16, 17, 18, 19

hin MB et ne Oe Re oe owe te

Table of Cases and Authorities Continued ili

Page

- West Virginia State Board of Education v. Barnette,

& f F Sry eee rer 18

Wooley v. Maynard, 430 U.S. 705 (1977) ........... 18

CONSTITUTIONS:

United States Constitution:

a EE res er Passim

STATUTES AND RvuLEs:

Federal Trade Commission Act (15 U.S.C. $45 et

GD nbd enn 60 ns 6uceuno60ceesncéeséusecueess 4, 10, 23

Wheeler-Lea Amendments (52 Stat. 111, 116); (15

a YK eet 8, 23

Magnuson-Moss-Warranty-Federal Trade Commis-

sion Improvement Act, 88 Stat. 2183; 15 U.S.C.

BE eacncienakehedwienheuddeseeannes co04sos 24

eet dued eadhahaseuckeses 23

EE, ncvgvenicuhvneeekesses daneses 2

ee bee cae eees 8,9

Ee adn cteubecembenveeseeaisueeses 8

tea tecenceeentededbebenned 8, 9, 22

ee oe ccccceuceenecuadveds 9, 10, 12, 22

CE ee 11, 22

MISCELLANEOUS:

S. Rep. No. 1744, 87th Cong., 2d Sess. (1962) ... .... 23

H. R. Rep. No. 1613, 75th Cong., Ist Sess. (1937) .... 23

Cornfeld, A New Approach to an Old Remedy: Correc-

tive Advertising and the Federal Trade Commis-

sion, 61 Iowa L. Rev. 693 (1976)

iv Table of Cases and Authorities Continued

Page

Lemke, Souped Up Affirmative Disclosure Orders of

the Federal Trade Commission, 41 U. Mich. J.L.

Reform 160 (1970) ...cccccccccccccesccsscosses 16

Note, ‘‘Corrective Advertising’’ Orders of the Federal

Trade Commission, 85 Harv. L. Rev. 477 (1971) .. 16

Note, The Limits of FTC Power to Issue Consumer

Protection in Orders, 40 Geo. Wash. L. Rev. 496

CDOTS) .ccvcccccccceccccecvcebeseeeuuneneeneeae 16

Address by Philip Elman, ‘‘ Advertising and the First

Amendment,’’ (Food & Drug Law Institute Con-

ference on Food Advertising and Labeling, Oct.

BF, WBGT) .cccccvccccccccesecesuesue ene 16

ee ee oe nee

IN THE

Bupreme Court of the United States

OctToBER TERM, 1977

NO, —————

WaARNER-LAMBERT COMPANY, PETITIONER

FEDERAL TRADE COMMISSION

PETITION FOR A WRIT OF CERTIORAR! TO THE

UNITED STATES COURT OF APPEALS FOR

THE DISTRICT OF COLUMBIA CIRCUIT

Warner-Lambert Company petitions for a writ of

certiorari to review the judgment of the United States

Court of Appeals for the District of Columbia insofar

as it affirmed the Federal Trade Commission’s order

and to review the order of that court denying Warner-

Lambert’s application for leave to adduce additional

evidence.

The Opinion and the Supplemental Opinion on Pe-

tition for Rehearing of the court below (including

the dissents of Judge Robb), set forth at Pet. App.

Dla and 87a,’ are reported at 562 F.2d 749. No opin-

ions accompanied the earlier denial of Warner-Lam-

hert’s application for leave to adduce additional evi-

dence (Pet. App. 50a) or the denial (Judges Tamm,

MacKinnon and Robb dissenting) of its suggestion for

rehearing en banc (Pet. App. 96a). The opinion and

order of the Federal Trade Commission (Pet. App.

la) are reported at 86 F.T.C, 1398. The Commission’s

order denying Warner-Lambert’s petition to reopen

ne proceedings (Pet. App. 48a) is reported at 87

“.T.C. 619.

JURISDICTION

The judgment of the court of appeals was entered

on August 2, 1977. (Pet. App. 5la) Petitions for

rehearing filed by Warner-Lambert and the Federal

Trade Commission were denied on September 14,

1977 (Pet. App. 95a, 96a, and 97a). The jurisdiction

of this Court is invoked under 28 U.S.C. § 1254(1).

QUESTIONS PRESENTED

The Federal Trade Commission has éhtered an

order that prohibits future Listerine advertising, in-

cluding concededly truthful advertisements not deal-

ing with relief of colds symptoms, unless the first $10

million of such advertising includes a corrective mes-

sage stating that ‘‘Listerine will not help prevent colds

or sore throats or lessen their severity.’’ This message

expresses the Commission’s position on a subject of

genuine and continuing scientific controversy ; but it is

*The appendix to this petition is cited ‘‘Pet. App.’’ The pro-

ceedings before the FTC are reported in the Joint Appendix before

the court below, which is cited ‘‘J.A.’’

yt a ha ee a She PE Ee AON rag

inconsistent with published determinations by a Food

and Drug Administration panel of experts and con-

trary to beliefs held by petitioner in good faith on the

basis of reputable medical and scientific opinion. The

Commission did not find that Warner-Lambert’s cold

symptoms relief claims were made in bad faith, and

the court of appeals found that the record could sup-

port a finding of good faith. The following questions

arise:

1. Whether the Federal Trade Commission vio-

lated petitioner’s First Amendment Constitutional

rights by prohibiting future Listerine advertising

unless it contains a mandatory ‘‘corrective’’ message

(a) which is unrelated to and not needed to cure de-

ception in such advertisements and (b) which seeks

to present as unqualified fact the Commission’s view

on a subject of genuine scientific controversy.

2. Whether the Federal Trade Commission and

the court below erred in refusing to consider evidence

related to a determination by a Food and Drug Admin-

istration panel of experts regarding Listerine’s effec-

tiveness for the relief of colds symptoms which was

contrary to the view of the Commission.

3. Whether the Federal Trade Commission’s sta-

tutory authority to issue ‘“‘cease-and-desist” orders

under the Federal Trade Commission Act inciudes

the power to order “corrective advertising.”

CONSTITUTIONAL PROVISION AND STATUTE INVOLVED

The First Amendment to the Constitution provides,

in pertinent part:

Congress shall make no law . . . abridging the

- freedom of speech, or of the press.

Section 5(a)-(c) of the Federal Trade Commission

Act, 38 Stat. 719, as amended, 15 U.S.C. 45(a), (hb)

and (c), provided,’ in pertinent part:

(a)(1) Unfair methods of competition in com-

merce, and unfair or deceptive acts or practices

in commerce, are decided unlawful.

«+ om »

(6) The Commission is empowered and di-

rected to prevent persons, partnerships or cor-

porations, ... from using unfair methods of com-

petition in commerce and unfair or deceptive acts

or practices in commerce.

(b) ... If upon such hearing the Commission

shall be of the opinion that the method of com-

petition or the act or practice in question is pro-

hibited by this Act, it... shall issue ... an order

requiring such person, partnership or corporation

to cease and desist from using such method of

competition or such act or practice. Until the

expiration of the time allowed for filing of peti-

tions for review ... or... until the record

in the proceeding has been filed in a court of

appeals of the United States, as hereinafter pro-

vided, the Commission may at any time, upon

such notice and in such manner as it shall deem

proper, modify or set aside, in whole or in part,

any report or any order made or issued by it

under this section... .

for leave to adduce additional evidence, and shall

show to the satisfaction of the court that such

additional evidence is material and that there

were reasonable grounds for the failure to ad-

? After the complaint issued in this case, Section 5(a) and (b)

were amended by adding the words ‘‘or affecting’’ before ‘‘com-

meree’’ and by the renumbering of paragraph (a) (6) as paragraph

(a) (2). 88 Stat. 2193, 89 Stat. 801, 15 U.S.C. (Supp. V) 45(a) (1),

(2).

— | a

duce such evidence in the proceeding before the

Commission, the court may order such additional

evidence be taken before the Commission and to

be adduced upon the hearing in such manner and

upon such terms and conditions as to the court

may seem proper.

STATEMENT

Listerine Antiseptic was formulated in 1879 and

dispensed through physicians and pharmacists for

more than 40 years before it was advertised directly

to consumers. This case involves a Federal Trade

Commission proceeding against certain claims for re-

lief of colds and sore throat symptoms made in ad-

vertisements for Listerine, claims which the company

“successfully defended in five prior FTC investigations

or evidentiary proceedings and which have been made

since 1879 without challenge by the Food and Drug

Administration. Advertisements concerning Lister-

ine’s effectiveness against bad breath, which accounted

for more than 80 percent of the product’s advertising

in the ten years preceding the complaint, were not

questioned by the FTC.

(a) The Federal Trade Commission Decision

. This proceeding is the first and only litigated case

in which the Federal Trade Commission has ordered

so-called ‘corrective advertising.”* The order issued

*““A corrective advertising order. . . uires an adverti

make certain disclosures regardless of BD they are rete >

prevent future advertisements from being misleading.’’ This con-

trasts with ‘‘affirmative disclosure’ orders, which forbid ‘‘an ad-

vertiser from making representations which are deceptive unless

he discloses facts which remove the deception.’’ Cornfeld, A New

Approach to an Old Remedy: Corrective Advertising and the Fed-

eral Trade Commission, 61 Iowa L. Rev. 664, 706-07 (1976).

by the Commission, as modified by the court below,’

requires that all advertisements for Listerine, until

approximately $10 million has been expended on such

advertising, contain the following language:

Listerine will not help prevent colds or sore

throats or lessen their severity.

The mandated language is required in all advertise-

ments, even though the advertisements themselves are

entirely truthful and wholly unrelated to colds and

sore throats. (Pet. App. 46a)

The Federal Trade Commission did not find that

this language was necessary to prevent future adver-

tisements from being deceptive. In rejecting Warner-

Lambert’s First Amendment objections to the order’s

“corrective advertising” requirements, the Commis-

sion conceded that the order constituted “regulation

of truthful commercial speech” (Pet. App. 33a, em-

phasis supplied) ; but it nevertheless ordered that the

language be included as an ‘‘affirmative action” (Pet.

App. 24a) designed to eliminate any “lingering ef-

fects” from the past advertisements it had found to

he false (Pet. App. 24a, n.24).

The complaint which led to the order described

above was issued by the Commission in June 1972.

Insofar as is pertinent to this petition, the complaint

‘The court of appeals modified the FTC’s order by directing the

deletion of an introductory phrase (‘‘contrary to prior advertis-

ing’), finding that this ‘‘confessional preamble’’ was neither

necessary to attract attention nor appropriate in a ease such as this,

where ‘‘the record compiled could support a finding of good faith.’’

(Pet. App. 74a-76a) The Federal Trade Commission made no

findings and its opinion offered no reasons for the requirement of

this phrase.

——

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charged that Warner-Lambert had falsely represented

that Listerine would “prevent colds and sore throats”

and would ‘‘cause colds and sore throats to be less

severe than they otherwise would be.” * (Pet. App. la

n.29 at 32a) Warner-Lambert denied these and other

substanti :

" ntive allegations of the complaint. (Pet. App.

The Commission concluded that the advertisements

in issue made the claims alleged in the complaint. ( Pet.

App. 3a) It also found by a preponderance of the

evidence that the use of Listerine would be of no

benefit in reducing the number or Severity of colds

and would not provide any relief from cold symptoms.

(Pet. App. 17a-18a) While virtually all witnesses

stated that Listerine would provide temporary relief

from sore throat due to cold, the Commission found

that comparable relief could be obtained from salt

water, and ‘‘that this temporary relief is not the ‘sig-

nificant relief’ promised by respondent’ :

ments.” (Pet. App. 8a)* po S advertise-

*The complaint also contained an allegation that W

bert had misrepresented the results of “ite most Pht mo =

studies. This charge was dismissed, based upon a finding that War-

ner-Lambert ‘cannot be said to have acted unreasonably’’ when it

se upon studies which had been considered in detail by the

ederal Trade Commission in connection with the dismissal of a

prior complaint challenging essentially the same colds claims for

Listerine as are in issue here. (J.A. 564; Pet. App. la, n.1)

* The only claims related to ‘‘sore throat”? j

in the ree i

poe Prien which appear on Listerine labels: ‘‘For Bed Deeeth

- 7 = Resultant Sore Throats,’’ which appeared prior to 1973,

an or Relief of Cold Symptoms and Minor Sore Throats Due

to Colds,’’ whi

ea ~ which has appeared from 1973 to the present. (Pet. App.

(b) The Concurrent Food and Drug Administration Proceedings

At about the time the complaint in this case was

issued, the Food and Drug Administration adopted

procedures for determining whether over-the-counter

(OTC) drugs, including Listerine, are safe, effective,

and correctly labeled.’ 21 C.F.R. § 330 (1977). While

the Listerine case was pending before the full Commis-

sion, the Federal Trade Commission announced a

‘Proposed [Industry] Rule Concerning Over-the-

Counter Drugs,’’ 40 Red. Reg. 52631 (1975). Under the

terms of this proposed industry regulation, the Com-

mission will in effect adopt the findings of the FDA re-

view program and proceed against advertising for

OTC drugs which conflicts with the monographs issued

under the FDA review program.

Pursuant to the FDA’s OTC review procedures, a

panel of experts was established to study ‘“Over-the-

counter cold, cough, allergy, bronchodilator, and anti-

asthmatic drug products.’’ 37 Fed. Reg. 9464 (1972).

In February 1976, two months after the order was

entered in the present case, the panel issued its draft

report. (J.A. 3090)

’ Under the procedures established by the Food and Drug Admin-

istration, independent expert panels were appointed to review all

available medical and scientifie data concerning the safety and effi-

cacy of ingredients used in over-the-counter products, and to deter-

mine the safety and efficacy of the ingredients and the claims which

could be made for them. The panel’s report is subject to public

comment prior to final action by the Commissioner of Food and

Drugs. 21 C.F.R. § 330.10(a) (6) (1977)

The Food and Drug Administration has jurisdiction over the

labeling of drug products, including Listerine. The Wheeler-Lea

Amendments to the Federal Trade Commission Act defined the

Commission’s jurisdiction over drug advertising to exclude labeling.

52 Stat. 116 (1938), 15 U.S.C. § 55(a)(1).

a meni,

nl eT A) ae ee OS

In its draft report, the panel of experts recom-

mended that Listerine be classified in ‘‘Category III”

(J.A. 3018, 3213), a category which it defined as ap-

propriate for drugs “which in their judgment are

likely to be safe and effective, but for which more

data are needed”’ (J.A. 3143). The Commissioner of

Food and Drugs has formally declared that ‘‘[c]lassi-

fication of an ingredient or claim in Category III

represents a preliminary determination that general

recognition of safety and effectiveness can be shown

with further testing.’”’ 42 Fed. Reg. 19137, 19139

(1977).° The panel evaluated a wide variety of evi-

dence concerning the pharmacological properties of

Listerine’s ingredients, including a clinical study

which was part of petiticner’s proof before the FTC

which the panel described as showing ‘‘milder nasal

symptoms and [cough] symptoms”’ for Listerine users

as compared to a control group which did not use Lis-

terine. On the basis of these evaluations, the panel

recommended further study to determine the necessity

for and contribution of each ingredient claimed to be

active.” (J.A. 3018, 3045-46, 3213)

Warner-Lambert petitioned the Commission to re-

open the record to consider the FDA panel report’s

findings relating to the efficacy of Listerine. (J.A.

* Drugs deemed not safe and effective are placed in Category II.

Category I drugs are those deemed safe and effective without need

for further testing, 21 C.F.R. § 330.10(a) (6) (1977).

* Under the FDA rules governing the OTC review rogram, Li

terine could continue to be labeled for the relief of ‘oi ~-cnon a

pending the outcome of this future testing. E.g. 41 Fed. Reg. 38312,

38314 (1976). The FTC's proposed rule would prohibit advertising

of Category i claims. 40 Fed. Reg. 52631 (1975). Continued ad-

vertising of claims accorded Category III status in the FDA review

program was contemplated by the FTC. (J.A. 972-73)

10 .

922) On March 26, 1976, the Commission denied the

petition to reconsider on the ground that the con-

clusion of the FDA’s expert panel with respect to

Listerine was in a draft report and thus did not prop-

erly constitute a “finding”. (Pet. App. 49a)

After the record of the FTC proceeding had been

filed with the court of appeals, thereby depriving the

Commission of further jurisdiction, the advisory panel

to the Food and Drug Administration issued its final

report. 41 Fed. Reg. 38312 (1976).” This report re-

peated the pertinent conclusions reached in the draft

report. 41 Fed. Reg. 38348, 38351, 38353, 38409, 38411,

38413 (1976). Pursuant to 15 U.S.C. § 45(c), Warner-

Lambert applied to the court of appeals for leave to ad-

duce additional evidence before the Commission. This

application was denied without opinion. (Pet. App.

90a )

On August 2, 1977, the court of appeals affirmed,

with one modification, the order issued by the Federal

Trade Commission. (Pet. App. 51a) The court of ap-

peals held that “the Commission’s conclusion that Lis-

terine is not beneficial! for colds or sore throats’’ was

“supported by substantial evidence on the Tecord

viewed as a whole,’”’ and sustained the Commission’s

finding of a violation of §5 of the Federal Trade

Commission Act. (Pet. App. 54a) The court did, how-

ever, state that “the record compiled could support

a finding of good faith” by the company in making

claims for Listerine of symptomatic relief of colds.

10 The panel report recommended a monograph, which the Com-

missioner issued for public comment, after which he is to issue a

final monograph, 41 Fed. Reg. 38312-14 (1976).

