Carter Products, Inc. v. FTC

• Decision Date: 27 September 1963
• Docket Number: No. 19778.,19778.
• Citation: 323 F.2d 523
• Parties: CARTER PRODUCTS, INC., and Sullivan, Stauffer, Colwell & Bayles, Inc., Appellants, v. FEDERAL TRADE COMMISSION, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

323 F.2d 523 (1963)

CARTER PRODUCTS, INC., and Sullivan, Stauffer, Colwell & Bayles, Inc., Appellants, v. FEDERAL TRADE COMMISSION, Appellee.

No. 19778.

United States Court of Appeals Fifth Circuit.

September 27, 1963.

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William L. Hanaway, Breed, Abbott & Morgan, New York City, for petitioners-appellants Carter Products, Inc., and Sullivan, Stauffer, Colwell & Bayles, Inc., Stoddard B. Colby, New York City, of counsel.

Richard W. Whitlock, Atty., J. B. Truly, Asst. Gen. Counsel, James McI. Henderson, Gen. Counsel, F. T. C., Washington, D. C., for Federal Trade Commission.

Before PHILLIPS,^* WISDOM and GEWIN, Circuit Judges.

WISDOM, Circuit Judge.

Everyone knows that on TV all that glisters is not gold. On a black and white screen, white looks grey and blue looks white: the lily must be painted. Coffee looks like mud. Real ice cream melts much more quickly than that firm but fake sundae. The plain fact is, except by props and mock-ups¹ some objects cannot be shown on television as the viewer, in his mind's eye, knows the essence of the objects.

The technical limitations of television, driving product manufacturers to the substitution of a mock-up for the genuine article, if they wish to use what they may regard as perhaps their most effective advertising medium, often has resulted in a collision between truth and salesmanship.² "What is truth?", has been asked before. On television truth is relative. Assuming that collisions between truth and salesmanship are avoidable, i. e., that mock-ups are not illegal per se, the basic problem this case presents is: what standards should the Federal Trade Commission and the courts work out for television commercials so that advertisers will appear to be telling the truth, consistently with Section 5 of the Federal Trade Commission Act prohibiting unfair advertising practices.

This case is before us on petition for review of an order issued by the Federal Trade Commission directing the petitioners to cease and desist from engaging in certain unfair methods of competition in violation of Section 5 of the Act, 15 U.S.C.A. § 45.³

The Commission charges Carter Products, Inc., manufacturer of a popular aerosol shaving cream, "Rise", and other products, with having falsely represented in television commercials that shaving creams competing with Rise dry out during the course of a shave, while Rise stays moist and creamy. Sullivan, Stauffer, Colwell & Bayles, Inc., an advertising agency handling the Rise account, and S. Heagan Bayles, an executive of the agency, are also charged.

The Hearing Examiner found that the advertisement was misleading, unfair, and damaging to competing products of Rise. He dismissed the action against Bayles in his individual capacity. The Commission approved the findings of the Examiner but narrowed the scope of the Examiner's cease and desist order.

This Court viewed the Rise commercial. It opened with a silhouette of a man shaving with "ordinary" instant cream. A jagged line followed the razor down his face. A voice said, "Guard against razor scratch". After the picture and the words were repeated, a close-up showed a man shaving in great discomfort; the lather had dried out. Superimposed on this picture were the words, "Ordinary Lathers Dry Out." The announcer said: "The scratches, scrapes and burns you often get with ordinary aerated lathers that dry out on your face * * * and let your whiskers dry out, too. Your razor tugs and pulls." The picture then shifted to a can of Rise from which a rich, creamy lather was released onto a man's hands. "Stays Moist and Creamy" was flashed onto the screen. The next episode showed a man shaving with Rise. He was enjoying this shave. Again "Stays Moist and Creamy" appeared on the screen followed by the legend, "the wetter lather that DOESN'T DRY OUT". Throughout this happy scene the announcer described the virtues of Rise:

But now there\'s new instant lather * * * that stays moist and creamy * * * keeps your whiskers wet and soft all through your shave * * * gives you closer, more comfortable shaves. It\'s Rise patented small bubble lather * * * the richest, wettest lather ever made. Instead of drying out on your face * * * Rise wetter lather puts more moisture into whiskers * * * keeps them wet and soft * * * all through your shave. Guards against Razor scratch. * * * Gives you closer, more comfortable shaves in half the time. Shave with Rise * * * the wetter lather that doesn\'t dry out on your face.

