Stanley Laboratories v. Federal Trade Commission

• Decision Date: 20 October 1943
• Docket Number: No. 10149.,10149.
• Citation: 138 F.2d 388
• Parties: STANLEY LABORATORIES, Inc., et al. v. FEDERAL TRADE COMMISSION.
• Court: U.S. Court of Appeals — Ninth Circuit

138 F.2d 388 (1943)

STANLEY LABORATORIES, Inc., et al. v. FEDERAL TRADE COMMISSION.

No. 10149.

Circuit Court of Appeals, Ninth Circuit.

October 20, 1943.

Leo Levenson, of Portland, Or., and James J. Hayden, of Washington, D. C., for petitioners.

W. T. Kelley, Chief Counsel, F.T.C., Joseph J. Smith, Jr., Asst. Chief Counsel, and Jno. W. Carter, Jr., Sp. Atty., F.T.C., all of Washington, D. C., for respondent.

Before GARRECHT, STEPHENS and HEALY, Circuit Judges.

GARRECHT, Circuit Judge.

The single issue here presented is whether there is substantial evidence to support the respondent's findings that the petitioners' use of the letters "M.D.", either alone or in conjunction with the picturization of a doctor, nurse, or cross, in connection with a medicated douche powder put out by the petitioners, is deceptive in that it tends to lead the public to believe that the powder is endorsed by the medical profession or by the American National Red Cross.

This is an original proceeding upon a petition to review and set aside an order to cease and desist issued by the respondent, pursuant to a complaint charging petitioners with engaging in unfair and deceptive acts and practices in commerce, in violation of the Federal Trade Commission Act, 15 U.S.C.A. § 41 et seq.

The complaint alleged that the petitioners sold and transported in interstate commerce certain drug products for feminine hygiene, including "MD Medicated Douche Powder"; that the petitioners in the course of their business disseminated false advertisements concerning their products; that by the use of the letters "MD" in designating their products, the petitioners made "false, deceptive and misleading representations to the effect that their products are either prescribed or compounded by physicians or that they bear the endorsement or recommendation of the medical profession."

In their answer, the petitioners alleged that they had long since discontinued the sale of all the products referred to in interstate commerce, except the MD powder, and denied that the use of the letters "MD" was intended to deceive or mislead, or did in fact deceive or mislead the public into the belief that MD powder was endorsed or recommended by the medical profession generally.

As furnishing the setting for the respondent's cease and desist order, the following admissions in the brief of the petitioners are significant:

1. The petitioners disseminated false advertisements through the United States mails, for the purpose of inducing the purchase of their products.

2. The petitioners, by means of those false advertisements and otherwise, represent, directly and by implication, that the douche powder "is a recent development of scientific research which is endorsed by leading physicians and surgeons."

3. By the use of the term "Laboratories" in their corporate and trade name, the petitioners represented that they owned a laboratory equipped for the compounding of medicinal preparations and for research in connection therewith; whereas "In truth and in fact, the petitioners neither own nor control any * * * laboratory wherein their medicinal preparations are compounded or wherein any research activities are conducted."

These admissions in the brief refer specifically to certain paragraphs in the "Findings as to the Fact" filed by the respondent. In addition, there are other admissions in the record, which are not, however, repeated in the petitioners' brief:

1. The false advertisements referred to above had the capacity and tendency to mislead a substantial portion of the buying public, and did cause a portion of such public to purchase the petitioners' preparations.

2. The use by the petitioners of such descriptive words and phrases as "dependable", "insure — personal hygiene", "dependable safeguard", and "effective, reliable antiseptic powder" in referring to the MD Medicated Douche Powder has a tendency to cause prospective purchasers to believe that the preparation is a preventive against conception and a germicide which will combat any form of bacteria; whereas the preparation is not such a preventive, and is not an adequate prophylactic.

The petitioners in their pleadings have sought to qualify their various admissions by reference to a "stipulation" filed by their attorney on January 31, 1940. Similarly, one of the three "points" in their brief is that this "stipulation" "makes a cease and desist order improper and unnecessary in this case."