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(Pet. App. 76a)"" The court of appeals rejected War-

ner-Lambert’s argument that the FDA advisory panel

had found Listerine ‘“‘likely to be effective”? and

“In defense of its claims for Listerine before the FTC, Warncr-

Lambert had presented medical and scientifie studies, including

clinice| tests, to demonstrate the effects of Listerine and its active

ingredients on various cold symptoms and upon the viruses and

bacteria which play a role in the development and aggravation of

colds symptoms. In addition, Warner-Lambert called expert wit-

nesses from prominent universities, independent testing labora-

tories, and the company’s scientific staff, who described and evalu-

ated the various studies and testified that, based upon the studies

they had reviewed, Listerine would be effective for the relief of

cold symptoms, including sore throat, and in some circumstances

could lead to a reduction in the number of colds, (Based upon the

results of the first half of a colds study begun by Warner-Lambert

in 1967, Warner-Lambert had ceased all references to ‘‘ fewer colds’’

in the Fall of 1969. No such references have been made since that

time.) These witnesses included a former Medical Director of the

Food and Drug Administration and three eminent physicians from

the faculties of prominent medical schools, one of whom had been

clinical director of the National Institute of Allergy and Infectious

Diseases at the National Institutes of Health and another of whom

had been selected by the Federal Trade Commission to conduct its

well-known comparative study of analgesics. (.J.A. 1649-80, 1713-23,

1764-69, 1793-95, 1798-1806, 1927-42, 1966-1979, 1991-92, 2057-70,

2087-94, 2100-19, 2135-43, 2148-50, 2415-16, 2422-23 2425.28,

2457-74, 2506-15, 2599-2611, 2681-95, 2747-64) The Commission

elected to rely on ‘‘experts [called by the Commission] who based

their views on their general medical and pharmacological knowl-

edge’’ rather than those called by petitioner, (Pet. App. 15a-16a)

None of the Commission's expert witnesses had worked with Lis-

terine or conducted any tests regarding its efficacy.

“* The term ‘‘likely to be effective’’ was taken from the portion

of the panel’s report which defined the standard to be applied in

determining whether or not drugs are to be accorded Category III

status. It was upon this language of the panel itself that Warner-

Lambert relied before the court of appeals. In his statement adopt-

ing a final rule concerning Category III, 42 Fed. Reg. 19137, 19139

(1977), the Commissioner of Food and Drugs endorsed this ap-

proach: ‘‘Classification of an ingredient or claim in Category III

concluded that the findings of the panel were “not

necessarily inconsistent with the FTC’s conclusion

that Listerine’s advertising claims are gee

(Pet. App. 60a)"* Accordingly, the court of appeals

held that the “FTC did not err in refusing to reopen

its proceedings to consider the draft FDA study, and

the FDA findings do not establish that the FTC’s

conclusions are wrong.” (tbid.)

Having concluded that the FTC’s decision on vio-

lation was supported by substantial evidence, the

court of appeals addressed the issue of remedy. The

court rejected Warner-Lambert’s arguments that the

“corrective advertising’? remedy contravened the

First Amendment and exceeded the Commission 6 sta

tutory authority. Instead, the court concluded that,

because the FTC could require an affirmative dis-

closure necessary to prevent future advertisements

from being deceptive (Pet. App. 66a-70a), it followed

that all advertisements, even if completely truthful,

could be prohibited unless they contained “informa-

imi inati 1 recognition of

represents a preliminary determination that genera gnitic

mn we and effectiveness can be shown with further testing.’’ The

safety of Listerine has been stipulated, (J.A. 2819)

'SIn contrast, the staff of the Federal Trade Commission has

taken the position that the panel report is in conflict with the Com-

mission’s conelusions, After briefing before the court of appeals

was closed, the Commission’s staff filed a lengthy enment with

the Commissioner of Food and Drugs requesting ‘‘that the Com-

missioner of Food and Drugs not accept . . . the recommendations

of the Panel’’ which pertained directly to Listerine, arguing that

the panel’s recommendations were inconsistent with the conclusions

of the Federal Trade Commission. Comment of the Bureau of

Consumer Protection of the Federal Trade Commission Concerning

the Report of the Advisory Review Panel on Over-the-Counter

(OTC) Cold, Cough, Allergy, Bronchiodilator [sic] and Anthi-

asthmatic |sic] Products (41 FR 38312), Docket No. 76N-0052.

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tion to correct a widely held, mistaken belief which

was cultivated by ... past advertising.” (Pet. App.

67a-68a, n.52) At no point in its first opinion did

the court of appeals suggest that future Listerine

advertisements would themselves be deceptive without

the required corrective statement.

(d) The Supplemental Court of Appeals Opinion

In its Petition for Rehearing and Suggestion for

Rehearing En Bane, Warner-Lambert asserted that

the court of appeals opinion had failed to address

serious First Amendment questions and argued (1)

that the First Amendment precluded the FTC from

imposing a ‘“‘corrective’’ order mandating speech in

an area of scientific controversy and (2) that the First

Amendment precluded the FTC from burdening fu-

ture truthful advertising with an unrelated “correc-

tive” message. In addition, Warner-Lambert argued

that the court had failed to give appropriate weight

to the report of the FDA expert panel on cough and

cold products. The Suggestion for Rehearing En Bane

was denied, with Judges Tamm, MacKinnon and Robb

dissenting. (Pet. App. 96a) “Because of the impor-

tance of the issues raised,” the original majority

issued a Supplemental Opinion on Petition for Re-

hearing, which “set forth in some detail [its] reasons”

for rejecting Warner-Lambert’s First Amendment

arguments. (Pet. App. 87a)

In its Supplemental Opinion, the court of appeals

did not address the First Amendment question raised

by Warner-Lambert’s first argument and thus did

not deal with the constitutional issues arising out of

an order mandating speech in an area of genuine con-

troversy. The court did, however, acknowledge that

A more serious First Amendment problem

which may be raised by corrective advertising

orders involves the burden thereby imposed upon

the constitutional right recognized in Virgina

State Board to advertise truthfully: the party

subject to a corrective advertisin order may be

precluded from exercising his right to advertise

unless he also includes specified statements under-

mining his prior deceptive claims. (Pet. App.

9Yla)

The court then declared that “[o]n the facts of this

case, no burden is imposed upon truthful, protected

advertising since, as the Commission makes clear,

Listerine’s current advertising, if not accompanied by

a corrective message, would itself continue to mislead

the public.’’ (Pet. App. 91a)

In fact, the Commission had not made any such

finding about deceptiveness of future advertising

(supra, p. 6) and had specifically declined to con-

sider this point (Pet. App. 32a, n.28). The court of

appeals’ first opinion had affirmed the Commission s

corrective advertising order without addressing the

truthfulness of future Listerine advertising (supra,

p. 13). However, on rehearing, the court obviously be-

lieved that a ‘‘finding’’ that the corrective message

was needed to cure deception in future advertisements

was essential to the court’s conclusion that the Com-

mission’s order imposed no burden ‘‘upon truthful,

protected advertising.’’ (Pet. App. 91a)

REASONS FOR GRANTING THE WRIT

This case presents novel and important questions

as to the proper scope of regulation of advertising

and the validity of the extraordinary remedy of “cor-

rective advertising” propounded by the Federal Trade

Commission. Under the order below, respondent will

be compelled to state that Listerine has no efficacy

in alleviating the symptoms of colds or sore throats.

This unequivocal language is to be required, notwith-

standing the fact that there is a genuine scientific con-

troversy about Listerine’s efficacy in those respects and

that the petitioner’s position is reasonably held. Fur-

thermore, the ‘‘corrective’’ language is required not in

connection with claims of cold symptoms relief (which

are prohibited), but in advertisements that make con-

cededly truthful breath freshening claims, and do not

deal at all with the subject of cold symptoms or sore

throats.

Review by this Court is called for to correct error

below in the application of the First Amendment to

commercial speech and in interpretation of this

Court’s seminal opinion in Virginia State Board of

Pharmacy v. Virginia Citizens Consumer Council,

Inc., 425 U.S. 748 (1976). The case also presents ques-

tions as to the proper deference to be accorded the

determinations of the expert panel of the Food and

Drug Administration in a concurrent proceeding; and

as to the proper construction of the FTC’s remedial

powers under the Federal Trade Commission Act.

First, this is a case of first impression. It is the

only litigated case in which the Federal Trade Com-

mission has imposed corrective advertising.’* The va-

lidity and propriety of this new remedy have been the

_———- -—— -

“* There were earlier consent orders entered by the FTC incor-

porating a corrective advertisement requirement. However, the

consent orders do not constitute precedent or authority. See United

States v. E. I. duPont de Nemours & Co., 366 U.S. 316, 330, n.12

(1961).

subject of substantial controversy and are at issue in a

number of pending ecases."* This is a matter of great

concern to all advertisers regulated by the Commis-

sion. It should be resolved by this Court.

Second, the corrective advertising order raises seri-

ous questions about the First Amendment’s applica-

tion to commercial speech. In its Supplemental Opin-

ion, the panel majority below acknowledged ‘‘the im-

portance of the issues raised.” (Pet. App. 87a) The

need for resolution by this Court is emphasized by

the court of appeals’ erroneous and confusing shifts

of position in interpreting and in attempting to meet

the Constitutional requirements of the Virginia State

Board decision.

In its first opinion, the majority below sought to

dismiss the First Amendment challenge to corrective

advertising by stating that ‘‘the Supreme Court [in

‘S For pending adjudicative cases in which corrective advertising

is at issue see Bristol-Myers Co., FTC Docket No. 8917, American

Home Products Corp., FTC Docket No, 8918; Sterling Drug Inc.,

FTC Docket No. 8919.

In the same year the FTC issued the complaint in issue here,

the Commissioners were sharply divided on the question of such

relief. Firestone Tire & Rubber Co., 81 F.T.C. 398 (1972). The

initial reference to the existence of such a power by the Commission

in Campbell Soup Co., 77 F.T.C. 664 (1970), provoked widespread

controversy. See, e.g., Lemke, Souped Up Affirmative Disclosure

Orders of the Federal Trade Commission, 4 U. Mich. J.L. Ref.

180 (1970) ; Note, ‘‘Corrective Advertising’’ Orders of the Federal

Trade Commission, 85 Harv. L. Rev. 477 (1971) ; Note, The Limits

of FTC Power to Issue Consumer Protection in Orders, 40 Geo.

Wash. L. Rev. 496 (1972); Cornfeld, supra, note 3 at 5; Adver-

tising and the First Amendment, Address by Philip Elman before

the Food and Drug Law Institute Conference on Food Advertising

and Labeling (Oct. 27, 1977).

Virginia State Board] clearly foresaw the very ques-

tion before us and its statement is dispositive.’’ (Pet.

App. 66a) But the cited statement of this Court was

that, to the extent regulation of advertising was con-

stitutionally permissible, it may be appropriate

to require that a commercial message appear in

such a form, or include such additional informa-

tion, warnings, and disclaimers, as are necessary

to prevent its being deceptive. [425 U.S. at 772,

n.24; emphasis added]

The Court’s carefully-framed qualifications thus left

room only for requiring statements necessary to pre-

vent a particular advertisement’s [‘‘its’’] being de-

ceptive. The corrective advertising order in this case,

however, seeks to impose this requirement upon fu-

ture advertisements which are not alleged to be de-

ceptive—where, accordingly, there is nothing to cor-

rect.

In its Supplemental Opinion, the majority below

evidently realized that it had misinterpreted Virginia

State Board. Its solution was to represent the FTC’s

opinion as if it had indeed made the finding called for

by Virginia State Board, i.e., that the corrective mes-

sage was necessary in order to prevent future breath-

freshening advertisements of Listerine from being de-

ceptive. According to the court of appeals, the FTC

had ruled that ‘‘Listerine’s current advertising, if not

accompanied by a corrective message, would itself con-

tinue to mislead the public.’’ (Pet. App. 91a; see also

Pet. App. 89a-90a) The flaw, however, is that the FTC

made no such finding. The Commission deliberately

rested its order only upon its alleged power to correct

“‘lingering’’ beliefs from past advertising, and not

upon its long recognized authority to prohibit future

deceptive advertising. (Pet. App. 3la-32a) Indeed, the

Commission explicitly declined to consider whether

future Listerine advertising would be deceptive. (Pet.

App. 32a, n.28) The court of appeals thus clearly mis-

stated the Commission’s findings in its effort to har-

monize them with this Court’s authoritative exposition

in Virginia State Board.”

Third, the corrective advertising order in this case

is in conflict with established principles under the

First Amendment. It is fundamental to the First

Amendment that differing views are entitled to ex-

pression in the “marketplace of ideas” and that the

right to speak includes the right not to be compelled

to say that which one does not believe,’ concepts

which now must be applied to speech in the economic

marketplace.

This ease involves a genuine scientific and medical

controversy concerning the value of Listerine and its

ingredients for the symptoms of colds and sore throats.

The substantiality of the question and the fact that

there are two reasonably-held sides is abundantly

shown by the record evidence in this case.” It is con-

firmed, moreover, by the action of the FDA’s expert

16 The court of appeals thus sought to uphold the FTC’s order

on a ground not stated by the Commission, in violation of the doc-

trine of SEC v. Chenery Corp., 332 U.S. 194, 195 (1947).

'S : - Miami Her-

‘7 Wooley v. Maynard, 430 U.S. 705, 714-17 (1977) ; Miami

ald Publishing Co. v. Tornillo, 418 U.S. 241, 256-257 (1974) ; West

Va. State Bd. of Edue. v. Barnette, 319 U.S. 624, 633 (1943).

‘8 See Statement, supra, p. 11, n.11; Petitioner's Brief in the

Court of Appeals, pp. 4-25; Petitioner’s Reply Brief in the Court

of Appeals, pp. 3-9. Note that the court below acknowledged the

basis for a finding of petitioner’s good faith in asserting its claims.

(Pet. App. 76a)

panel reviewing OTC cough and cold products, which

classified the Listerine ingredients among those for

which a preliminary determination had been made

that efficacy can be shown by further testing. (Supra,

p- 9) Yet, the order below not only would prohibit pe-

titioner from presenting in advertising the position

which it holds in good faith about its product; it would

command the company to state the opposite of its

view as a definitive unequivocal fact.

We submit that First Amendment principles stand

in the way of this assertion of authority. While this

is a case of first impression, our position is supported

by lower court decisions which have followed Virginia

State Board, and rejected undue limitation of com-

mercial speech. Thus, the Third Circuit reversed an

FTC order on the ground that “‘any prior restraint is

suspect, and that a remedy, even for deceptive adver-

tising, can go no further than is necessary for the

elimination of the deception.”’ Beneficial Corp. Vv.

F.T.O. , 542 F.2d 611, 620 (3d Cir. 1976), cert. denied,

430 U.S. 983 (1977). Another panel of the court helow

recently limited an antitrust decree and held that it

was improper under the First Amendment to require a

defendant to state as its opinion a position that it

does not accept or believe in. United States v. National

Society of Professional Engineers, 555 F.2d 978 (D.C.

Cir. 1977), cert. granted, 46 U.S.L.W. 3214 (U.S. Oct.

3, 1977) (No. 76-1767). See also Banzhaf v. F.C.C., 405

F.2d 1082 (D.C. Cir. 1968), cert. denied, 396 U.S. 842

(1969).

Petitioner’s rights under the First Amendment are

unlawfully impaired when, as in this case, the Com-

mission directs a ‘‘corrective” statement on the basis

of its asserted power to ‘“‘choose between experts,” on

a subject of genuine scientific controversy. (Pet. Lape

15a-16a, supra, n.11)" The Commission may have au-

thority to develop a new standard as to the onneradl

tiation required to support an advertiser s Pee

claims and to bar claims not meeting that test. Bu

here the Commission went far beyond such seer

tory action. Instead, it purported to adopt the side

of the controversy contrary to petitioner's as an wn-

equivocal fact, and to require petitioner to proclaim

the Commission’s view affirmatively and unqualifiedly.

This approach simply sweeps away the right of ay

tioner to maintain its reasonably-held position, and 1

cannot survive First Amendment scrutiny.

Indeed, the Commission itself in other cases has

recognized that its function is not to foreclose gen-

uine controversy. Thus, in National Commission on

Egg Nutrition, 88 F.T.C. 89 (1976), aff’d as modified,

Nos, 76-1969 and 76-1975 (7th Cir. Nov. 29, 1977), the

Commission emphasized :

is certainly not the Commission’s intention to

Baal in this proceeding whose interpretation

of a difficult and incomplete body of scientific

literature is superior. . . . It is manifest that

‘‘seientifie evidence’ as the term is commonly un-

derstood, may exist in support of a proposition

whose truth is contested or for that matter, in

support of a theory which is ultimately deter-

mined by general agreement not to be true at all.