As a matter of fact, the "ordinary lather" used in the commercial was not a lather. It was a mock-up. The white creamy-looking substance simulating shaving cream was made from a special formula consisting of 90 per cent water and a foaming agent known as "ultra-wet 60L". This imitation "ordinary lather" did not contain any soaps or fatty acid salts, the ingredients used to keep shaving cream from breaking down. It is not surprising therefore that the "lather" came out of the can in a good puff and then rapidly disappeared.

February 9, 1960, on advice of counsel, Carter Products stopped using that particular television advertisement. The Commission issued a complaint on June 15, 1960, alleging that the use of the simulated lather did "not provide a valid comparison of the respective qualities of `Rise' and competing products as shaving lathers and tends to disparage competing lathers."⁴

The petitioners' major defense is that their commercial was not a comparison of Rise with all competing products, but was simply a comparison of the moistureretaining properties of Rise with the drying-out properties of inferior shaving creams. They contend that practical limitations imposed by television photography and the necessity of completing the commercial within sixty seconds compelled the use of the mock-up.

I.

A. First, in considering the Commission's findings and order, the reviewing court must recognize certain fundamental principles. "The meaning of advertisements or other representations to the public, and their tendency or capacity to mislead or deceive, are questions of fact to be determined by the Commission". Kalwajtys v. F. T. C., 7 Cir., 1956, 237 F.2d 654, cert. den'd, 1957, 352 U.S. 1025, 77 S.Ct. 591, 1 L.Ed. 2d 597. It is the Commission's function to find these facts and a court should not disturb its determination unless the finding is arbitrary or clearly wrong. Kalwajtys v. F. T. C.; Gulf Oil Corp. v. F. T. C., 5 Cir., 1945, 150 F.2d 106, 108. Furthermore, the Commission may draw its own inferences from the advertisement and need not depend on testimony or exhibits (aside from the advertisements themselves) introduced into the record. New Amer. Library of World Literature v. F. T. C., 2 Cir., 1954, 213 F.2d 143; see Zenith Radio Corp. v. F. T. C., 7 Cir., 1944, 143 F.2d 29. The Commission need not confine itself to the literal meaning of the words used but may look to the overall impact of the entire commercial.

B. In non-television cases brought under Section 5(a) the law is clear that an advertisement is illegal if it contains a false claim inducing the purchase of a product inferior to the product the consumer bargained for. The false claim may be a quality,⁵ an ingredient,⁶ or effectiveness⁷ the advertised product does not have. Or the advertisement may disparage competing products by attributing to them inferiorities they do not possess.⁸ In such cases the advertiser acquires a better competitive position in the market as a result of false and unfair practices. As Justice Cardozo said in Federal Trade Commission v. Algoma Lumber Co., 1934, 291 U.S. 67, 54 S.Ct. 315, 78 L.Ed. 655:

"The consumer is prejudiced if upon giving an order for one thing, he is supplied with something else. * * In such matters, the public is entitled to get what it chooses, though the choice may be dictated by caprice or by fashion or perhaps by ignorance. Nor is the prejudice only to the consumer. Dealers and manufacturers are prejudiced when orders that would have come to them if the lumber had been rightly named, are diverted to others whose methods are less scrupulous." 291 U.S. at 78, 54 S.Ct. at 320, 78 L.Ed. 655.

The broad principle expressed by Justice Cardozo in 1934 has not lost any of its vitality.

C. In Colgate-Palmolive v. F. T. C., 1 Cir., 1962, 310 F.2d 89, 94, the "sandpaper" case, the First Circuit formulated the first judicial standards for testing the legality of props and mock-ups in television commercials. Colgate-Palmolive was not a case involving a comparison test and disparagement of competing products. However, we consider the standards worked out in that opinion well-reasoned, in keeping with principles established in non-television cases, and applicable to the case now before us.

In Colgate-Palmolive the commercial purported to demonstrate visually the moisturizing qualities of "Rapid Shave". It showed an actor applying Rapid Shave to what appeared to be sandpaper. Almost immediately after applying the cream, in one stroke of a razor the actor shaved the "sandpaper" clean; "Apply * * * soak * * * and off in a stroke." On television real sandpaper appears to be plain, colored paper, and cannot be shaved until it has soaked "upwards of an hour". As a mock-up, the advertiser used plexiglas covered with a jelly-like substance over which sand was sprinkled.

The Commission held that the commercial was deceptive, finding that Rapid Shave could not shave real sandpaper even after an hour's soaking. The Commission went further. It said that the fact no one buys Rapid Shave to scrape sandpaper is besides the point. Even if the commercial truthfully described Rapid Shave's effectiveness, according to the Commission, it was still deceptive and unfair advertising in that it "misinforms the viewer that what he sees being shown is genuine `tough, dry sandpaper', rather than a plexiglas mockup."⁹ The Commission quoted from Algoma: "The public is entitled to get what...