foods such as Daily Greens. Pharmtech's failure to reveal these material facts, as required by 15 U.S.C. § 55, makes it highly likely that its representations are false in the second respect.
Section 12 of the Act also requires a showing that the challenged advertisement was disseminated "for the purpose of inducing" the purchase of Daily Greens, or was "likely to induce the purchase" of Daily Greens. 15 U.S.C. § 52. The FTC has shown that it can sufficiently establish this element. Pharmtech's representation that Daily Greens have certain anti-cancer effects are highly likely to induce and persuade the average consumer to purchase Daily Greens. Indeed, it is difficult to imagine that any manufacturer would sponsor an advertisement absent the purpose of influencing the purchase of its product.
Moreover, Pharmtech's claim that Daily Greens help build certain important biological defenses appears to be a thinly veiled attempt to soften the impact of a direct claim that its product possesses cancer-reducing qualities. Pharmtech itself admits that the biological defenses claim is a "more popular and less scientific" version of its cancer claims, Defendant's Opposition at 17, and the claim appears in the same sentence as the reference to a "Report commissioned by the National Cancer Institute . . ."
If this claim is synonymous with the cancer claims, it is false for the same reasons that the explicit cancer claims are false.
If it is not, the claim must fail because the Report makes no mention of the role of a food or nutrient supplement in building biological defenses.
b. Unfair or Deceptive Acts and Practices.
Section 5 of the Act declares that unfair or deceptive acts or practices in or affecting commerce are unlawful.
Under section 5, the capacity of an advertisement to deceive consumers is judged by the impression conveyed by the entire advertisement, and not by the impact of isolated words and phrases. Beneficial Corp. v. FTC, 542 F.2d 611, 617 (3rd Cir. 1976), cert. denied, 430 U.S. 983, 52 L. Ed. 2d 377, 97 S. Ct. 1679 (1977); Murray Space Shoe Corp. v. FTC, 304 F.2d 270, 272 (2d Cir. 1962). An advertisement may be deceptive if it has a tendency to convey a misleading impression, even if an alternative nonmisleading impression might also be conveyed. Chrysler Corp v. FTC, 182 U.S. App. D.C. 359, 561 F.2d 357, 363 (D.C. Cir. 1977).
Moreover, an advertisement's reference to a public issue as a means to induce consumer purchases is relevant to whether the advertisement is misleading or deceptive. Standard Oil Co. of California v. FTC, 577 F.2d 653, 659 (9th Cir. 1978) (air pollution is a matter of public concern which is relevant to the lawfulness of the advertisement). This is because "the representations which bear on the characteristics of the product may take on increased importance in the mind of the public." Id. The advertiser's good faith or absence of intent to deceive is irrelevant. Warner-Lambert Co. v. FTC, 183 U.S. App. D.C. 230, 562 F.2d 749, 763 n. 70 (D.C. Cir. 1977), cert. denied, 435 U.S. 950, 98 S. Ct. 1576, 55 L. Ed. 2d 800 (1978); Chrysler Corp., 561 F.2d at 363 n. 5.
Pharmtech's representations that the Report supports a finding that Daily Greens reduces the risk of cancer are unfair and deceptive because they convey a misleading impression. Pharmtech has played on the average consumer's well-founded fear of cancer as a vehicle for the sale of its product,
see Standard Oil Co. of California, 577 F.2d at 659, and has used the findings of the Report to create the impression that Daily Greens will reduce the risk of cancer. Since there are no findings concerning the beneficial cancer effects of products like Daily Greens, and the Report in fact disclaims such a conclusion, Pharmtech's claims are misleading.
Many of the facts which establish that the FTC is likely to prevail in its claims that Pharmtech's representations are false also support the FTC's deceptive advertising charges. It should be noted, however, that this Court makes an independent legal finding on the likelihood of a violation of section 5. This finding does not stand or fall on the likelihood that Pharmtech has violated section 12.
The Commission has also employed a "reasonable basis" test as a means of determining whether an advertisement is unfair or deceptive. Section 5 requires a manufacturer to have a "reasonable basis" for any affirmative performance claims for a product. Pfizer, Inc., 81 F.T.C. 23, 62 (1972), cited with approval in Porter & Dietsch, Inc. v. FTC, 605 F.2d 294, 302 n. 5 (7th Cir. 1979), cert. denied, 445 U.S. 950, 63 L. Ed. 2d 784, 100 S. Ct. 1597 (1980); Crown Central Petroleum Corp., 84 F.T.C. 1493, 1548 (1974), aff'd mem. 174 U.S. App. D.C. 241, 530 F.2d 1093 (D.C. Cir. 1976). Absent such a reasonable basis, the advertisement is unfair, Pfizer, 81 F.T.C. at 62, and deceptive. National Dynamics Corp., 82 F.T.C. 488, 550 n. 10 (1973), aff'd in part, remanded on other grounds, 492 F.2d 1333 (2d Cir. 1974), cert. denied, 419 U.S. 993, 95 S. Ct. 303, 42 L. Ed. 2d 265 (1974).