(Id. at 182] ”

1 The court of appeals review did not enter into the conflicting

evidence, finding only that there was ‘‘substantial evidence’’ in

support of the Commission. (Pet. App. 54a-60a)

inj i i Seventh Circuit

*In a temporary injunction proceeding, the ‘ire

Court of Appeals reached a similar conclusion as to the permissible

In Egg Nutrition, the Commission limited its relief

for a violation to the requirement that the respon-

dent, NCEN, when making the disputed claim in its

advertising, shall disclose the existence of a contro-

versy on the subject and the disagreement of other

experts. (Id. at 204) The Seventh Circuit affirmed

the requirement that NCEN be required to disclose the

existence of a controversy. However, it modified the

part of the order which required inclusion of a Com-

mission-mandated statement as to the opinions of

other experts on the ground that “requir[ing] NCEN

to argue the other side of the controversy” in all ad-

vertising violated its First Amendment rights. (Slip

op., p. 13) *

scope of an injunction. F.T.C. v, Nat’l Comm. on Egg Nutrition,

517 F.2d 485, 489 (7th Cir. 1975), cert. denied, 426 U.S. 919

(1976). Similarly, in Pfizer, Inc., 81 F.T.C. 23 (1972), the Commis-

sion, explaining the ‘‘ reasonable basis’’ required to support adver-

tising claims, stated that its role in assessing scientific tests ‘‘should

simply be one of attempting to determine the existence and general

quality of the tests and a threshold determination as to the reason-

ableness of reliance thereon, rather than an attempt to conclusively

determine the adequacy of the tests.’’ Jd, n.22 at 67. See also

Lambert Pharmacal Co., 38 F.T.C. 726 (1944) ; Scientific Mfg. Co.

v. F.T.C., 124 F.2d 640, 644 (34 Cir. 1941). The Commission made

no ‘‘threshold determination’’ here that petitioner’s evidence was

inadequate, and it could not do so; instead, the Commission sought

to resolve the controversy on its view of the preponderant opinion

and to command a statement corresponding to such opinion, which

was improper.

** The Seventh Cireuit limited the requirement of the Commis-

sion-mandated statement to advertising in which NCEN itself

“‘ehooses to make a representation to the state of available evidence

or information concerning the controversy.’’ (Slip op., p. 13) In

Egg Nutrition, the court, like the Third Circuit in Beneficial Corp.,

applied the principle that the First Amendment does not permit a

remedy broader than that which is necessary to prevent deception.

The court distinguished the decision of the District of Columbia

Fourth, the majority below erroneously dismissed

the significance of a study of cough and cold remedies

conducted by an advisory panel of experts selected

by the Food and Drug Administration and held that

the Commission was correct in refusing to reopen

the record to consider that study. Contrary to the view

of the court below, the FDA panel’s classification of

Listerine in Category III was highly relevant, since

that classification constitutes a “preliminary determi-

nation that general recognition of safety and effective-

ness can be shown with further testing.” 42 Fed. Reg.

at 19139; see supra, p. 9.% The FDA panel had consid-

ered clinical evidence also in the FTC record, as well

as material submitted by other companies and not

available to petitioner at trial. See 41 Fed. Reg. 38347-

55, 383408-14 (1976). Not only does the FDA panel

report bear upon the issues in this case, but it estab-

lishes that this is an area of genuine scientifie contro-

versy—which is compelling on the petitioner’s First

Amendment rights.”

Cireuit in this ease on the ground that the NCEN order was pre-

venting future deception, not correcting the effects of past adver-

tising, as in the present case. The Seventh Circuit did not discuss

the validity of the relief affirmed by the District of Columbia Cir-

cuit in this case.

2 The court below characterized petitioner's similar definition of

Category III, which petitioner based on the language used by the

expert panel, as an ‘‘unwarranted’’ ‘‘extrapolation’’ from an

‘‘aberration.’’ (Pet. App. 59a, n.23)

28 Failure to accord deference to the FDA panel report is also

inconsistent with the FTC’s action in another proceeding, in which

that agency itself has proposed to defer to the expertise of the FDA

monographs resulting from the OTC panel review, to require ad-

vertising to conform to FDA-approved labelling, and to permit

continued advertising for products in Category III. 40 Fed. Reg.

52631 (1975). But for the order below, petitioner would be able to

Fifth, as recognized by Judge Robb in his dissent,

this ease also presents an important question as to the

FTC's authority to order corrective advertising under

its power to issue orders ‘requiring [persons] to cease

and desist’’ from violations of the Act, 15 U.S.C.

§ 45(b). The court below dismissed in a single sen-

tence the specific and persuasive legislative history

upon which petitioner and Judge Robb relied. (Pet.

App. 61a)

In debating the Wheeler-Lea Amendments of 1938,

Congress specifically considered the scope of remedies

to be provided the FTC and the argument that the

“cease-and-desist” powers provided were inadequate

because ‘‘the false information or claims contained in

the [prohibited] advertisement would still repose in

the minds of the millions of persons who had read or

listened to or been told about the advertisements.”’ *

avail itself of this rule with regard to Listerine.

It should further be noted that the FTC’s assertion of power in

this ease to choose between experts is contrary to the principles

applicable to the FDA’s drug regulation, pursuant to which a drug

may be validly manufactured and sold if there is sufficient support-

ing evidence, notwithstanding a conflicting body of scientific judg-

ment. Under the 1962 amendments to the Food, Drug and Cosmetic

Act, approval of a ‘‘new drug’’ requires ‘‘substantial evidence’’

of its efficacy and safety. 21 U.S.C. § 335(d), As the Senate Report

stated, ““there will frequently, if not usually, be a difference of

responsible opinion’’ about the effectiveness of new drugs, and a

new drug would properly be authorized, notwithstanding the exis-

tence of such conflict of scientific judgment, if it is ‘‘supported by

substantial evidence.’’ S. Rep. No. 1744, 87th Cong. 2d Sess., part 2

p. 6 (1962). Not even ‘‘preponderant evidence to the contrary”’ is

sufficient to warrant exclusion of claims based on substantial evi-

dence, Jd. at 16,

- H.R. Rep. No. 1613, 75th Cong., Ist Sess., p. 26 (1937); see

Petitioner s Brief to the Court of Appeals, pp. 29-53; Petitioner’s

Reply Brief, pp. 9-11. The majority below stated that the concern

In these circumstances, adoption of the 1938 amend-

ments with only cease and desist authority reflected

the clear intent of Congress that the FTC was to be

limited to orders terminating allegedly false or de-

ceptive representations. In amendments enacted in

1975, Congress adopted legislation which permits fed-

eral district courts, in cases where bad faith is proved,

to order ‘‘publie notification respecting . . . unfair or

deceptive acts or practices,” upon petition by the

FTC.” In the words of Judge Robb below, this action

“indicates to me that at least in the judgment of the

Congress the Commission does not have, and is not

intended to have, the power to order ‘public notifica-

tion’ by way of corrective advertising.” (Pet. App.

80a-81la)

Since the power asserted by the Commission under

the statute prior to the 1975 amendments impinges

upon First Amendment rights, it should not arise by

doubtful implication in the face of contrary legisla-

tive history. See United States v. Thirty-Seven Pho-

tographs, 402 U.S. 363 (1971); United States v. Jin

Fuey Moy, 241 U.S. 394 (1916).

of Congress about civil and criminal penalties and treble damages

cannot be equated with corrective advertising. (Pet. App. 62a) But

the corrective advertising ordered here is far more severe and puni-

tive than the relatively mild measures rejected by Congress.

*® Magnuson-Moss-Warranty-Fderal Trade Commission Improve-

ment Act, § 206, 88 Stat. 2183, 2201-02 (1975), 15 U.S.C. § 57(b).

Here, there was no finding of bad faith, and the court below ack-

nowledged that the record could support a finding of good faith.

(Pet, App. 76a)

CONCLUSION

Accordingly, this petition for writ of certiorari

should be granted.

Respectfully submitted,

LIONEL KESTENBAUM

JAMES H. KELLEY

DonaLp L. Harpison

Larry D. SHARP

Attorneys for Petitioner

Of Counsel:

BERGSON, BORKLAND,

Marcouis & ADLER

11 Dupont Circle, N.W.

Washington, D.C. 20036

(202) 462-5930

December 13, 1977

APPENDIX

In the Matter of

WARNER-LAMBERT COMPANY

Docket 8891

Opinion of the Commission

Dec. 9, 1975

By Enoman, Commissioner:

I. Background

Respondent, the Warner-Lambert Company, manufac-

tures Listerine Antiseptic, a mouthwash preparation. It is

the purpose of this proceeding to determine whether re-

spondent, through various labels and advertisements, has

misrepresented Listerine’s utility. Specifically, the com-

plaint, dated June 27, 1952, charged Warner-Lambert with

misrepresenting, through various labels, print advertise-

ments and television commercials, that the use of Listerine

Antiseptic will cure colds and sore throats, will prevent

colds and sore throats and will cause colds and sore throats

to be less severe than they otherwise would be. It also

alleged that through the use of the statement ‘‘ Kills Germs

By Millions On Contact’’ respondent falsely represented

that Listerine’s ability to kill germs is of medical signifi-

cance in the prevention, cure or treatment of colds and sore

throats.’

In its answer, res; »ndent denied representing either that

the use of Listerine will cure colds and sore throats or

that it will totally prevent colds and sore throats, but it

admitted representing that the use of Listerine, as directed

*The complaint further charged that respondent falsely repre-

sented that tests prove that children who gargle with Listerine

twice a day have fewer and milder colds and miss fewer days of

school because of colds than do children who do not use Listerine.

Since complaint counsel have not challenged the ALJ’s dismissal

of this count, that issue is not before us on this appeal.

and in conjunction with a regimen of proper rest and diet,

will result in fewer colds and will relieve or lessen the se-

verity of cold symptoms to a significant degree. It further

admitted that use of Listerine will not cure colds or sore

throats and will not totally prevent colds or sore throats.

After extensive hearings covering thousands of pages of

testimony, the administrative law judge (hereafter

‘‘ALJ’’) concluded that complaint counsel had sustained

their burden of proof on these allegations. He issued an

order which prohibits respondent from making the chal-

lenged claims in regard to Listerine, other mouthwashes

and other nonprescription drugs (Part I and II). His order

further requires respondent to include in all Listerine print

and television advertisements during the next two years

the following statement:

Contrary to prior advertising of Listerine, Listerine

will not prevent or cure colds or sore throats, and Lis-

terine will not be beneficial in the treatment of cold

symptoms or sore throats.

Respondent appealed from the initial decision and order

claiming, inter alia, that the ALJ did not fairly and ade-

quately consider the evidence on the record as a whole. It

charged that Judge Berman ‘‘engaged in a wholly one-

sided and unfair consideration of the factual and legal is-

sues in this case, and that, in so doing, he has deprived

respondent of a fair hearing.’’ (RB at 9.)* We have re-

viewed the record thoroughly and have found no indication

that the ALJ’s findings were the products of bias or that

he conducted this proceeding in an unprofessional manner.

While we do rot agree with every finding in the initial

? The following abbreviations are used in this opinion: IDF—

Initial decision of administrative law judge. (cited by paragraph

except as otherwise noted); Tr.—Transcript of testimony; CX—

Commission exhibit ; RX—Respondent’s exhibit ; RB—Respondent’s

appeal brief; RRB—Respondent’s reply brief; CCB—Complaint

counsel’s answering brief.

decision, there is not a scintilla of evidence that the ALJ

treated respondent unfairly.

II. Did Respondent Make the Challenged Representations

about Listerine?

We agree with the ALJ’s conclusion that respondent did

in fact make the challenged representations that Listerine

will ameliorate, prevent and cure colds and sort throats.

In so concluding, we have taken into account respondent’s

admissions and the views of experts called by both sides

to interpret the ads, but most importantly, we have studied

each of the challenged labels, print ads and television com-

mercials ourselves.

A. The Amelioration Claim

Respondent admitted making amelioration claims, i.e.,

that the use of Listerine as directed will cause

colds and sore throats to be less severe than they oth-

erwise would be and that such a representation encom-

passes the representation that such use of Listerine

will relieve or lessen the severity of cold symptoms to

a significant degree. IDF 39.

These amelioration claims were being made at least as

late as January of 1974, as is evidenced by respondent’s

most recent Listerine labels.*

B. The Prevention Claim

Respondent also admitted representing that the use of

Listerine as directed and in conjunction with a regimen of

proper rest and diet will cause fewer colds. The ALJ con-

cluded that this admisssion satisfies the complaint’s allega-

tion that respondent represented that Listerine will pre-

vent colds. We agreee.

*CX 139b and 139.

However, respondent has qualified its admission by con-

tending that all prevention claims ceased prior to the fall

of 1969. (RB 82.) Respondent’s assertion is incorrect. Our

review of Listerine television commercials aired in 1970,

1971 and 1972 convinces us that prevention claims were

being made during that period.‘ In particular, numerous

television commercials of the 1970-72 era urged the viewer

to use Listerine twice a day all winter long. The message

is inescapable: Use Listerine twice a day, every day, in

conjunction with proper rest and diet, and you will im-

prove your chance of warding off colds. (CX 142-A-D, CX

143C-F, CX 144A-E.) The prevention claim was also con-

veyed in the post-1969 period by the claim that Listerine

users have a ‘‘fighting chance’’ against catching a cold.

This ‘‘fighting chance’? theme appeared in print ads as

well as television commercials (CX 17, CX 32, CX 142A,

CX 1430, CX 143E, CX 144A.) Even respondent’s own

expert psychologist, Donald E. Payne, agreed that CX

144A, a commercial aired in the 1971-72 season, had a pre-

vention message. (Tr. 3661-3662.)

The ALJ also concluded that although it need not be

shown that respondent made claims of total prevention,

respondent’s advertisements may well be understood to

represent total prevention. Since the relevant allegations

* We also note that the ALJ found that respondent made preven-

tion claims subsequent to 1969. In support of this conclusion the

ALJ noted that consumer surveys which respondent commissioned,

called ‘‘Burke Tests,’’ demonstrate that substantial percentages of

persons who had an opportunity to view the commercials perceived

the message that Listerine prevented colds and sore throats. (IDF

45.) Respondent contends that the Burke Test is not ‘‘a reliable

test for construing advertisements.’’ (RB 83.) In view of respond-

ent’s admission that it made prevention claims prior to the fall of

1969 and our finding, based upon our review of the advertisements,

that it made prevention claims subsequent to that date, we need no

additional evidence in support of the prevention allegation, and

therefore, we do not reach the question of whether the Burke Test

adds additional support.

in the complaint are satisfied by a finding that respondent

made qualified prevention claims, i.e., that use of Listerine

in conjunction with proper rest and diet will result in fewer

colds, we need not reach the question of whether respond-

ent made claims of total prevention.

C. The Cure Claims

We agree with the ALJ’s conclusion that respondent

represented that the use of Listerine will cure colds

through the following statements:

(1) that Listerine ‘‘is for colds and resultant sore

throats’’ (IDF 27, 25, 10.)

(2) that ‘‘those colds we do catch don’t seem to last as

long’’ (IDF 27.)

In reaching the conclusion that ‘‘for * * * colds and re-

sultant sore throats’’ is a cure claim, we rely primarily on

the Listerine labels and wrappers used from prior to 1938

to December 1972 which proclaimed:

LisTERINE

ANTISEPTIC

Kitts Germs

By Mituions

On Contact

For General Oral Hygiene

Bad Breath, Colds and

resultant Sore Throats

Minor Cuts, Scratches

Insect Bites, Infectious Dandruff *

* Respondent incorrectly contends that the FTC lacks jurisdiction

over the labeling of foods, drugs and cosmetics. Stanley Labora-

tories v. FTC, 138 F.2d 388 (9th Cir. 1943) ; Justin Haynes & Co.

v. FTC, 105 F.2d 988 (2d Cir. 1939), cert. denied, 308 U.S, 616

(1939); Fresh Grown Preserve Corp. v. FTC, 125 F.2d 917 (2d

Cir. 1942) ; Houbigant v. FTC, 139 F.2d 1019 (2d Cir. 1944), cert.

denied, 323 U.S. 768 (1944).

On this label, the statement ‘‘Kills Germs By Millions

On Contact’? immediately precedes the assertion ‘‘For

General Oral Hygiene Bad Breath, Colds and resultant

Sore Throats.’’* By placing these two statements in close

proximity, respondent has conveyed the message that since

Listerine can kill millions of germs, it can cure, prevent

and ameliorate colds and sore throats.’ It has also made

this representation in numerous print advertisements

which emphasized colds and prominently displayed the

Listerine label.* However, we do not agree with the ALJ’s

additional finding that advertisements which simply state

that ‘‘you can help with Listerine’’ or that ‘‘Listerine pro-

*CX 49 and 50 demonstrate minor variations on this theme. In

December 1972 respondent altered the label to read :

LISTERINE

ANTISEPTIC

Kills Germs By Millions

On Contact

For General Oral Hygiene, Bad Breath

Minor Cuts, Scratches,

Insect Bites, Infectious Dandruff

For Relief of Colds Symptoms

and Minor Sore Throats due to Colds

* Respondent claims that the ALJ reached the conclusion that

‘‘for * © * colds and resultant sore throats’’ is a cure claim by

relying on a per se rule of construction that ‘‘for’’ means ‘‘cure.’’

Respondent has misread the Al.J’s opinion. Rather than posit a

per se rule, the ALJ emphasized that he rested his opinion on his

examination of the evidence in the record. We too rest our con-

clusion on an evaluation of the evidence.

*CX 19, CX 20, CX 23, CX 27. These ads appeared in national

publications from 1968 to 1969. We note, in addition, that several

advertisements which focus on Listerine’s purported breath fresh-

ening ability depict a bottle of Listerine and the label thereon.

CX 1, CX 7, CX 11, CX 13, CX 15, CX 28, CX 30. To the extent

the label is readable in these advertisements, they make the same

representation as does the label by itself.

vides a fighting chance’’ or a ‘‘means of fighting off colds’’

or ‘‘fighting back’’ but which do not display the label

prominently are reasonably subject to the construction that

a cure is represented.