Nowhere do the petitioners give us a record reference to such a "stipulation", nor do they attempt to outline its provisions. Our own independent scrutiny of the transcript convinces us that there was no such stipulation. The document to which the petitioners apparently refer is a letter from their counsel addressed to the respondent, offering a stipulation to cease and desist from certain representations, which letter is one of the unprinted exhibits herein. This offer was not accepted by the respondent; but even if it had been, it would not have constituted a defense to the present proceedings. Federal Trade Commission v. Goodyear Tire Company, 304 U.S. 257, 260, 58 S.Ct. 863, 82 L.Ed. 1326; Philip R. Park, Inc., v. Federal Trade Commission, 9 Cir., 136 F.2d 428, 430. Furthermore, the proffered stipulation did not relate to the use of the initials "MD", which is the core of the present controversy. On the contrary, the letter in question insisted on the petitioners' right to continue the use of those initials.

Indeed, the second paragraph of the very letter that is so insistently relied upon by the petitioners virtually concedes the unlawful character of their advertising: "I am satisfied from my examination of the law applicable to this matter that the advertising heretofore employed by my clients is in apparent violation of the law in most of the particulars set forth in the proposed stipulation forwarded to my clients by your office. * * *"

The advertisements themselves, which are exhibits in this case, amply justify counsel's misgivings. They are of a deceptive and generally reprehensible character. One contains the photograph of a young woman in a trained nurse's garb, speaking into a telephone. Above the picture is the caption, in quotation marks: "Yes * * * M.D. is Decidedly Better." Another advertisement carries the picture of a young woman, also at the telephone who is represented as saying: "Thank you * * * for your Advice, Doctor!" A third piece of publicity consists of the photograph of an elderly, bespectacled man wearing a Vandyke beard, and above is the caption "Your Doctor Will Tell You —". Still others show pictures of women wearing expressions of pain and anxiety, with such captions as "Why Risk Your Health and Beauty?", "Now let's look at this thing sensibly", "You, too, should change to M.D." And invariably and inevitably, the initials "M.D."—with or without the periods after the letters — are prominently displayed in the body of the advertisements.

With this background, we turn to the testimony bearing on the specific question as to whether the use of the initials "M.D." in connection with the medicated douche was calculated to mislead or did in fact mislead the general public.

The respondent offered the testimony of five physicians to the effect that the public is led to believe that the letters "MD" on MD Medicated Douche Powder mean that the product is endorsed by the medical profession. The petitioners seek to brush this testimony aside with the flippant comment that "such clairvoyance should be rejected by a court of law as beyond the scope of the medical profession." But it is decidedly within the scope of the medical profession to caution patients against the dangers of self-diagnosis, self-treatment, and self-medication, and the indiscriminate use of patent medicine; and in the discharge of this duty physicians acquire considerable insight into purchasing psychology of their patients. As was said in Benton Announcements, Inc., v. Federal Trade Commission, 2 Cir., 130 F.2d 254, 255: "Persons whose business carries them among the buyers of a product are certainly qualified sources of information as to the buyers' understanding of the words they hear and use." So in the instant case, physicians would be well qualified to testify as to what patients would understand by the legend "M.D." on a container of medicated douche.

Indeed, there is testimony in this record on this precise point. Dr. R. Phillip Smith, a specialist in obstetrics and gynecology, said:

"I think one thing that stands out in my mind is the fact that these douche powders are put on the market for patients who go into the drugstore and ask for something to use for a douche and the druggist gives them this, and they start using * * * it, and get into some very dire effects sometimes.

"Part of my business is getting patients out of trouble that have gotten themselves in with patent medicines or drugs that they have used over a period of time."

Certainly it is part of a practitioner's professional duty to ascertain what makes women purchase such nostrums, for thus he can more effectively warn them against the dangers of self-medication.

Furthermore, the petitioners are in error when they state that "All of the Commission doctors testified that they were not deceived by the use of the letters `MD' or by the use of the likeness of a nurse, or a doctor, or a cross." Some of the experts did testify that they knew that no reputable physicians would endorse such a product; but there was other medical testimony to the effect that some of the expert witnesses themselves were misled or at least confused by the use of the initials. For instance, Dr. Norman A. David, a teacher at the University of Oregon Medical School, testified:

"The only interpretation I have of the letters `M.D.' is that it refers to Doctor of Medicine, and therefore would be a product that is endorsed by doctors. The letters stand for `Medical Doctor', and...