The requirement of a reasonable basis for a product claim differs with the particular product at issue, and depends on the type of claim and product, the consequences of a false claim, and the degree to which consumers will rely on the claim. Pfizer, 81 F.T.C. at 64. When an advertiser invokes scientific sources or data in support of health claims for its products, a "reasonable basis" requires that the claims be supported by competent scientific evidence. Porter & Dietsch, Inc., 605 F.2d at 302 n. 5. In this instance, the defendant has utilized a scientific document to support the alleged health benefits of Daily Greens.
The FTC has also established that it is likely to prevail on its claims that the defendant lacks a reasonable basis for its claims that the use of Daily Greens reduces the risk of cancer. For its claims, Pharmtech relies solely on its interpretation of the Committee's findings and the studies considered by the Committee, and a single affidavit prepared by Mr. William Vaughan. Mr. Vaughan is currently the Director of Research at Protein Research Associates, the laboratory which developed Daily Greens.
Although the FTC seriously questions Mr. Vaughan's qualifications and credibility, see FTC Reply at 2-3, Robbins Affidavit (September 9, 1983) (National Academy of Sciences) at para. 1, this Court finds it unnecessary to resolve the question of his expertise. The opinion that the Committee's findings can be applied to Daily Greens is flatly contradicted by the Report itself, whose literal language is the best evidence of its conclusions. Moreover, Vaughan's conclusions are based on studies included in the Report, and do not provide additional evidence which would support the defendant's claims.
For these reasons, the submissions fail to establish that the Committee's findings support Pharmtech's claims, or that its claims are supported by any other scientific evidence.
3. Weighing the Equities.
Once the FTC has established a likelihood of ultimate success on the merits, the Court must weigh the equities in order to determine whether an injunction would be in the public interest. Simeon Management Corp., 532 F.2d at 717. The public equities on one side of the equation include possible harm to consumers, cost of the product, and the availability of alternate products, balanced against such private equities as the financial harm to the manufacturer. FTC v. Simeon Management Corp., 391 F. Supp. 697, 707 (N.D. Cal. 1975), aff'd, 532 F.2d 708 (9th Cir. 1976). A showing that the company will not realize an expected financial gain if a preliminary injunction is issued does not outweigh an FTC countershowing of likelihood of ultimate success. Weyerhaeuser, 665 F.2d at 1083, n. 26 (private gain from a transaction which the FTC has shown is likely to violate the antitrust laws does not merit weight); FTC v. National Tea Co., 603 F.2d 694, 697 (8th Cir. 1979); Simeon Management Corp., 391 F. Supp. at 707.
In this case, the FTC has clearly demonstrated that Pharmtech's representations that the use of Daily Greens reduces the risk of cancer are false, misleading and deceptive. This deception is especially harmful because it preys on consumers' fears about a health issue which has generated public concern. See Standard Oil Co. of California, 577 F.2d at 659. In addition, people who use Daily Greens as a substitute for whole vegetables may more likely than not neglect to eat those vegetables. This is a very real harm in view of the Report's findings that the consumption of whole vegetables has a positive effect on the reduction of cancer in humans.
The availability of whole vegetables also indicates that consumers do not have an overriding need for Daily Greens. A consumer who desires the protective benefit of vegetables is able to purchase and consume these vegetables in a nondehydrated form. Moreover, the evidence indicates that Daily Greens are not inexpensive. A bottle of Daily Greens costs nearly $15 in the Washington, D.C. Metropolitan area, Snyder Declaration, supra, P 12.
Admittedly, the issuance of a preliminary injunction may have certain adverse financial consequences. Indeed, Pharmtech has submitted an affidavit stating that some retailers have not purchased Daily Greens because of the adverse publicity which has been generated by this litigation, and asserts that Pharmtech would incur certain costs in revising its television and print advertising.
Defendants' Opposition, Epstein Affidavit (August 25, 1983) (President of Pharmtech) at paras. 2-4. These costs, while not insubstantial, do not in any respect outweigh the public equities to be considered.
Pharmtech also voices the concern that the prohibition of the representations at issue would raise a serious First Amendment question. While commercial speech is entitled to a degree of First Amendment protection, Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, 425 U.S. 748, 48 L. Ed. 2d 346, 96 S. Ct. 1817 (1976), the First Amendment does not prohibit government regulation of false or misleading advertising. Warner-Lambert Co., 562 F.2d at 758-59; Simeon Management Corp., 532 F.2d at 713; National Commission on Egg Nutrition, 517 F.2d at 489. Here, injunctive relief is appropriate because the Commission has demonstrated a likelihood of success in demonstrating that the advertisements violate the Act. Pharmtech, of course, is free to disseminate advertisements which are not false or misleading.
The record in this proceeding clearly demonstrates that the Commission has shown a likelihood of ultimate success in establishing that Pharmtech has disseminated false, misleading, and deceptive advertisements. After weighing the equities, the Court determines that an injunction against these practices would be in the public interest. Pharmtech should be enjoined from making the challenged representations about its product Daily Greens.
An appropriate order accompanies this Memorandum Opinion.