Respondent’s television commercial entitled ‘‘School

Bus’’ (CX 34F, 140F) also made the claim that Listerine

cures colds. In that commercial a mother extolls the virtues

of gargling with Listerine twice a day or at the first sign

of a cold stating, inter alia, ‘‘I think we’ve cut down on

colds, and those we do catch, don’t seem to last as long.”’

We find that the statement, ‘‘those we do catch, don’t seem

to last as long,’’ conveys the message that Listerine cures

colds,

III. Are Respondent’s Representations about Listerine

True?

Respondent admits that ‘‘the use of Listerine Antiseptic

will not cure colds or sore throats and will not totally pre-

vent colds or sore throats,’’ but it asserts that use of the

product ‘‘* * * as directed and accompanied by a regimen

of proper diet and proper rest has been demonstrated to

result in’ fewer colds, milder colds and milder symptoms

thereof, and less severe colds and sore throats.’’ [ Answer,

Paragraph 6.]

Complaint counsel called numerous medical and scien-

tific experts to the stand. Each of these witnesses had im-

pressive credentials and was well-qualified to testify in this

proceeding. It is the consensus of these experts that viruses

cause the common cold and that bacteria play very little

part. Virus particles enter the body through the nose (or

sometimes the eyes), attach to cells in the nasopharynx,

(‘‘the back of the nose where the nose turns downward

into the pharynx’’—Tr. 616) * and begin to multiply. The

* RX 14 illustrates the location of the nasopharynx.

viral activity destroys cells, causing the various symptoms

of the cold to occur. These symptoms can include stuffy

nose, runny nose, postnasal drip, burning sensation in the

nose, sore throat, sneezing, coughing, burning eyes, fever,

general malaise, muscle ache and mild headache. (ID pp.

16-18 [pp. 1417-1418 herein].)

It is also the consensus of the experts called by com-

plaint counsel that Listerine has no efficacy in the preven-

tion of colds and sore throats or in the amelioration of

colds symptoms, including sore throats.*® Several of these

medical experts stated that gargling with Listerine could

provide temporary relief from a sore throat. We agree

with the ALJ that this temporary relief is not the ‘‘signifi-

cant relief’? promised by respondent’s advertisements.

More importantly, the record demonstrates Listerine would

be no better than salt water or perhaps simply warm wa-

ter." Thus, as the ALJ found, any relief to a sore throat

by gargling with Listerine is not peculiarly attributable

to Listerine. (IDF 57.) It is clearly deceptive to attribute

significant medical benefit to a purported medication when,

in fact, the same benefit can be obtainec from ordinary

salt water or perhaps even warm water. Cf. Stauffer La-

boratories v. FTC, 343 F.2d 75 (9th Cir. 1965.)

58.

"Tr. 395, 446-47, 483, 566-69, 860, 862, 1011-12. It should be

noted that Dr. Modell, a pharmacologist called by complaint coun-

sel, testified that the lower the surface tension of a gargle the better

it can remove accumulated debris in the throat (a source of irrita-

tion) Tr. 1042-43. The record shows that Listerine does have a

lower surface tension than salt water. However, the record does not

show that this lower surface tension translates into meaningfully

greater relief than could be obtained by gargling with salt water.

A. The Experts’ Reasons for Concluding that Listerine

Has No Efficacy in the Prevention of Colds and Sore

Throats and in Amelioration of Cold Symptoms

In order to prevent a cold from developing or to lessen

the severity of a cold, an efficacious substance must reach

the affected cells of the body in therapeutic concentrations.

Experts for complaint counsel concluded that gargling with

Listerine would not meet these criteria for the following

three reasons, each of which is a sufficient ground for con-

cluding that Listerine lacks the claimed efficacy:

(1)

Listerine’s ingredients, considered together, are present

in the bottle in insufficient concentrations to have any

utility in the prevention or treatment of a cold or sore

throat when gargled (Tr. 712 and 1010-1111).”

(2)

Listerine does not reach the critical areas of the body.

As the ALJ aptly summarized:

The mechanism of gargling makes it virtually im-

possible for the gargle to reach the nasal passages or

the lower respiratory tract. When gargling, the palate

See also Tr. 1016, 1007 (methyl salicylate) Dr. Sorrell

Schwartz, a pharmacologist, claimed that the ingredient methyl

salicylate, if present in great enough amounts, would increase blood

flow to the throat and that this would have a counter-soothing effect

becanse a sore throat, in large part, is the result of too much blood

flow. (Tr. 683.) Since the concentration of methyl salicylate in

Listerine is insufficient to have any effect on sore throats, we need

not determine whether Dr. Schwartz was correct in asserting that

a@ greater amount would be counter-soothing); Tr. 1008 (boric

acid) ; Tr. 1009-1010, 687-688 (benzoic acid, used for the purpose

of obtaining a certain level of acidity); Tr. 1010 (alcohol) ; Tr.

686, 712, 1009, 1025-26 (menthol) ; Tr. 678-79, 1008 (thymol) ; Tr.

688-691, 1010 (eucalyptol) ; IDF 74, 76, 77, 78, 79 and 80.

10a

closes off the nasal passage and nasopharynx and the

glottis closes off the entrance to the lower respiratory

tract. The gargle is confined to the mouth chamber.

Hence, Listerine would not reach the site of infection

or manifestation of symptoms in any medically signi-

ficant concentration. Any vapors that might reach the

site where the action is would not be in therapeutic

concentration and, in any event, would soon be swept

away. Thus, the gargling with Listerine would be in-

effective in preventing or producing fewer cold infec-

tions or in relieving or reducing the severity of cold

symptoms (Gwaltney 393, 448; Hornick 483; Seal 554-

56, 571, 573; Proctor 616-19; Rammelkamp 787 (sic

782) ; Sanders 854; Parrott 904). IDF 69."

(3)

Listerine would not penetrate the infected cells.** Again,

as the ALJ correctly noted:

Even if gargling with Listerine caused its ingredi-

ents to reach the nose and nasopharynx, they would

not penetrate the cells where the action of the viruses

*? See also CX 161B. Dr. John C. Krantz, a witness for respond-

ent, wrote a textbook which lends support for this view. It states

that the mechanical action of gargling will not deliver the gargled

substance to the infected regions of the throat.

** Respondent claims that a test conducted by the FDA, RX 57,

demonstrates that after gargling, some of the ingredients in Lis-

terine are substantive with the membrane lining; that is, some

binding between the oral cavity membrane and ingredients of

Listerine occurred. In that test, each subject swished Listerine in

his mouth for ten seconds, expectorated and rinsed his mouth twice

with an alcohol solution. A substantially smaller percentage of

Listerine was recovered in the second rinse than in the first. This

finding led the ALJ to conclude that rather than demonstrate a

binding effect the test results more probably ‘‘indicate that after

fully expectorating the Listerine in the mouth, the first alcohol

gargle got most of what remained so that the second gargle gath-

lla

would be taking place. Hence, Listerine would still be

ineffective in this regard (Hornick 481-82; Parrott

904). If Listerine’s ingredients were in a concentra-

tion strong enough to be effective and reached the in-

fected cells in therapeutic strength and did and could

penetrate the cells, the cells would be killed. This would

be undesirable as it would destroy the protective cover-

ing of the lining of the nose and throat and so provide

portals of entry for various bacteria (Hornick 482-

83). IDF 70.

Even when asked to assume that Listerine can kill mil-

lions of germs on contact (i.e., that Listerine has bacteri-

cidal properties), complaint counsel’s experts did not alter

their conclusions as to Listerine’s lack of effectiveness.

The following findings by the ALJ adequately summarize

the views expressed by complaint counsel’s witnesses:

Bacteria play very little pert in the common cold.

Apart from viruses, cold type symptoms may be caused

by the bacteria called Beta Hemolytic Streptococci or

Group A Hemolytic Streptococci, more commonly re-

ferred to as a strep throat, and another organism

somewhere in between a virus and a bacteria called

microplasma [sic: mycoplasma] pneumonia. These

agents may cause at most 5 to 10 percent of the occur-

rences of cold-like symptoms.

ered a much smaller residual amount.’’ IDF 152. The FDA did not

offer the ALJ’s interpretation as an alternate conclusion, and we

see no reason to reject the FDA’s conclusion. However, this test

does not demonstrate that Listerine’s vapors would have the same

binding effect to the membrane in the nasophrynx as would Lis-

terine in liquid form to the buccal membrane. More important, it

does not demonstrate that Listerine would penetrate the tissue cells.

In fact, respondent’s own witness, Dr. Thomas McNamara, has

testified that although Listerine may bind to the mucous membrane,

it willnot enter the tissue cells (Tr. 2343).

12a

These ailments, however, must be treated with spe-

cific medicinal agents. In the case of strep throat,

failure to treat properly may result in rheumatic fe-

ver, valvular heart disease and kidney infections,

which are very serious to the point of being life-threat-

ening. Microplasma pneumonia is a lingering ailment

if antibiotics are not used. It would be inappropriate

to treat patients with strep throat or microplasma

pneumonia with Listerine or with anything other than

the specific medications that should be prescribed

(Gwaltney 380-81, 384-85, 438, 453-54; [Hornick] 486,

493-94; Proctor 610; Rammelkamp 767-71, 799-800;

Sanders 836-40, 870; Parrott 896-97, 900-01, 918-19;

[See also] Knight 1925-26, 2037-40, 2048). IDF 51.

Colds are not caused by bacteria. Bacteria in the

oral cavity play no role in cold symptoms. The ability

of Listerine to kill millions of germs on contact, there-

fore, is of no medical significance in the prevention,

cure or treatment of colds or sore throats (Gwaltney

397, 453; Hornick 486, 488-89; Seal 551-53; Proctor

609, 616-18 [19 and 20]; Rammelkamp [775] 776-77;

Sanders 836; Parrott 918-19; Kilbourne 1058; see also

Knight 2048). IDF 58.

Colds are sometimes followed by secondary infec-

tions caused by bacteria known as secondary invaders.

Instances are sinusitis and otitis media (middle ear

infection) where drainage from the sinuses or middle

ear is impaired by the cold, and bacteria which are al-

ready in those sites get the opportunity, because of

the lack of drainage, to cause trouble. Another second-

ary infection is peritonsillar cellulitis. The ingredients

of Listerine, however, would not reach the resting

places of the secondary invaders. Listerine could not

reach the sinuses, the middle ear or the deep crypts

of the tonsils or adenoids or other deep-seated places

where such bacteria might be. Listerine, therefore,

13a

would be ineffective to prevent, cure or alleviate such

secondary infections (Seal 552-54, 572; Proctor 614-15,

618; Rammelkamp 772-74, 811-12; Sanders 842, 844).

IDF 71.

While Listerine kills millions of bacteria in the

mouth, it also leaves millions. It is impossible to steri-

lize any area of the month, let alone the entire mouth.

There are significant numbers of bacteria in various

tissues, tissue folds and crypts which Listerine can’t

reach. For example, there is more flora in the crevices

of the teeth than on the roof of the mouth. The bac-

teria grow back quickly or the voids are quickly re-

placed by other bacteria. The use of Listerine has only

a transient effect on the flora (Hornick 488-89, 523-24;

Seal 554; Proctor 620; Sanders 847-881-83). IDF 72.

To the extent that Listerine may kill millions of bac-

teria in the mouth, it would do so only ahead of the

soft palate. This would have nothing to do with the

throat, nose or the posterior pharynx. Consequently,

the killing of germs in the mouth would have nothing

to do with preventing, curing or relieving colds or

‘coughs or cold symptoms (Hornick 483; Seal 554;

Rammelkamp 777). The bacteria in the normal flora of

the mouth play no role in the causation of colds or in

the symptoms of colds. Thus, killing some of those

bacteria would have no effect on the prevention, cure

or symptoms of colds or coughs ‘Sanders 846-47, 879-

80; And See Findings 48, 51, 52, 58 and 62, supra).

IDF 73.

B. Respondent’s Experts

Respondent sought to refute the prima facie case made

by complaint counsel’s experts with a battery of ten ex-

pert witnesses and numerous studies, clinical as well as

nonclinical. Although several of these witnesses offered no

l4a

support for one or more efficacy claims or substantially

qualified their views,” the general import of their testi-

mony, taken as a whole, was that Listerine can reduce the

number of colds one catches and ameliorate cold symptoms.

Nine of respondent’s experts based their opinions to a

substantial degree upon laboratory tests and/or clinical

studies.** We have painstakingly reviewed each of the ex-

hibits introduced for the purpose of establishing Lister-

ine’s effectiveness and conclude that they have little or no

probative value for this proceeding. We have set forth at

length in the Appendix our views as to each of these stud-

ies. Since these tests do not provide a sound basis for con-

cluding that Listerine may have the claimed preventive or

ameliorative powers, the persuasiveness of those witnesses

who relied upon them is greatly diminished.

‘*Dr. Noller offered no opinion as to Listerine’s efficacy. He

merely asserted that an ingredient of Listerine, menthol, acts as a

nasal decongestant. Dr. Shirkey asserted only that Listerine could

ameliorate some cold symptoms, Tr, 2607, 2616, 2628, 2667-69, 2674.

Dr. Carson limited his evaluation of Listerine’s efficacy to relief for

coughing and nasal congestion, Tr. 3032-34, See also Tr. 3057. Dr.

Knight on cross examination, ‘‘* * * retreated to the position that

there were threads of evidence upon which one could put together

a theoretical basis for the efficacy of Listerine, but that there were

also threads of evidence to the effect that Listerine was ineffective

(Tr. 2045-48).’’ IDF 143. Dr. Lasagna concluded that ‘‘if you

gargle with Listerine regularly there is a chance you will feel some-

what better when you have a cold,’’ Tr. 4154, Dr. Sadusk would

recommend Listerine for relief of cold symptoms, but was not in a

position to recommend it for prevention of colds and would not

recommend it as a cold cure, Tr. 3211-12.

**Haggie, IDF 128; Knight, IDF 143-44; Noller, IDF 145;

McNamara, IDF 146; See also Tr. 2306; (Dr. McNamara may have

relied additionally upon tests admitted into evidence solely for the

purpose of ‘‘showing what Dr. McNamara relied upon as a respon-

sible official of respondent for purposes of considering the scope of

an order to cease and desist should one be issued.’’ IDF 148) ;

Ritchie, IDF 155; Shirkey, IDF 164; Carson, IDF 167 and 182;

Sadusk, IDF 184; Lasagna, IDF 1990.

15a

The tenth witness, Dr. John C. Krantz, Jr., apparently

did not rely upon the exhibits in question. However, we

accord his testimony little weight, because he was unaware

of the quantities of Listerine which would reach the naso-

pharynx, (Tr. 1882) and his view that gargling with Lis-

terine would be beneficial for a sore throat is contradicted

by statements in his own textbook. (CX 161A and 161B,

Tr. 1889-95.) **

In weighing the evidence we have taken into considera-

tion the fact that the experts called by complaint counsel

based their opinions on their general medical and pharma-

cological knowledge and, in some instances, on their ex-

periences as clinicians. With the exception of Dr. Hornick,

none of complaint counsel’s witnesses examined the ex-

hibits which respondent presented in support of its asser-

tion that Listerine is efficacious. Failure to provide these

witnesses with respondent’s tests is inconsequential be-

cause, as we have set out in the Appendix, these tests lack

probative value. Moreover, the experts called by complaint

counsel are well versed in their fields, several having de-

votd their careers to the task of studying and treating

respiratory diseases. If valid tests demonstrating Lis-

terine’s efficacy as a cold treatment had been conducted,

we seriously doubt that such tests would have remained a

secret to all of complaint counsel’s medical and pharma-

cological experts.

This is not the first proceeding in which the Commission

has had to choose between experts who based their views

on their general medical and pharmacological knowledge

* The ALJ noted that many of respondent’s experts had finan-

cial ties to respondent. In view of the reasons we have expressed for

placing little reliance on the testimony of respondent’s witnesses,

we need not consider the possible effect of their financial ties.

Finally, in regard to Dr. Noller, although we agree with the ALJ

that his testimony was not a model of clarity, we will attribute the

ambiguities in his testimony solely to language difficulties.

l6a

and others who based their views at least in part on defi-

cient studies. It is well established that the Commission

has authority to rely on the testimony of the former. E.g.,

J. E. Todd v. FTC, 145 F.2d 858 (D.C. Cir. 1944); Fulton

v. FTC, 130 F.2d 85 (9th Cir. 1942), cert. denied, 317 U.S.

679 (1942); Aronberg v. FTC, 132 F.2d 165 (7th Cir. 1942) ;

Justin Haynes & Co. v. FTC, 105 F.2d 988 (2d Cir. 1939).

C. Consumer Satisfaction

Respondent claims that Listerine’s cold-fighting ability

is demonstrated by the fact that vast percentages of the

population consider Listerine Antiseptic to be effective for

colds and sore throats ‘‘because a consumer’s image of a

product and his propensity to purchase it repeatedly is

substantially dependent upon his experience with it.’’ (RB

74-75, RRB 20.) The record does show that a consumer’s

‘‘experience’’ with a product affects his image of the

product and his propensity to purchase it. (Tr. 1199-1200,

1673, 3389-90, 3402-03, 3436-38, 3455-56.) The record also

demonstrates that many consumers think Listerine is effec-

tive for colds and sore throats. (Infra, Sec. V A2.) But

this evidence does not, as respondent contends, prove that

Listerine works. The flaw in respondent’s reasoning is that

a consumer may perceive a product to be effective when,

in reality, it has no efficacy. In short, he may repeatedly

purchase the product out of ignorance. A cold is a self-

limiting disease, and therefore a cold sufferer who takes

Listerine may wrongly attribute the termination of the

cold episode to his gargling with Listerine. (Tr. 2039.)

