Petition to Review Order of the Federal Trade Commission.
Before TREANOR and KERNER, Circuit Judges, and LINDLEY, District Judge.
This is a petition by Dr. W. B. Caldwell, Inc., to review the proceedings and to set aside a cease and desist order of the Federal Trade Commission, upon complaint charging that petitioner's advertising was false and misleading and constituted unfair methods of competition in commerce, in violation of the Federal Trade Commission Act, § 5, 15 U.S.C.A. § 45.
Dr. W. B. Caldwell graduated from a medical college in 1875 and immediately engaged in the practice of medicine. In the course of his practice he originated a medicinal preparation which was marketed by a company with which he was connected up to the time of his death. Petitioner is the successor of this company. It manufactured, sold and distributed this preparation in interstate commerce, selling and distributing it in bottles placed in a carton wrapper, and pamphlets containing representations relative to the preparation were wrapped around each bottle.
The words "Dr. Caldwell's Syrup Pepsin combined with Laxative Senna Compound" are printed on the label. In smaller letters are the words "Alcohol 4 1/2 percent" and in still smaller letters the words "Syrup Pepsin composed of Senna Cascara Sagrada Peppermint Oil Aromatics." In larger letters appear the words "A Laxative For Constipation."
The gist of the complaint as amended charged that petitioner's advertising was false and misleading in that it represented that the use of pepsin in the preparation had a therapeutic value as a laxative and in the treatment of constipation.
The Commission entered an order that the petitioner, among other things, cease and desist from:
"(4) Representing through the use of the word 'pepsin' alone or in association with any other word or words in the designation or description of such preparation * * * that said preparation owes its laxative and cathartic properties to its pepsin contents;
"(5) Using the word 'pepsin' alone or in association with any other word or words to designate, describe or refer to any preparation which does not contain a sufficient quantity of pepsin, as an active ingredient, to possess substantial therapeutic value by reason of such pepsin content;
"(6) Using any term or name to describe, designate or refer to such preparation containing senna and cascara sagrada as its active ingredients, which name or names conceal or deceptively minimizes the presence of such ingredients." In substance the pertinent facts found by the Commission are that pepsin has no therapeutic value as a laxative or as a relief from constipation; that the pepsin in the preparation is used as a vehicle for the senna and cascara sagrada; that the use of the words Syrup Pepsin and Syrup of Pepsin to describe and designate the preparation in which the active ingredients are senna and cascara sagrada is deceptive and misleading and has the tendency to cause the purchasing public who are uninformed as to the therapeutic value of pepsin to have the mistaken belief that the pepsin in such preparation has thereapeutic value in the treatment of constipation; that the use of the aforesaid tems has the tendency to cause the purchasing public who are informed as to the value and purpose of the use of pepsin to have the mistaken belief that said preparation is a pepsin preparation designed and used for the purposes for which a preparation in which pepsin is the princiapl active ingredient would be used; that senna and cascara sagrada are very powerful drugs and the use of said preparation in a sufficient dosage will produce a cathartic effect; that the use of the aforesaid terms to describe a preparation in which pepsin serves as a vehicle for senna and cascara sagrada is misleading and deceptive, and has the capacity and tendency to conceal the presence of the senna and cascara sagrada and to mislead and deceive the purchasing public as to the active ingredients in the preparation.
The Commission also found as a fact that these false, deceptive and misleading statements had a tendency and capacity unfairly to divert trade to petitioner from its competitors.
At the outset it is insisted that this proceeding is not in the interest of the public. No one can gainsay it is in the public interest to prevent the use of methods that have a tendency and capacity to injure unfairly the user's present or potential competitors and that such practice may be restrained. In determining whether a proceeding is in the public interest the Commission exercises a broad discretion, Federal Trade Commission v. Klesner, 280 U.S. 19, 28, 50 S. Ct. 1, 74 L. Ed. 138, 68 A.L.R. 838, and each case must be determined upon its own facts. Federal Trade Commission v. Beech-Nut Co., 257 U.S. 441, 453, 42 S. Ct. 150, 66 L. Ed. 307, 19 A.L.R. 882, and when misbranded goods attract customers by means of the fraud which they perpetrate, trade is diverted from the producer of truthfully marked goods, Federal Trade Commission v. Winsted Co., 258 U.S. 483, 493, 42 S. Ct. 384, 66 L. Ed. 729. See also Federal Trade Commission v. Real Products Corporation, et al., 2 Cir., 90 F.2d 617, 619; Federal Trade Commission v. Artloom Corporation, 3 Cir., 69 F.2d 36, 38; and Armand Company v. Federal Trade Commission, 2 Cir., 78 F.2d 707, 710.We conclude that under the circumstances in the instant case the proceeding was in the interest of the public.
Counsel also argues that the findings of fact are not supported by substantial evidence, and he insists there is nothing in the record which proves the ultimate facts ...