Koch v. Federal Trade Commission
| Decision Date | 08 July 1953 |
| Docket Number | No. 11495.,11495. |
| Parties | KOCH et al. v. FEDERAL TRADE COMMISSION. |
| Court | U.S. Court of Appeals — Sixth Circuit |
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Nathan B. Goodnow, Detroit, Mich., Robert D. Dunwoodie and Marshall M. Massey, Detroit, Mich., on brief; Dykema, Jones & Wheat, Detroit, Mich., of counsel, for petitioners.
Donovan Divet, Washington, D. C., W. T. Kelley, General Counsel, Robert B. Dawkins, Asst. General Counsel, Washington, D. C., on brief, for respondent.
Before ALLEN, MARTIN and MILLER, Circuit Judges.
This case arises upon a petition to review a cease and desist order issued against the petitioners by the Federal Trade Commission.
The complaint alleged that Koch Laboratories, Inc., and petitioners William F. Koch and Louis G. Koch, President and Secretary-Treasurer, respectively, of Koch Laboratories, Inc., were engaged in the manufacture and in the sale and distribution in interstate commerce of certain medicinal preparations designated as "Glyoxylide," "B-Q", and "Malonide Ketene Solution" and that, in the course and conduct of their business, petitioners William F. Koch and Louis G. Koch disseminated and caused to be disseminated, by the United States mails and by various means in commerce, false, misleading and deceptive statements and representations as to the therapeutic value of their aforesaid medicinal preparations for the purpose of inducing the purchase of these preparations.
It was alleged that through the use of these statements and representations petitioners represented directly or by implication that their product "Glyoxylide" is an adequate treatment for any type or stage of cancer, leprosy, malaria, coronary occlusion or thrombosis, multiple sclerosis, arteriosclerosis, angioneourotic oedema, obliterative endarteritis, asthma, hay fever, dementia praecox, epilepsy, psoriasis, poliomyelitis, tuberculosis, syphilis, arthritis, and osteomyelitis, any type of allergy or infection, abscess of the prostate gland, septicaemia, and insanity; that the product "B-Q" constitutes an adequate treatment for all infections and their sequelae, including gonorrhea, salpingitis, sinusitis, meningitis, infantile paralysis, septicaemia, streptococcus sore throat, pneumonia, undulant fever, malaria, coronary thrombosis, the allergies, diabetes, cancer, arthritis, and the degenerative diseases; that the preparation "Malonide Ketene Solution" constitutes an adequate treatment for the allergic diseases, infections, diabetes, cancer, double pneumonia, osteomyelitis, and postoperative meningitis, and that through the use of the term "for allergy, cancer, infection" to describe and refer to properties of the aforementioned products, they have represented such products to be of therapeutic value in the treatment of all infections, cancer and allergies.
The Commission in its findings of fact in general sustained the allegations of the complaint, held that the advertisements issued by the petitioners violated Sections 5 and 12 of the Federal Trade Commission Act, 15 U.S.C.A. § 41 et seq. and ordered that the advertisements be discontinued.
The petitioners in their answer concede that the statements referred to in the complaint appeared in books, pamphlets and circulars published by them. While they contend that this printed matter had been distributed only to members of the medical profession, they admit that Exhibit 16, a booklet on "Chemistry's Victory Over Disease," and Exhibit 17, a booklet on "Clinical Demonstration of the Laws of Chemical Structure that Determine Immunity to Disease and Their Application in the Treatment of Patients" were distributed to customers. Petitioners contended below and reiterate here that the statements as to the case histories included in the publications were entirely truthful, that those as to the operation of the drugs were statements of scientific theories or opinions, which were in fact their honest and well-considered theories, and the therapeutic value of the drugs was shown by the experience of physicians who used them. They also contend (1) that there is no substantial evidence to support a finding that they disseminated advertising to persons not members of the medical profession or that petitioners' advertising contained false representations of material fact, and (2) that, since representations of therapeutic value are statements of opinion, the Commission had no authority to pass upon them.
Pertinent copies of the Commission's findings and conclusions are appended herewith as Appendix 1.
Sections 5 and 12 of the Federal Trade Commission Act, with certain immaterial omissions, read as follows:
The burden of proof was on the Commission to establish the material allegations of the complaint. This burden was successfully carried. The evidence on issues of fact was largely controverted. However, the record as a whole supports the finding of the Commission that the representations were misleading and false in material matters, that the products have no therapeutic value, and that the advertisements were sent both to members of the medical profession and to lay persons.
Thirty-three physicians and scientists testified for the Commission to the effect that petitioners' products had no therapeutic value. Thirty-six witnesses, including twenty-nine physicians, testified on behalf of petitioners.
Petitioners urge and the record shows that the Commission's witnesses have had no clinical experience with their products. This objection goes to the weight but not to the competence of the testimony. The general medical and pharmacalogical knowledge of the doctors qualified them to testify as to the lack of therapeutic value of the Koch products. Charles of the Ritz Distributors Corporation v. Federal Trade Commission, 2 Cir., 143 F.2d 676, 679; Dr. W. B. Caldwell, Inc., v. Federal Trade Commission, 7 Cir., 111 F.2d 889; Neff v. Federal Trade Commission, 4 Cir., 117 F.2d 495; John J. Fulton Co. v. Federal Trade Commission, 9 Cir., 130 F.2d 85, certiorari denied November 9, 1942, 317 U.S. 679, 63 S.Ct. 158, 87 L.Ed. 544.
Moreover, the clinical data relied on by petitioners were shown by cross-examination to be based upon insufficient diagnosis or to be inaccurate because of such circumstances as the use of conventional treatment along with the product. For example, benign lesions which are inflammatory were shown to be difficult to distinguish from true cancer. A claimed cancer of the oesophagus described in the case histories presented by petitioners was stated by an expert physician testifying for the Commission to present the symptoms of an abscessed throat. One case originated in carcinoma which caused removal of the uterus, ovaries, and tubes of a patient of one of the doctors who testified for petitioners. Radium treatment was also given. Because the patient suffered severe pain and experienced passage of blood through the rectum the doctor testifying for petitioners concluded that there was a metastasis which established that carcinoma of the rectum existed. He took no biopsy to confirm this. The expert testifying for the Commission concluded that the symptoms were those of delayed radium reaction and that there was no metastasis.
No biopsy had been taken in many of the cases presented in evidence claimed to involve malignant tumor. One witness for petitioners who stated that he found Glyoxylide more effective in the treatment of tumors than anything else said that he made no laboratory tests, took no biopsies, and diagnosed tumors by palpation. Another doctor who testified as to a number of claimed cures of cancer by the Koch method said that he preferred not to use a biopsy because biopsies cause "traumatism to the growth." This conclusion is disputed by a number of expert physicians. It is the weight of medical authority, as shown by this record, that, while even in biopsies there is a margin of error, microscopic examination of the tissue of a tumor is the most accurate test known for malignancy.
The Commission was clearly correct in its conclusion that the evidence relating to the case histories is not determinative as to therapeutic value of the drugs in question.
A principal contention is that the order of the Federal Trade Commission invades the protection afforded by Section 15 (a) of the Federal Trade Commission Act, 15 U. S.C.A. § 55. This section reads as follows:
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