Clearly, unless the patient can perform well-controlled

clinical tests, he is not in a position to know whether his

improvement was attributable to the medication.

In addition, the cold-sufferer who takes Listerine is

likely to experience the placebo effect, the phenomenon in

which the patient who takes a medication feels better be-

cause he thinks he should feel better even though the prod-

uct has no genuine therapeutic value. (Appendix at 6A.)

17a

The Commission cannot accept as proof of a product’s

efficacy a psychological reaction stemming from a belief

which, to a substantial degree, was caused by respondent’s

deceptions. (Infra, Sec. V A2.)

Since there may be a divergence between what the user

thinks the product will do for him and what the product

actually does (or does not do), evidence of consumer be-

liefs has little probative value for determining whether

Listerine is effective for colds or sore throats.

In support of its contention that consumer satisfaction

constitutes persuasive evidence of product efficacy, re-

spondent cites Evis Mfg. Co. v. FTC, 287 F.2d 831 (9th Cir.

1961), cert. denied, 368 U.S. 824 (1961). That case does

not stand for so broad a rule. In Evis the court merely held

that tests conducted by experts who failed to follow the

manufacturer’s instructions did not constitute substantial

evidence of the challenged product’s lack of efficacy, and

that the Commission erred in failing to consider testimony

of user witnesses (many of whom were experts). The court

did not hold that evidence of consumer satisfaction is per-

suasive of a product’s efficacy, but merely that the Com-

mission must consider such testimony. In the case at hand

we have taken into account the fact that survey evidence

shows that many consumers consider Listerine to be effec-

tive for colds and sore throats, and for the reasons dis-

cussed above, we conclude that this evidence does not dem-

onstrate that Listerine has any efficacy in the prevention

or treatment of colds or sore throats.

To summarize, after carefully reviewing the testimony

of the experts called by both sides and of the studies ad-

mitted into evidence in support of respondent’s efficacy

claims, we must conclude that the preponderance of the

evidence * demonstrates that, contrary to respondent’s

* This Commission has consistently used a preponderance of the

evidence test in evaluating the truthfulness of product claims.

18a

advertising claims, the use of Listerine, as directed, will

not prevent or cure colds or sore throats or ameliorate

cold symptoms. Accordingly, respondent has violated the

Federal Trade Commission Act.

Respondent asserts that in evaluating a drug’s effectiveness we

must follow, instead, the ‘‘substantial evidence’’ standard set forth

in the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 355(d),

which the Secretary of Health, Education and Welfare must apply

when he considers a new drug application. We cannot agree. Of

course, we would take into account an evaluation by the Secretary

that substantial evidence supported the claimed efficacy, but we find

no indication in either the Federal Food, Drug and Cosmetic Act

or our own Act that Congress intended that we automatically defer

to the Seeretary’s determinations.

However, the question of which standard to apply is not crucial

to the outcome of this proceeding because respondent has not met

even the more lenient standard prescribed by § 355(d). That section

requires that an application for a new drug be denied if ‘‘there is

a lack of substantial evidence that the drug will have the effect it

purports or is represented to have under the conditions of use

prescribed, recommended, or suggested in the proposed labeling

thereof.’’ Sec. 355(d) defines ‘‘substantial evidence’’ as: ‘evidence

consisting of adequate and well-controlled investigations, including

clinical investigations, by experts qualified by scientific training

and experience to evaluate the effectiveness of the drug involved,

on the basis of which it could fairly and responsibly be concluded

by such experts that the drug will have the effect it purports or is

represented to have under the conditions of use prescribed, recom-

mended, or suggested in the labeling or proposed labeling thereof.’’

The FDA’s relevant regulations specify that ‘‘essentials of ade-

quate and well-controlled clinical investigations’’ include the neces-

sity ‘‘to minimize bias on the part of the subject and the observer.’’

See. 314.111(a) (5) (ii) (a) (3). The Supreme Court has noted that

‘*{L]ower courts have upheld the validity of these regulations, and

it is not disputed that they express well-established principles of

scientific investigation.’’ Weinberger v. Hynson, Westcott & Dun-

ning, 412 U.S. 609, 619 (1973). As is discussed in the Appendix,

respondent did not take adequate precautions to minimize bias on

the part of either the subjects or the investigators in its clinical

tests of Listerine. Thus, respondent has not satisfied even the sub-

stantia] evidence standard.

19a

IV. The Prior Proceeding

In 1940 the Commission issued a complaint challenging

cold and sore throat claims for Listerine which it later

dismissed ‘‘* * * without prejudice to the right of the

Commission to institute further proceedings should future

facts so warrant.’’ 38 F.T.C. 730 (1944). Respondent ar-

gues that the complaint in the present proceeding must be

dismissed because complaint counsel have not come for-

ward with ‘‘future facts.’’ Respondent has misconstrued

the 1944 order. In previously expressing our position on

this question, Warner-Lambert Company, 82 F.T.C. 749,

752 (1973), we stated:

The future facts which would warrant a new pro-

ceeding upon which the Commission’s decision to issue

a complaint are based and, as we have previously held,

respondent is precluded from inquiring into our men-

tal processes leading up to that decision. In the Matter

of the Seeburg Corporation, 70 FTC 1818.

Respondent also contends that the Commission relied

upon the Reddish Study in dismissing the 1944 complaint,

and ‘therefore the ALJ’s findings relating to the defici-

encies in the Reddish Study ‘‘constitute an impermissable

[sic] relitigation of matters long ago settled.’’ (RB 67.)

Although in his separate statement Chairman Freer said

that the Reddish tests

* * * afford some basis for the respondent’s conclu-

sion that the use of Listerine in practice actually miti-

gates or shortens colds and their complications,

Respondent also contends that (RB at 39): ‘‘* ® ® in the case of

old (pre-1938), well-established drugs such as Listerine Antiseptic,

Congress further concluded that their history of consumer accept-

ance was in itself substantial evidence of efficacy and established

for those drugs a presumption of efficacy and an exemption from

the preclearance procedures established in the 1962 Drug Amend-

ments.’’ 21 U.S.C. § 321(p) ; see, Weinberger v. Hynson, Westcott

& Dunning, Inc., supra at 614.

20a

the Commission’s order belies respondent’s assertion that

the validity of the Reddish tests was settled in the prior

action. Had it been of the view that the Reddish tests

proved that Listerine was effective for the treatment of

colds, the Commission presumably would have dismissed

the complaint with prejudice. Instead, it dismissed the com-

plaint ‘‘without prejudice to the right of the Commission

to institute further proceedings should future facts so

warrant.’’ * The dismissal of a Federal Trade Commission

Neither § 321(p) nor the cited case suggest that a ‘‘history of con-

sumer acceptance was in itself substantial evidence of efficacy’’ or

that old drugs are presumed to be efficacious. On the contrary,

Congress viewed his grandfather clause merely as a ‘‘transitional’’

provision for implementing the 1962 Drug Industry Act (S. Rep.

No, 1744, 87th Cong., 2nd Sess., Part II at 7-8 1962). FDA was

given the statutory mandate ‘‘to review all marketed drugs for their

therapeutic efficacy, whether or not previously approved * * *”’

Weinberger v. Hynson, Westcott & Dunning, Inc., 412 U.S, 609,

614 and, as the Supreme Court has noted, ‘‘{i]n May 1972 FDA

adopted a procedure for determining whether particular OTC

products, not covered by NDA’s are safe products, not ineffective,

and not misbranded.’’ Weinberger v. Bentex Pharmaceuticals, Inc.,

412 U.S. 645, 650 (1973). Thus, no presumption of efficacy arises

from the fact that Listerine has been on the market since 1879.

* In explaining his reason for so doing Chairman Freer said:

In my opinion the issues raised by paragraphs 3, 4 and 5 of the

complaint involve in their determination the adoption of one of two

opposing medical or scientific opinions in respect to which our

decision would settle only the legal right of the respondent to

continue to make the challenged representations and not the under-

lying controversy. Should we so resolve those issues (both as to

interpretations of the advertisements and as to the medical or

scientific opinions) as to require an order to cease and desist, the

respondent can, and no doubt will, appeal. In that appeal, however,

the door will be closed to any weighing of the evidence by the court,

since ‘‘the findings of the Commission as to the facts, if supported

by evidence, shall be conclusive.’’ Should we, on the other hand,

so resolve the several issues of interpretation of language and of

medical or scientific opinion in such a manner as to dictate an

2la

action ‘‘without prejudice’’ does not work an estoppel to a

future determination of the merits of that action. Hastings

Mfg. Co. v. FTC, 153 F.2d 253 (6th Cir. 1946), cert. denied,

328 U.S. 853 (1946).

V. The Remedy

A. Corrective Advertising

The ALJ imposed on respondent the duty to engage in

corrective advertising. Specifically, for two years respond-

ent shall not disseminate any advertisement for Listerine

unless the advertisement clearly and conspicuously states:

Contrary to prior advertising of Listerine, Listerine will

not prevent or cure colds or sore throats, and Listerine

will not be beneficial in the treatment of cold symptoms or

sore throats.

1, Authority to Issue a Corrective Advertising Order

The Commission has previously noted its authority to

issue corrective advertising orders.” It also has ordered

outright dismissal of the complaint, the respondent might, and

probably would, raise the defense of res adjudicata to any proceed-

ing which the Government might decide to institute at some future

time when and if the medical profession learns more about and

reaches a greater degree of unanimity concerning the cause of and

cure for dandruff, bad breath and colds or sore throats.

Hence, while not unmindful of the forcefulness of the arguments

on the one hand for an order to cease and desist and on the other

for outright dismissal, I feel that a dismissal without prejudice is

warranted by the probability (almost certainty) that neither an

order to cease and desist nor an outright dismissal would settle

with finality or help greatly in the final settlement of the under-

lying medical and scientific controversies, although either disposi-

tion would be interpreted as having settled these matters once and

for all. 38 F.T.C. at 741-42.

*° Firestone Tire & Rubber Company, 81 F.T.C, 393, 464-74

(1972) aff'd. 481 F.2d 246 (6th Cir.), cert. denied, 414 U.S, 1112

22a

affirmative relief to dispel the lingering effects of mis-

representations * and has accepted numerous consent or-

ders which require corrective advertising.” In concluding

that the Commission’s statutory mandate encompasses the

authority to order corrective advertising, we have been

mindful of the wide latitude courts have afforded the Com-

mission in fashioning appropriate relief.” Illustrative of

(1973); ITT Continental Baking Company, Inc., Dkt. 8860 (Oct.

19, 1973 [83 F.T.C, 865]) at 31-32, appeal docketed No. 75-4141,

2d Cir., July 11, 1975; Campbell Soup Company, et al., 77 F.T.C.

664, 668 (1970).

2: Travel King, Inc., Dkt. No, 8949 (Sept. 30, 1975 [86 F.T.C.

715} ).

22 Matsushita Electric of Hawaii, Inc., 78 F.T.C. 353 (1971);

Sugar Information, Inc., 81 F.T.C. 711 (1972) ; ITT Continental

Baking Co., Inc., 79 F.T.C. 248 (1971) ; Ocean Spray Cranberries,

Inc., 80 F.T.C. 975 (1972); Shangri-La Industries 81 F.T.C. 596

(1972); Pay Less Drug Stores Northwest, Inc, 82 F.T.C, 1473

(1973); Boise Tire Co., C-2425 (July 16, 1973); Lens Craft Re-

search and Development Co. et al., D. 8950 (Sept. 4, 1974 (84 F.T.C.

355] ) ; Wasem’s Inc., C-2524 (July 23, 1974 [84 F.T.C. 209]).

23 We said in Firestone, 81 F.T.C. at 467-68:

The courts have repeatedly recognized that to deal with the ever

expanding scope of unfair and deceptive practices, the Commission

must be permitted wide latitude in fashioning effective relief, In

Jacob Siegel Co. v. FTC, 327 U.S. 608, 612-13 (1946) the Court

stated :

The Commission is the expert body to determine what remedy is

necessary to eliminate the unfair and deceptive trade practices

which have been disclosed. It 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.

Again in FTC v. Ruberoid Co., 343 U.S. 470, 473 (1952) the

Supreme Court reiterated this view:

Congress placed the primary responsibility for fashioning such

orders upon the Commission, and Congress expected the Commission

to exercise a special competence in formulating remedies to deal

23a

this wide latitude are orders requiring divestiture, L. G.

Balfour Co. v. FTC, 442 F.2d 1 (7th Cir. 1971); ordering

compulsory licensing of a patent on a reasonable royalty

basis, Charles Pfizer & Co., Inc. v. FTC, 401 F.2d 574 (6th

Cir. 1968), cert. denied, 394 U.S. 920 (1969) ; limiting the

purchases of certain products between respondents, Luria

Bros. & Co., Inc. v. FTC, 389 F.2d 847 (3d Cir. 1968), cert.

denied, 393 U.S. 829 (1968); and requiring affirmative dis-

closures in advertisements and on products, J. B. Williams

Company v. FTC, 381 F.2d 884 (6th Cir. 1967), Keele Hair

¢ Scalp Specialists, Inc. v. FTC, 275 F.2d 18 (5th Cir.,

with problems in the general sphere of competitive practices. (Foot-

note omitted. )

The court pointed out that if the Commission is to carry out the

objectives envisioned by Congress ‘‘it cannot be required to confine

its road block to the narrow lane the transgressor has traveled,’’

but must be able ‘‘to close all roads to the prohibited goal.’’ Ruber-

oid, supra at 473.

Such wide latitude in determining remedy has been deemed neces-

sary so that the Commission can effectively carry out the statutory

policy of the Federal Trade Commission Act to protect consumers

and maintain competitive vigor in the marketplace. As the Ninth

Cireuit stated in Carter Products, Inc. v. FTC, 268 F.2d 461, 498

(9th Cir. 1959) :

Shaping a remedy is essentially an administrative function. Con-

gress has entrusted the Commission with the responsibility of

selecting the means of achieving a statutory policy—the relation of

remedy to policy is peculiarly a matter for administrative com-

petence.

The Seventh Cireuit recently reflected this same view in L. G. Bal-

four Co. v. PTC, 442 F.2d 1,24 [sic] (7th Cir. 1971) :

The Commission must be accorded latitude in forming its orders

for ‘‘the Commission alone is empowered to develop that enforce-

ment policy best calculated to achieve the ends contemplated by

Congress and to allocate its available funds and personnel in such

a way as to execute its policy efficiently and economically.’’ Moog

Industries, Inc, v. FTC, 355 U.S. 411, 413, 78 S. Ct. 377, 379, 2

L, Ed. 2d 370 (1958).’’

24a

1960), Ward Laboratories, Inc. v. FTC, 276 F.2d 952 (2nd

Cir. 1960), cert. denied, 364 U.S. 827 (1960), Waltham

Precision Instrument Co. v. FTC, 327 F.2d 427 (7th Cir.

1964), cert. denied, 377 U.S. 992 (1964).

Simply stated, the common thread linking these cases is

the principle that the Commission has authority to order

the relief necessary to adequately protect the public from

the effects of a law violation. Thus, if a deceptive adver-

tisement has played a substantial role in creating or rein-

forcing in the public’s mind a false and material belief

which lives on after the false advertising ceases, there is

clear and continuing injury to competition and to the con-

suming public as consumers continue to make purchasing

decisions based on the false belief. Since this injury can-

not be averted by merely requiring respondent to cease

disseminating the advertisement, we may appropriately

order respondent to take affirmative action designed to

terminate the otherwise continuing ill effects of the ad-

vertisement.

Respondent claims that Heater v. FTC, 503 F.2d 321

(9th Cir. 1974), rejected the proposition set forth in Fire-

stone that the Commission has authority to terminate con-

tinuing injury to the public.* Respondent has misread

**In considering the Commission’s authority to issue an order

designed to terminate the continuing effects of a deceptive adver-

tisement, the Commission said in Firestone:

ANA and respondent contend that a corrective advertising order

is retrospective and therefore unlawful because it seeks to dissipate

the effects of illegal conduct. In our view, however, such an order

is quite obviously not retrospective if its purpose and effect is to

terminate continuing injury to the public. This continuing injury

may be in the form of lingering effects which a misrepresentation

may have on consumers’ minds or in the form of a lessening of

competitive vigor in the marketplace due to the deceptive practices.

Under such circumstances, the appropriate relief is that which will

terminate the continuing injury to the public. 81 F.T.C. at 470.

25a

Heater. In that case the court simply held that the Com-

mission lacked authority to order a respondent to refund

to customers monies obtained from them through decep-

tive practices. Neither the holding in Heater nor the

court’s rationale support respondent’s assertion that the

Commission lacks authority to order corrective advertis-

ing. In fact, the Heater court explicitly distinguished the

Commission’s order in that case from a corrective adver-

tising order:

Our holding denies retroactive impact to a Commis-

sion decision, at least insofar as private rights and

liabilities are involved * * *

We recognize that divestiture and corrective adver-

tising orders support the Commission’s position that

it has power, in order to remedy the continuing effects

of violations of the Act, to order acts imposing eco-

nomic costs properly attributed to conduct occurring

before the conduct is declared illegal. Moreover, we

recognize that there is no economic difference in the

impact of those orders and a restitution order—in

each case the offender loses the benefits of money ex-

pended in reliance on the legality of conduct later

found illegal. Nevertheless, the two cases must be

treated differently because Congress, out of reason-

able fair notice consideration, chose to leave the cure

of private injuries caused by violations of the Act to

whatever common-law remedies existed. 503 F.2d 321,

324-25 n. 13.

We thus conclude that Heater is no authority for the con-

tention that the Commission lacks authority to issue a cor-

rective advertising order to dispel the continuing effects

which a deceptive advertisement has on the consuming

public.

26a

Moreover, the continued sale of a product under false

pretenses is itself a violation of the FTC Act,” which, in

the case of lingering false beliefs created by discontinued

advertisements, can be remedied only by dispelling the

false belief.

2. Applying the Corrective Advertising Standard to the

Case at Hand

The record demonstrates that respondent’s deceptive

advertisements have created false beliefs which are likely

to continue to exist and influence consumer decisions to

purchase Listerine.

Consumer Beliefs. Market research reports, known as

‘‘Product Q’’ reports,”* which were commissioned by re-

spondent over a seven-year period at a cost of over $100,-

000, demonstrate that the majority of those surveyed be-

lieve that Listerine is effective for colds and sore throats.

Specifically, the percentage of those persons surveyed who

rated Listerine as ‘‘one of the best’’ in the category ‘‘ef-

fective for colds and sore throats’’ rose from 43 percent

in 1963 to 59 percent in 1971, averaging 53.8 percent for

the entire period. This figure includes the entire popula-

tion surveyed. Listerine users as well as nonusers. 53.8

percent is itself a substantial portion of the survey popu-

lation, but that figure probably understates the percentage

who believes Listerine has some effect on colds and sore

throats because it includes only those who believe that

Listerine is ‘‘one of the best’? mouthwashes for that char-

acteristic. It does not include responders who rated Lis-

25 J. B. Williams Company v. FTC, 381 F.2d 884 (6th Cir. 1967) .

Keele Hair & Scalp Specialists, Inc. v. FTC, 275 F.2d 18 (5th Cir.

1960); Ward Laboratories, Inc. v. FTC, 276 F.2d 952 (2nd Cir.

1960); Waltham Precision Instrument Co. v. FTC, 327 F.2d 427

(7th Cir. 1964), cert. denied, 377 U.S. 992 (1964).

** For discussion of the nature of Product Q reports see IDF

222-227.

27a

terine as ‘‘very good,’’ ‘‘ ’’ or ‘‘fair’’ for the category

‘effective for colds and sore throats.’’ (IDF 236.)

Although the data for the precoded category ‘‘effective

for colds and sore throats’’ was not refined into more

specific beliefs, the ALJ concluded that this category en-

compasses prevention, amelioration and cure claims, (IDF

230.) On the one hand respondent takes issue with the

ALJ’s interpretation, but on the other hand, it appears to

argue, in support of its amelioration and partial preven-

tion claims, that consumers perceive Listerine to be an

effective remedy. (RB 74-75.) More important, the record

adequately supports the conclusion that ‘‘effective for

colds and sore throats’’ includes prevention and ameliora-

tion beliefs. (Tr. 1553.) However, on the basis of the record

before it, the Commission is unconvinced as to cure beliefs.

We thus find that a substantial portion of the consumer

public holds prevention and amelioration beliefs but we

can draw no conclusion about cure beliefs.

Effect of Listerine Advertisements on Consumer Beliefs.

Respondent has advertised Listerine to consumers as a

cold remedy since 1921. Not only have Listerine packages

and labels contained cold efficacy messages, but also re-

spondent has spent large sums to advertise Listerine on

television and in print media as effective for colds and sore

throats. (IDF 219-220.) Common sense indicates that this

extensive cold efficacy advertising campaign (including

labels and packages) has contributed substantially to Lis-

terine cold and sore throat efficacy beliefs and that current

advertising performs the dual functions of maintaining

beliefs created by prior advertisements and creating be-

liefs in consumers entering the market.

Record evidence supports what common sense suggests:

(1) Dr. Peter Rossi, a witness for complaint counsel,

testified that (Tr. 1451):

Indeed, the evidence here is consistent with the idea

that it is the advertising of Listerine as registered in

28a

the memories of consumers which produces the dis-

tinctive patterning of the brand image for that brand;

and, indeed, the advertising for Micrin does the same

thing for Micrin, but certainly it is clear that the ad-

vertising for Listerine does its job for that brand.

(2) Dr. Alvin A. Achenbaum, a witness for respondent,

stated (Tr. 3439-40) :

* * * insofar as the users of a brand are concerned

that advertising for a well-established product like

Listerine—that probably the advertising has the effect

of reminding people of information or their belief or

about the brand so that at the time at which they make

a purchase—that hopefully that brand will come to

their mind as opposed to perhaps some other brand

which is out there trying to advertise and have some

effect upon their point of view as well. So I would say

that, in that sense in the life cycle, it has a reminding

effet

Now, there are always new people coming into the

market. I mean, people grow up and form households

who are not users, and, to some degree, the advertis-

ing could affect their belief structure.

See also testimony of Dr. Frank Bass. (Tr. 1607-12,

1617-21.)

(3) The benefit of spending vast sums on cold efficacy

advertising has not escaped respondent’s notice. A Product

Q report commissioned by respondent stated:

Listerine continues to be first on most measures and

it continues to grow while Scope remains a distant

second; its performance relatively static. However,

despite this one sided picture, comparable numbers of

respondents claim to recall ‘‘a lot’’ of advertising for

each brand. With this dimension constant and Lister-

ine well ahead of Scope on everything else, it would

29a

appear that the quality of Listerine’s advertising and/

or its media plan are making a vital contribution to

the brand’s success.

Also, there is a very close relationship between Lis-

terine advertising registration and the brand’s image.

(Emphasis added) CX 65E-F.

Moreover, a letter from respondent to the J. Walter

Thompson Co. stated that a cold efficacy commercial,

‘e * * helped generate all-time high b ”

109A.) e high brand shares.’’ (CX

(4) Apparently, Listerine’s three leading competi

were not advertised as colds remedies. (Tr. 1595, op es)

The Product Q data reveals that over 60 percent of re-

sponders in 1967 and 1968 believed Listerine was effective

for colds and sore throats, whereas fewer than 20 percent

attributed that quality to Listerine’s three leading com-

petitors.” (CX 80Z-11.) Although this empirical data

showing a three-fold differential in belief levels does not

prove that Listerine cold efficacy advertising substantially

affected consumer beliefs, it is consistent with the afore-

said views expressed by experts and respondent.

Respondent argues that consumer beliefs result from

actual experience with the product rather than from the

advertising. We have previously concluded that Listerine

has no efficacy for colds and sore throats. We further noted

that a cold is a self-limiting malady, and therefore a cold

sufferer may wrongly attribute the termination of the

cold episode to Listerine. In fact, the only source of con-

**In commenting on the low scores of Listerine’s competito

se Bass said ‘‘and I would expect that there would be ce

ef for these other brands of about the level that we observe in

the absence of advertising.’’ Tr. 1595. He suggested that the low

percentages which the other mouthwashes registered in the absence

of colds advertising could have resulted from color, image of anti-

septic properties and perhaps word of mouth. Tr. 1596.

30a

sumer ‘‘satisfaction’’ is the placebo effect. Although the

placebo effect probably causes some Listerine users to

think the mouthwash works, the record does not establish

it as the exclusive or even major source of the belief.

Respondent further incorrectly contends that a correc-

tive advertising order cannot properly be issued unless the

Commission finds that advertising was the sole source of

the belief. We have previously ordered affirmative relief

to correct a false impression created merely ‘‘in part

through respondent’s own efforts.’? Waitham Instrument

Co., 61 F.T.C. 1027, 1049 (1962) aff’d. 327 F.2d 427 (7th

Cir. 1964), cert. denied, 377 U.S. 992 (1964). To the extent

that dicta in Sun Oil, Dkt. 8889 (Aug. 19, 1974 [84 F.T.C.

247]), an unappealed initial decision adopted by the Com-

mission, could be construed as supporting a sole-source

standard, that opinion does not reflect the views of this

Commission. The Commission’s mandate is to eliminate

the effects of false advertising, and a sole-source standard

would effectively bury a remedy which is vital to the

achievement of that goal.

Persistence of the False Beliefs. The record demon-

strates that long after Listerine cold efficacy advertising

ceased, a substantial proportion of the public would con-

tinue to believe in Listerine’s efficacy for the treatment

and prevention of colds and sore throats. Dr. Bass testified

that cold efficacy belief levels would continue at the 1971

rate (59 percent) for about two years after colds adver-

tising ceased and would remain high even after five years.

(Tr. 1560-61, 1611.) It is Dr. Bass’ view that consumer be-

liefs tena to continue once they are created and that after

a belief is created it lasts much longer than the memory

of the copy points of the ads that created the belief. (Tr.

1556-57.) Dr. Rossi concluded that the stability of Lister-

ine’s image is quite impressive, and that in the absence

of colds advertising consumer beliefs would decline at no

greater a rate than 5 percent a year. (Tr. 1433, 1469-72.)

At that maximum rate of decline, belief levels would still

3la

ceased. Moreover, the Product Q data reveals that con-

sumer beliefs about Listerine’s effectiveness against colds

and sore throats were practically the same during the por-

tions of the year when respondent engaged in colds adver-

tising as during the rest of the year. (CX 159D.)

As was previously discussed (supra, Part IT), the record

shows that respondent’s advertisements and labels made

the challenged claims at least as late as 1972. Thus, we

conclude that a substantial proportion of the consuming

public will retain the beliefs in issue well into the 1980’s.

Materiality of the False Beliefs. The ALJ fo

‘(t]he belief that Listerine is effective for colds Poe on

throats is a determining factor in a significant number of

sonsumers’ decisions to purchase Listerine.’? (IDF

244( a).) The testimony of Dr. Rossi supports this conclu-

sion (Tr. 1455, 1460) as does empirical evidence. Accord-

ing to Product Q data, 37.5 percent of those interviewed

over a seven-year period said that ‘‘effective for colds and

sore throats’’ was ‘‘extremely important’’ in their selec-

tion of a mouthwash. (CX 159A.) This tabulation did not

includé those for whom “‘effective for colds and core

throats,” was “‘very important,’’ ‘‘somewhat important,’’

or “‘fairly important.’’ Thus, although 37.5 percent is in

itself substantial, it probably does not fully reflect the ex-

tent to which cold efficacy beliefs affect purchasing de-

cisions.

3. The Nature of the Corrective Advertising Order

In view of the foregoing findings that respondent’s ad-

vertisments substantially contributed to the development

and maintenance of the belief that Listerine is effective

for the prevention and treatment of colds and sore throats,

that a substantial portion of the population will continue

to hold thig belief well into the 1980’s and that this belief

plays a material role in purchasing decisions (thereby in-

32a

juring both consumers and competition), we conclude that

an order merely requiring cessation of the deceptive ad-

vertising would not afford the public adequate protection.

The lingering false belief must be dispelled, a task which

requires corrective advertising.”

The ALJ’s order, which requires respondent to include

a corrective message in all advertising for two years, may

not accomplish this task. If respondent chose not to adver-

tise during the two-year peeriod (or to do a miniscule

amount of advertising) the corrective message would not

adequately reach the public and the false beliefs would live

on. To avert this possibility we shall order respondent to

include the corrective message in all Listerine advertis-

ing until it has expended an amount on such advertising

equal to its average annual Listerine advertising budget

for the ten-year period of April 1962 to March 1972 (as

set forth in CX 44). A corrective advertising campaign of

this scope should adequately dispel the lingering beliefs.

In this proceeding we cannot determine in advance with

computer-like precision the minimum amount of co..eviive

advertising which will dispel the otherwise continuing

beliefs at issue. However, in ordering the relief which the

public interest requires, it is the duty of a tribunal to exer-

cise its best judgment to predict the relief which is essen-

tial. As the Supreme Court has recognized, the fashioning

of appropriate affirmative relief necessarily ‘‘* * * involves

predictions and assumptions concerning future economic

2 The ALJ justified the corrective advertising order on the addi-

tional ground that future representations of Listerine as a germ

killer would automatically remind the public of false colds claims

(IDF 248). We need not consider at this time this additional

rationale.

2° Since the record does not demonstrate that conrumers hold cure

beliefs, we have modified the message to read :

Contrary to prior advertising, Listerine will not help prevent

colds or sore throats or lessen their severity.

33a

and business events.’’ Ford Motor Compa }

ny v. United

States, 405 U.S. 562, 578, (1972).*° We see no reason why

different considerations should apply when drafting a cor-

rective advertising order.

4. Other Objections to a Corrective Advertising Order

Respondent contends that a corrective advertising order

would raise First Amendment questions. However, it has

not disputed the commercial nature of its advertisements.

As we noted in Firestone," courts have repeatedly held

that regulation of false commercial advertising is consti-

tutional. In Pittsburgh Press Co: v. Pittsburgh Commis-

sion on Human Relations, 413 U.S. 376, 389 (1973), the

Supreme Court articulated a balancing test which must

be applied to the regulation of truthful commercial speech :

Any First Amendment interest which might be

served by advertising an ordinary commercial pro-

posal and which might arguably outweigh the govern-

mental interest supporting the regulation is altogether

absent when the commercial activity itself is illegal

and the restriction on advertising is incidental to a

‘valid limitation on economic activity.

Assuming that the same considerations appl

{ pply when man-

dating commercial speech as when proscribing it, we con-

clude that the corrective advertising order in this case is a

valid limitation on economic activity because it is designed

*° The Court upheld a lower court’s determination that to restore

and encourage competition, Ford must, inter alia, be par And from

manufacturing spark plugs for ten years, be ordered for five years

to buy one half its spark plug requirements from the divested plant

under the ‘‘ Autolite’’ name and refrain from using its own name

on spark plugs during that five-year period, and be ordered for ten

years to sell to its dealers at prices not less than the minimum

suggested jobbers’ selling price.

* 81 F.T.C, at 471-72.

‘S4a

to dispel the continuing effects of illegal commercial

activity.”

Respondent also claims that a corrective advertising

order is a punitive measure because it may adversely

affect the product’s consumer franchise as a breath fresh-

ener. The corrective advertising order that we are issuing

is intended solely to dissipate the effects of respondent’s

deceptive representations. In dispelling these beliefs, re-

spondent may impair a portion of its breath-freshener

franchise, but the fact that the remedy may have some

harsh consequences does not render it punitive. As the

Commission said in Firestone, 81 F.T.C. at 469:

The fact that the remedy may be deemed by the court

to have severe consequences to the respondent does not

in itself render the order punitive if the order is also

deemed a ‘‘needful public precaution.’’ All-State Indus-

tries of North Carolina, Inc. v. FTC, 423 F.2d 423, 425 (4th

Cir.), cert. denied, 400 U.S. 828 (1970).

B. Objections to Part II of the ALJ’s Order

Part II of the ALJ’s order requires respondent to cease

representing that Listerine or any other mouthwash prod-

uct is effective for colds. Respondent objects to the in-

clusion of other mouthwashes on the ground that the com-

plaint challenges solely the efficacy of Listerine.

Respondent has spent a considerable sum advertising

Listerine as a cold remedy for decades. Presumably, it

found this representation to be profitable. Respondent thus

has an incentive to formulate a new mouthwash which it

could advertise as a cold remedy. In view of our conclusion

that the act of gargling does not deliver a mouthwash to

%2 See also Bigelow v. Virginia, 95 S, Ct. 2222, 2235 (1975) where

the Court again noted the distinction between advertising related

to activities the state may legitimately regulate (including fraudu-

lent or deceptive advertising (2235-36)) and advertising not so

related.

35a

the critical areas of the body, we question whether any

mouthwash would be effective for colds or sore throats.

Thus, by limiting the order to Listerine we would set the

stage for a replay of the instant proceeding, the only dif-

ference being the name of the mouthwash. To avert this

prospect we must, in the exercise of our fencing-in author-

= — = “yr within the coverage of Part

of the order. See FTC v. Colgate-Palmoli ‘

U.S. 374, 394-395 (1965). ’ sales

Of course, if respondent were to develop a mouthwash

which was effective for colds or sore throats, it could peti-

tion to modify the order, as provided by Section 3.72 of

the Commission’s rules.

Appendix

The ALJ determined that the following exhibits do not

support respondent's efficacy claims. After a thorough re-

view of each exhibit, we concur in the ALJ’s conclusion

that they lack probative value, but as explained below, in

some instances we have a different reason for finding that

a particular exhibit has no value.

1. RX 40-43: We agree with IDF 134-142 (the last cita-

tion to Dr. Knight’s testimony in IDF 142 sh

“ake ae y should be

2. RX 44: We agree with IDF 198.

3. RX 46: As described in IDF 45, the procedures used

in the tests discussed in RX 46 render those tests useless

in this proceeding.

4. RX 47: This is a report of a test in which the d

was administered to test rabbits. In addition to the alee

advanced by the ALJ for according little value to this

test (IDF 174-176) we emphasize the following:

Dr. Carson stated that studies in animals are simply

preliminary studies and that clinical tests are necessary

36a

to draw conclusions about the effect of a drug in man (Tr.

3576). Moreover, the probative value of the test is further

reduced by the dissimilarity between the method by which

the drug was administered to the rabbits and the method

by which Listerine is administered to humans. Further-

more, even assuming arguendo that this test demonstrated

that ingredients of Listerine can have a decongestant ef-

fect, Dr. Carson did not satisfactorily establish that an

effective dose of these ingredients would reach the critical

areas of the respiratory tract (Tr. 3572-73).

5. RX 48: The systemic administration of the drug ren-

ders the test valueless. We note, however, that since we

place no value in RX 47, we need not reach the ALJ’s

conclusion that RX 47 contradicts RX 48. (IDF 178.)

6. RX 50: We agree with IDF 173.

7. RX 53: We agree with IDF 149.

8. RX 55: We agree with IDF 150.

9. RX 56: This was an in vitro test conducted in ham-

ster cheek tissue. Assuming arguendo that hamster cheek

tissue closely resembles tissues in the human nasopharynx,

this test has little value because, as the ALJ noted, the

amount of ingredients retained was not quantified. (IDF

151.)

10. RQ 57: See opinion at 15 [pp. 1494-1495 herein].

ll. RX 60, 61, 63 and 64: We agree with IDF 153.

12. RX 65-68: We agree with the ALJ that the tests dis-

cussed in these exhibits deserve little weight in this pro-

ceeding. RX 67, a document to which Dr. Ritchie, the co-

author fully subscibes (Tr. 2404) stated, in essence, that

the results of the tests described in RX 65, 66, 67 and 68

are not statistically significant:

Severe colds are usually those in which the viral

stage of about three days duration is succeeded by a

37a

more prolonged bacterial stage, believed to be due to

the multiplication of the native nasopharyngeal bac-

teria. Such colds can be preverted by a six-months

course of autogenous bacterial vaccines given before-

hand, or they can be aborted and rendered innocuous

by early antibiotic treatment. The evidence submitted

although strong, does not reach statistical significance.

These tests, therefore, have little probative value. Re-

spondent argues that the above reference to the statistical

insignificance of the tests does not encompass so-called

‘‘subsequent tests’’ described in RX 66. However, RX 66

wae printed in 1958. RX 67, which was published in 1969

( Tr. 2389), was offered into evidence as a summary of

Ritchie’s views over the period 1958-1969. Thus, we can-

not see how the test discussed in RX 66 covld be regarded

as a ‘“subsequent”’ test which Dr. Ritchie somehow failed

to consider in making the assessment in RX 67 that ‘‘the

evidence * * * does not reach statistical significance.’’

We also accord these tests little weight because the rec-

ord does not show that the results obtained with « bacteri-

ostatic substance (which purportedly maintains the bac-

teria population at a reduced level) carry over to a bac-

tericidal substance, particularly since bactericides do not

prevent the bacteria from growing back to their previous

strength or greater. See IDF 154.

13. RX 69-71: We agree with ALJ at IDF 199-201.

14. RX 73: The ALJ’s tinding (IDF 205) that the ma-

chine did not measure the quantities of any ingredient is

sufficient reason to accord this test little weight, and there-

fore, we need not reach other reasons he off i

the exhibit valueless. ee

15. RX 75: We agree with IDF 207-209. In IDF 208 the

ALJ noted the prospect that the panelists may have exer-

cised bias’ in favor of Listerine. Although the panelists

may have been biased, we need not reach this issue because

38a

the test has little probative value for the other reasons

discussed at IDF 207-209.

16. RX 97: We agree with IDF 168-172.

17. RX 108: In 1935, Dr. Oscar B. Hunter performed

tests which he claimed showed that gargling is an adequate

mechanism for bathing the crypts of the tonsils with

Listerine. See RX 108 p-r, z-226. However, he also testified

that Listerine would not get into all of the crevices of the

mouth, RX 108 z-96. We have resolved this apparent in-

consistency in his testimony in favor of his assertion that

Listerine would not reach all the crevices because this is

the view which is consistent with the testimony of experts

for both sides in this proceeding, e.g., Seal Tr. 554; Mc-

Namara, Tr. 2342.

Clinical Studies of Listerine

Respondent contends that two clinical studies, the St.

Barnabas and Reddish studies, demonstrate the efficacy

of Listerine for colds and sore throats. After a careful

review, we must conclude that the design and execution of

these tests heavily biases the results in favor of Listerine,

and therefore, the results cannot support respondent’s

efficacy claim.

1. The St. Barnabas Test

Students in an elementary school and a high school were

randomly selected to participate in this study which

spanned four years (the high school was dropped at the

end of the third year). During the first two years, the par-

ticipating students were assigned either to the treatment

group, which gargled with Listerine twice a day, or to &

control group which used no mouthwash at all. (RX 81, Tr.

2789-90.) During the last two years the control group

gargled with water colored to resemble Listerine’s amber

hue. (Baron Tr. 2746-47). Since it did not have Listerine’s

taste or odor, the ALJ concluded that this amber-colored

39a

water was not a true placebo, IDF 87, and that the absence

of a true placebo biased the test results in favor of the

tested agent, Listerine. We ith thi

the ALJ noted: agree with this conclusion. As

People who are given medication for an ailment fre-

quently feel better because they think they should, even

though the product has no therapeutic value. There are

very few people who are not susceptible to this phe-

nomenon (Seal 562, 566; Proctor 659; Rammelkamp,

785). As Dr. Proctor testified, ‘‘Even with severe pain

you can substitute sugar for morphine and about 30

percent of the people will be relieved of their pain.’’

(Tr. 659.) And as Dr. Rammelkamp explained,

“[YJou see paralysis even stopped where you just

give an injection of salt water.’’ (Tr. 783.) This is

known as the placebo effect. The placebo effect is al-

ways present when medication is taken (Shirkey 2635).

(IDF 81.) saeed

In order to determine whether the product has efficacy, the

bias of the placebo effect should be removed. This bias can

be neutralized by ‘‘blinding’’ the participants, i.e., dis-

pensing to the control group a placebo which simulates in

taste, smell and appearance the product being tested. This

practice of blinding the control group through the use of

a placebo is a generally-accepted procedure today. (See

Knight 2051; Bogarty 3072-73, 3117; Shirkey 2655-56; Ja-

wetz 3698-99, 3838-39; Wehrle 4011; Lasagna 4126, 4131).

Use of an adequate placebo becomes even more important

where the evaluation of symptoms involves subjective judg-

ments (Wehrle 4038). The record demonstrates that a cold

is a self-limiting infection, and evaluation of cold symp-

toms tends to be quite subjective (Gwaltney 407; Hornick

476, 497, 499; Seal 549).

We are not requiring in this case that the placebo dupli-

cate the taste, smell, texture, color, etc. of the tested prod-

uct. There may well be degrees of simulation short of du-

40a

plication which would neutralize the placebo effect.’ How-

ever, the use of caramel-colored water was patently in-

adequate.

Respondent urges that the absence of a true placebo can

be counterbalanced by factors which tend to reduce the

impact of the placebo effect, such as conducting the study

over a long period of time, permitting the use of concom-

itant medication, and maintaining the ‘‘blindness’’ of the

examining physician—precautions which respondent claims

were taken in the St. Barnabas study. Perhaps in some

drug studies other factors could compensate for the ab-

sence of a placebo but so many uncertainties permeate the

St. Barnabas test that we cannot place any reliance in it.

For example, it is unclear whether the examiner was prop-

erly blinded. We note that blinding the examiner is not

merely a device for counterbalancing the absence of a

proper placebo; it is essential that a properly adminis-

tered test avoid bias on the part of the investigator. What-

ever bias he may consciously or subconsciously possess can

be neutralized by preventing him from knowing which sub-

jects used the purported medication and which received no

medication. In this sense, the examiner is ‘‘blinded.’’ The

ALJ aptly summarized the necessity for properly ‘‘blind-

ing’’ the examiner (at IDF 83):

Another bias that must be avoided is that of the in-

vestigator who is recording the results as narrated to

him by the subjects or as observed by him when he con-

ducts his examination. Every investigator has his own

‘Dr. Vernon Knight, a witness for respondent, identified an

alternative which may have proved adequate: A new study would

have to be of the ‘‘double blind’ type. This might be arranged by

completely avoiding the use of the word ‘‘Listerine.”’ Listerine

colored another color or conceivably flavored slightly differently as

well could be compared with a colored, flavored, 25% aleohol solu-

tion. A third group could be given a non-alcoholic, non-germicidal

solution of a different color and flavor. CX 162 at 8.

4la

biases. It is important that the investigator not know

whether the subjects are taking the test agent or are

in the control group. Otherwise, he will subconsciously

try to give his employer the answers the employer

wants (Gwaltney 407; Haggie 1794; Knight 2051;

Lamm 2934, 2937; Sadusk 3206; Carson 3589, 3601;

Jawetz 3698-3701; Wehrle 3995, 4013-15, 4037-39; La.

sagna 4126, 4133-34; CX 162G-I). As Dr. Knight re-

ported to respondent (CX 162G-H):

nie : In the absence of double blind controls, however,

there is no way to exclude the possibility of some bias.

There is a tendency of both patients and experimental-

ists to see a favorable effect of medication in any

experiment.

As respondent’s statistical expert testified (Lamm 2934) :

—— (T]he important thing in this type of study is that

your investigator be blind.

And, as one of respondent’s expert medical witn -

tified (Sadusk 3228): nif ‘ovens

If the doctor knew [which subject that came to him

was & control and which was a test]—and this would

indicate that the doctor was dishonest because he

would actually ask each person—the experiment, of

course, would not be valid.

The ALJ concluded that the examiner, Dr. Benjamin W.

Nitzberg, was not properly ‘‘blinded’’ because the test pro-

tocol required that the children gargle at 9:00 a.m., and he

began examining them at 10 a.m. Although Dr. Nitzberg

denied that he knew which children were in the test group

(Tr. 2790, 2800) or that he smelled Listerine on the stu-

dent 's breath except on rare occasions (i.¢c., three or four

children in six months, Tr. 2803), the ALJ concluded that

Dr. Nitzberg must have detected the odor of Listerine on

42a

the students’ breath because other witnesses for respond-

ent testified, on the basis of their own experiences with

Listerine, that Listerine can be smelled on the breath for

1% to 2 hours after gargling. IDF 99.

The record offers support for the ALJ’s concern. It

establishes that Dr. Nitzberg knew that the test was being

conducted for Warner-Lambert, that it involved Listerine

and that the data would be used to determine the effect on

colds of gargling with Listerine daily, Tr. 2829. Thus, if

he knew which children used Listerine, he might have

biased the results in favor of Listerine. The students gar-

gled at 9:00 a.m. (CX 51D, RX 81D) ; Dr. Nitzberg arrived

at 10:00 a.m. (Tr. 2811, 2826) and left within an hour dur-

ing the first two years of the study and within one and

one-half hours during the last two years. (Tr. 2811). There-

fore, many students were examined one to two hours after

gargling. Two physicians who testified for respondent

stated that, on the basis of their own experience with Lis-

terine, it can be detected on the breath for 144 to 2 hours

after gargling. (Sadusk Tr. 3216, 3229-30; Krantz 1879,

1901). See also Carache at 3840. On the other hand, another

witness for respondent testified that a laboratory instru-

ment could not detect some ingredients of Listerine in a

human subject’s nasal cavity twenty minutes after the sub-

ject gargled (Tr. 2486, 2505). However, he also testified

that the instrument leaked large amounts of the volatile

materials (Tr. 2498), and that after the instrument failed

to detect the ingredients, they were identified by smell (Tr.

2505). Considering this evidence as a whole, we are led to

conclude that by virtue of respondent’s own witnessees, it

is uncertain whether Dr. Nitzberg was properly ‘‘blinded.’’

Three additional infirmities heighten our concern about

the study’s probative value. Students were instructed to

report to the medical examiner, usually Dr. Nitzberg, at

the first sign of a cold. The medical examiner would evalu-

ate and record the overall severity of the cold plus the

43a

severity of fourteen cold-related symptoms (only eight

during the first two years of the study). The student re-

turned to the examiner each day for the duration of the

cold episode, and the physician examined and questioned

the student about each symptom, recording the severity of

the symptoms on the same sheet that he used the previous

day (a rating scale of 0-4 was nsed during the first two

years and 0-7 for the last two). Dr. Nitzberg allotted him-

self only 1% to 2 minutes to examine and question each

child (Tr. 2820). This procedure detracts from the proba-

tive value of the test in three respects. First, by using the

same score sheet day after day Dr. Nitzberg would know

how he evaluated a child’s symptoms the previous day (Tr.

2822-23). As the ALJ found, Dr. Nitzberg’s knowledge of

what he had done previously would tend to bias his scores,

and therefore he would not make an independent judgment

each day. IDF 101. Second, given the number of symptoms

which Dr. Nitzberg had to evaluate and the fine gradations

he had to make in his evaluation, we question whether he

spent an adequate amount of time on each subject. In addi-

tion to asking each child for historical data on every item

on the report form, he would ‘‘examine the upper respira-

tory tract, the eyes, the ears, the nose and the throat, the

sinuses by palpitation and the neck for cervical adeno-

pathy’’ Tr. 2791. During the last two years of the study the

examiner checked for six additional symptoms (Tr. 2798-

99). On Mondays he often had to fill in the form for Satur-

day and Sunday. (See also Tr. 2816-2819). Third, even if

Dr. Nitzberg had been properly blinded the scores he re-

corded could have been biased to the extent the scores were

based upon the non-blinded child’s subjective evaluation.

(See Lamm Tr. 2937).

All of the foregoing defects have the cumulative effect of

rendering the St. Barnabas study unreliable for evaluating

the efficacy of Listerine. In view of this conclusion, we find

it unnecessary to consider the parties’ disagreement over

the meaning of the results.

44a

2. The Reddish Cold Tests

During the winters of 1932 to 1942 respondent conducted

tests, mainly using its own employees, to determine whether

Listerine has the ability to fight colds. These tests, which

respondent claimed established Listerine’s efficacy against

colds and sore throats, have such grave deficiencies in de-

sign and execution that their results are meaningless. Of

foremost concern, no placebo was used. (During some win-

ters control groups gargled with a saline solution or tap

water. These liquids cannot qualify as adequate placebos. )

Moreover, employees were allowed to choose which group

they preferred, thereby further biasing the results because

those who thought that gargling was an effective method

for fighting a cold would most likely join the test group.

In addition, the ALJ found that the investigators them-

selves had predetermined beliefs that Listerine was good

for colds. Finally, the investigators were not provided with

a uniform definition of a ‘‘cold.’’ Common colds last no

longer than 10 days, yet illnesses lasting up to 69 days

were counted as ‘‘colds’’ in the Reddish study. Even re-

spondent’s own expert, Dr. Knight, said that ‘‘present

opinion would hold that satisfactory evidence for efficacy

is no longer provided by these early studies.’’ IDF 124,

CX 162G-H.

Respondent does not address these infirmities in the Red-

dish tests. Instead, it contends that the Commission relied

upon these tests in dismissing the 1944 complaint, and

therefore the ALJ’s finding of deficiencies in the Reddish

tests is ‘‘an impermissable [sic] relitigation of matters

long ago settled.’’ RB 67. This issue is discussed in Section

IV herein.

Fina. OrpER

This matter having been heard by the Commission upon

respondent’s appeal from the initial decision; and

45a

The Commission having considered the oral argum

. . t

of counsel, their briefs, and the whole record; and vid

The Commission, for reasons stated in the accompanying

opinion, having denied the appeal; accordingly

It is ordered, That, except to the extent that it is incon-

sistent with the Commission’s opinion, the initial decision

of the administrative law judge be, and it hereby is,

adopted together with the opinion accompany:ng this order

as the Commission ’s final findings of fact and conclusions

of law in this matter;

It is further ordered, That the followi

hereby is, entered: ng order be, and it

PART I

It is ordered, That respondent Warner-Lambert Com-

pany, a corporation, its successors and assigns and re-

spondent ’s officers, agents, representatives ow inl: ca

directly or through any corporation, subsidiary, division or

other device, in connection with the labeling, advertising

offering for sale, sale or distribution of Listerine or any

other nonprescription drug product in or affecting com-

merce, as “‘commerce’’ is defined in the Federal Trade

Commission Act, do forthwith cease and desist from:

1. Representing, directly or by implicati

ing, plication, that an

such product will cure colds or sore throats; ;

2. Representing, directly or by implication, that an

product will prevent colds or sore throats; ‘oo

3. Representing, directly or by implication, that users of

any such product will have fewer colds than nonusers.

PABT II

It is further ordered, That respondent Warner-Lambert

Company, ® corporation, its successors and assigns and

respondent’s officers, agents, representatives and employ-

46a

irectly or through any corporation, subsidiary, divi-

reed an device, in connection with the labeling, adver-

tising, offering for sale, sale, or distribution of Listerine

or any other mouthwash product in or affecting commerce,

as ‘‘commerce”’ is defined in the Federal Trade Commis-

sion Act, do forthwith cease and desist from:

1. Representing, directly or by implication, that any such

product is a treatment for, or will lessen the severity of,

colds or sore throats;

2. Representing that any such product will have any sig-

nificant beneficial effect on the symptoms of sore throats or

any beneficial effect on symptoms of colds;

3. Representing that the ability of any such product to

kill germs is of medical significance in the treatment of

colds or sore throats or the symptoms of colds or sore

throats.

PART III

It is further ordered, That respondent Warner-Lambert

Company, a corporation, its successors and assigns, and

respondent’s officers, agents, representatives and employ-

ees, directly or through any corporation, subsidiary, di-

vision or other device, do forthwith cease and desist from

disseminating or causing the dissemination of any adver-

tisements for the product Listerine Antiseptic unless it is

clearly and conspicuously disclosed in each such advertise-

ment in the exact language below that:

Contrary to prior advertising, Listerine will not

help prevent colds or sore throats or lessen their se-

verity.

In print advertisements, the disclosure shall be displayed

in type size which is at least the same size as that in which

the principal portion of the text of the advertisement ap-

pears and shall be separated from the text so that it can be

readily noticed. In television advertisements, the disclo-

47a

sure shall be presented simultaneously in both the audio

and visual portions. During the audio portion of the dis-

closure in television and radio advertisements, no other

sounds, including music, shall occur. Each such disclosure

shall be presented in the language, e.g., English, Spanish,

principally employed in the advertisement.

The aforesaid duty to disclose the corrective statement

shall continue until respondent has expended on Listerine

advertising a sum equal to the average annual Listerine

advertising budget for the period of April 1962 to March

1972.

PART IV

It is further ordered, That the allegations of Paragraphs

Nine and Ten of the complaint be, and they hereby are,

dismissed.

PART V

It is further ordered, That respondent shall forthwith

distribute a copy of this order to each of its operating divi-

sions.

It is further ordered, That respondent notify the Com-

mission at least thirty (30) days prior to any proposed

change in its structure such as dissolution, assignment or

sale resulting in the emergence of a successor corporation,

the creation or dissolution of subsidiaries or any other

change in the corporation which may affect compliance

obligations arising out of this order.

It is further ordered, That respondent shall, within sixty

(60) days after the effective date of this order, file with the

Commission a written report, setting forth in detail the

manner and form of its compliance with this order.

48a

In THE MatTTER oF

WARNER-LAMBERT COMPANY

Docket 8891. Order, Mar. 26, 1976

Denial of respondent’s petition to reopen proceedings to

receive evidence of ex parte communications and of FDA

findings concerning Listerine, and to wthdraw final order

pending consideration of such evidence.

Appearances

For the Commission: Wallace S. Snyder and William 8S.

Busker.

For the respondent: Mudge, Rose, Guthrie dé Alexander,

New York City and Larry Sharp, Bergson, Borkland, Mar-

golis & Adler, Washington, D.C.

Respondent has petitioned the Commission to reopen the

proceeding for the purpose of receiving ‘‘evidence of ex

parte communications and of FDA findings concerning Lis-

terine, and to withdraw [the] final order pending consider-

ation of such evidence.”’

First, respondent contends that the Commission staff,

through written memoranda dealing with the Commission ’s

over-the-counter drug program, has ‘‘singl [ed] out Lister-

ine by name, [and] made improper and damaging ex parte

arguments to the Commission’’ while the above-styled mat-

ter was pending. This contention is plainly without merit.

The Commission has based its determinations and order in

this proceeding solely upon the record compiled in Dkt.

8891. See Encyclopedia Britannica, Inc. (Order Denying

Motion To Reopen Record And Proceedings) (March 2,

1976"). We have examined the memoranda’ attached to

? Reported in this Volume.

* The memoranda, with one exception, consist of reports to the

Commission or the Chairman as to the status of the Commission's

Over-the-Counter Drug program. The exception is a report to the

Director of the Bureau of Consumer Protection from the Division

49a

respondent’s Petition, as well as the portions of the memo-

randa which were excised prior to FOIA release. The only

mention of Listerine occurs in a few statements that a pro-

ceeding exists with respect to respondent, e.g., ‘‘* * * the

Listerine case which is now before the Commission® * *.’’

There are no arguments, as respondent contends, of the

appropriateness of corrective advertising as a remedy in

the Listerine proceeding. The references to Listerine are

not ex parte communications since they are not statements

‘‘with respect to the merits,’’ Rules of Practice Section 4.7.

Secondly, respondent contends that the record should be

reopened since an FDA advisory panel, after issuance of

the Comnission’s opinion and order, ‘‘found that combina-

tion products containing the active ingredients of Listerine

may be efficacious for the symptomatic relief of colds and

coughs and that until further test data can be developed,

may continue to label and to sell the products as in the

past, for the conditions indicated*® * *.’’ [footnote omit-

ted]. We also find this contention to be without merit.

In the decision in this proceeding, the Commission con-

cluded, on the basis of the preponderance of the evidence

in the’ record before us, that the use of Listerine, as di-

rected, will not prevent or cure colds or sore throats or

ameliorate cold symptoms. Here the report that the re-

spondent references in its Petition is a draft report by the

FDA’s review panel for over-the-counter cough and cold

remedies. The report has not been adopted and thus there

is no ‘‘finding,’’ as respondent contends. The draft report

has been placed on the public record for comment. See

CCH Food, Drug & Cosmetic Law Reporter Para. 41,571

[41 F.R. 38312]. Moreover, ‘‘Category III,”’ the category

in which respondent claims its product’s ingredients fall,

is designated by FDA for drugs requiring additional study.

Accordingly,

It is ordered, That the aforesaid petition be, and it here-

by is, denied.

of National Advertising and was a wholly intra-Bureau communi-

cation.

50a

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT .

SepreMBER TeRM, 1976

No. 76-1138

Warner-LamMBert Company, Petitioner

Vv.

FeperaL Trape Commission, Respondent

(Firep December 28, 1976)

Before: Wright and McGowan, Circuit Judges.

Order

On consideration of petitioner’s motion for leave to ad-

duce additional evidence, the opposition thereto and of

petitioner’s reply, it is

Orperep by the Court that petitioner’s aforesaid motion

to adduce additional evidence is denied.

Per Curiam

5la

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 76-1138

Warner-Lambpert Company, Petitioner

Feperat Trape Commission, Respondent

Petition for Review of an Order of

the Federal Trade Commission

Argued March 25, 1977

Decided August 2, 1977

' Herbert A. Bergson, with whom James H. Kelley, Donald

L. Hardison, and Larry D. Sharp were on the brief, for

petitioner.

Jerold D. Cummins, Acting Assistant General Counsel,

Federal Trade Commission, with whom Gerald P. Norton,

Acting General Counsel, Federal Trade Commission, was

on the brief, for respondent. Gerald Harwood, Assistant

General Counsel, Federal Trade Commission, at the time

the record was filed, also entered an appearance for re-

spondent.

Gilbert H. Weil filed a brief on behalf of the Association

of National Advertisers, Inc. as amicus curiae urging re-

versal.

52a

William W. Royal filed a brief on behalf of the Ameri-

can Advertising Federation as amicus curiae urging re-

versal.

Before Bazeton, Chief Judge, and Wricnt and Ross,

Circuit Judges.

Opinion for the court filed by Circuit Judge Waricat.

Dissenting opinion filed by Circuit Judge Ross.

Waricnt, Circuit Judge: The Warner-Lambert Company

petitions for review of an order of the Federal Trade Com-

mission requiring it to cease and desist from advertising

that its product, Listerine Antiseptic mouthwash, prevonts

cures, or alleviates the common cold. The FTC order

further requires Warner-Lambert to disclose in future Lis-

terine advertisements that: ‘‘Contrary to prior advertis-

ing, Listerine will not help prevent colds or sore throats

or lessen their severity.’’' We affirm but modify the order

to delete from the required disclosure the phrase ‘‘Con-

trary to prior advertising.’’

I. BackorounpD

The order under review represents the culmination of a

proceeding begun in 1972, when the FTC issued a com-

plaint charging petitioner with violation of Section 5 (a)

(1) of the Federal Trade Commission Act* by misrepre-

senting the efficacy of Listerine against the common cold.

‘This requirement terminates when petitioner has expended on

Listerine advertising a sum equal to the average annual Listerine

advertising budget for the period of April 1962 to March 1972,

approximately ten million dollars.

215 U.S.C. § 45(a)(1) (1970). At the time the complaint issued,

§5(a)(1) stated that ‘‘({u]nfair methods of competition in com-

merce, and unfair or deceptive acts or practices in commerce, are

hereby declared unlawful.’’ This was amended in 1975 to substitute

‘‘in or affecting commerce’’ for the phrase ‘‘in eommerce.’’ See 15

U.S.C. § 45(a) (1) (Supp. V 1975).

53a

Listerine has been on the market since 1879. Its f

, ormula

has never changed. Ever since its introduction it has been

represented as being beneficial in certain respects for colds,

cold symptoms, and sore throats. Direct advertising to the

consumer, including the cold claims as well as others, began

in 1921.

Following the 1972 complaint, hearings were held before

an administrative law judge (ALJ). The hearings con-

sumed over four months and produced an evidentiary rec-

ord consisting of approximately 4,000 pages of documen-

tary exhibits and the testimony of 46 witnesses. In 1974

the ALJ issued an initial decision sustaining the allega-

tions of the complaint. Petitioner appealed this decision to

the Commission. On December 9, 1975 the Commission is-

sued its decision essentially affirming the ALJ’s findings

It concluded that petitioner had made the challenged rep-

resentations that Listerine will ameliorate, prevent, and

cure colds and sore throats, and that these representations

_ false. Therefore the Commission ordered petitioner

(1) cease and desist from representing that Listerine

will cure colds or sore throats, prevent colds or sore

throats, or that users of Listerine will have fewer

colds than non-users; '

(2) cease and desist from representing that Listerine

is a treatment for, or will lessen the severity of, colds

or sore throats; that it will have any significant bene-

ficial effect on the symptoms of sore throats or any

beneficial effect on symptoms of colds; or that the

ability of Listerine to kill germs is of medical sig-

nificance in the treatment of colds or sore throats or

their symptoms;

(3) cease and desist from disseminating any adve

. . . y »

tisement for Listerine unless it is clearly and conspic-

* Petitioner does not contest this part of the order on appeal.

54a

uously disclosed in each such advertisement, in the

exact language below, that: ‘Contrary to prior adver-

tising, Listerine will not help prevent colds or sore

throats or lessen their severity.’’ This requirement

extends only to the next ten million dollars of Lister-

ine advertising.‘

Petitioner seeks review of this order. The American Ad-

vertising Federation and the Association of National Ad-

vertisers have filed briefs as amici curiae.

Il. SuspstantTiaL Evipence

The first issue on appeal is whether the Commission’s

conclusion that Listerine is not beneficial for colds or sore

throats is supported by the evidence. The Commission’s

findings must be sustained if they are supported by sub-

stantial evidence on the record viewed as a whole.’ We

conclude that they are.

Both the ALJ and the Commission carefully analyzed

the evidence. They gave full consideration to the studies

submitted by petitioner. The ultimate conclusion that Lis-

terine is not an effective cold remedy was based on six

specific findings of fact.

First, the Commission found that the ingredients of

Listerine are not present in sufficient quantities to have

any therapeutic effect. This was the testimony of two lead-

ing pharmacologists called by Commission counsel. The

Commission was justified in concluding that the testimony

of Listerine’s experts was not sufficiently persuasive to

counter this testimony.*

Second, the Commission found that in the process of

gargling it is impossible for Listerine to reach the critical

* See note 1 supra.

* Universal Camera Corp. v. NLRB, 340 U.S, 474 (1951).

* JA 881-884, 909-921, 531-552.

55a

areas of the body in medically significant concentration.

The liquid is confined to the mouth chamber. Such vapors

as might reach the nasal passage would not be in thera-

peutic concentration. Petitioner did not offer any evidence

that vapors reached the affected areas in significant con-

centration.’

Third, the Commission found that even if significant

quantities of the active ingredients of Listerine were to

reach the critical sites where cold viruses enter and infect

the body, they could not interfere with the activities of the

virus because they could not penetrate the tissue cells.*

Fourth, the Commission discounted the results of a clin-

ical study conducted by petitioner on which petitioner

heavily relies. Petitioner contends that in a four-year study

schoolchildren who garg.ed with Listerine had fewer colds

and cold. symptoms than those who did not gargle with

Listerine. The Commission found that the design and exe-

cution of the ‘‘St. Barnabas study’’ made its results un-

reliable. For the first two years of the four-year test no

placebo was given to the control group. For the last two

years the placebo was inadequate: the control group was

given colored water which did not resemble Listerine in

smell or taste. There was also evidence that the physician

who examined the test subjects was not blinded*® from

" JA 556-557.

* JA 508-510, 533.

* People who are given medication for an ailment frequently feel

better because they think they should, even though the product has

no therapeutic value. This is known as the placebo effect. In order

to eliminate the bias of the placebo effect in a clinical study, it is

common practice to ‘‘blind’’ the participants, i.e., dispense to the

control group a placebo which simulates in taste, smell, and appear-

ance the product being tested. Similarly, to neutralize any subcon-

scious bias of the examiner, it is important to blind him, i.e., pre-

vent him from knowing which subjects received the medication and

which did not. A study in which both the subjects and the examiner

are blinded is referred to as ‘‘double-blind.’’ See JA 914-916.

56a

knowing which children were using Listerine and which

were not, that his evaluation of the cold symptoms of each

child each day may have been imprecise, and that he neces-

sarily relied on the non-blinded child’s subjective report-

ing. Both the ALJ and the Commission analyzed the St.

Barnabas study and the expert testimony about it in depth

and were justified in concluding that its results are unre-

liable.**

Fifth, the Commission found that the ability of Listerine

to kill germs by millions on contact is of no medical sig-

nificance in the treatment of colds or: sore throats. Expert

testimony showed that bacteria in the oral cavity, the

‘‘germs’’ which Listerine purports to kill, do not cause

colds and play no role in cold symptoms. Colds are caused

by viruses. Further, ‘‘while Listerine kills millions of bac-

teria in the mouth, it also leaves millions. It is impossible

to sterilize any area of the mouth, let alone the entire

mouth.’’ ™

Sixth, the Commission found that Listerine has no

significant beneficial effect on the symptoms of sore throat.

The Commission recognized that gargling with Listerine

could provide temporary relief from a sore throat by re-

moving accumulated debris irritating the throat.’ But this

type of relief can also be obtained by gargling with salt

water or even warm water.” The Commission found that

this is not the significant relief promised by petitioner’s

advertisements. It was reasonable to conclude that ‘‘such

JA 879-881,

2 JA 876, 506.

8 Petitioner argued that the lower the surface tension of a gargle

the greater its ability to remove the irritating debris, and there was

evidence that Listerine has a lower surface tension than salt water.

However, there was no evidence that this lower surface tension

translates into meaningfully greater relief. JA 876.

57a

temporary relief does not ‘lessen the severity’ of a sore

throat any more than expectorating or blowing one’s nose

‘lessens the severity’ of a cold.’’ *

In its attack on the Commission’s findings, netitioner re-

lies heavily on a recent study of over-the-counter cold rem-

edies by the Food and Drug Administration * which peti-

tioner alleges found Listerine ‘‘likely to be effective.’’ **

Its argument is two-pronged: first, that the fact that the

Commission’s findings differ from the FDA’s proves that

the Commission’s findings are wrong; and second, that

it was error for the Commission to refuse to reopen its

proceedings when the FDA study was released. We con-

clude that both of these arguments are without merit for

the simple reason that the FDA study does not, to any sig-

nificant degree, contradict the Commission’s findings.

The FDA study is the product of an expert pane! ap-

pointed in 1972 to study all over-the-counter cold, cough,

allergy, bronchodilator, and anti-asthmatic drug products

—some 180 ingredients used in as many as 50,000 prod-

ucts.” The panel’s draft report was issued in February

1976, two months after the FTC issued its order against

Listerine. The FTC refused to reopen its proceedings to

consider the draft report. In September 1976 the expert

panel’s report was published, but it has not yet been

adopted by the Commissioner of the FDA.”

* Respondent’s br. at 32 n.27.

* Petitioner’s motion requesting that the court take judicial

notice of the FDA study is hereby granted.

** See note 23 infra.

* JA 3121-3129, 3280.

“41 Fep. Reo. 38312 (Sept. 9, 1976). The Commissioner stated :

‘*The Commissioner has not yet fully evaluated the report, but has

concluded that it should first be issued as a formal proposal to

obtain full public comment before any decision is made on the

recommendations of the Panel.”’ Jd.

58a

The only evidence pertinent to the effectiveness of Lis-

terine that the FDA panel considered was the St. Barnabas

study, and it appears that reference to it was included in

the report only as an afterthought.’* More importantly,

the reference which does appear does not endorse or adopt

the St. Barnabas study; the FDA report merely describes

it and recounts the results.” The panel’s own conclusions

are reflected in the operative language repeated for each

ingredient of Listerine:

There are no well-controlled studies documenting the

effectiveness of [eucalyptol/eucalyptus oil, menthol,

thymol] as an [antitussive, expectorant, nasal decon-

gestant).

1° The draft report published in February 1976 did not refer to

mouthwashes or the St. Barnabas study. After it was issued the

panel received a letter, apparently from petitioner, ‘‘concerning

the fact that no references were made in the report on a submission

concerning the use of volatile aromatics in mouthwashes for any

symptomanie relief of the common cold.’’ Minutes of the panel’s

meeting of March 2 and 3, 1976, JA 3045. The panel then voted to

add to the sections of the report dealing with menthol, eucalyptol,

and thymol (three of Listerine’s active ingredients) a paragraph

describing the St. Barnabas study. JA 3046.

2° The effect of rinsing and gargling twice daily with an aqueous

mixture of volatile substances on the incidence of colds and

the severity of the symptoms associated with colds was evalu-

ated in a long-term double-blind, placebo-controlled, subjective

study in school children. The results of the study revealed

milder nasal symptoms and cough symptoms in individuals

using the medicated mouthwash as compared to the placebo.

Although the medicated mouthwash contained [eucalyptol,

menthol, thymol], the results did not demonstrate the contribu-

tion of this component to the overall alleviation of symptoms

eee

41 Fep. Reo. 38348 (1976); see also id. at 38351 38353, 38409,

38411, 38413. To the extent that the report describes

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