DECISIONS OF THE COURTS1

IN CASES INSTITUTED AGAINST OR BY THE COMMISSION

CHARLES OF THE RITZ DIST. CORP. v. FEDERAL TRADE COMMISSION 2

No. 133-F. T. C. Dock. 3923

(Circuit Court of Appeals, Second Circuit. July 6, 1944)

CEASE AND DESIST ORDERS-METHODS, ACTS AND PRACTICES-MISREPRESENTATION -ADVERTISING FALSELY OR MISLEADINGLY-LABEL DEPICTIONS-FOOD, DRug and COSMETIC ACT-WHETHER COMMISSION DEPRIVED OF JURISDICTION OVER, BY.

Although the Federal Security Administrator had control of the labeling of cosmetics, the Federal Trade Commission, upon the finding that a manufacturer of cosmetics had falsely represented its products as capable of restoring the youthful appearance of the skin, had jurisdiction to prevent depiction of a label containing the prohibited word "Rejuvenescence." Federal Trade Commission Act, 15 U.S.C.A. sec. 41 et seq.; Federal Food, Drug, and Cosmetic Act sec. 1 et seq., 21 U.S.C.A. sec. 301 et seq.

EVIDENCE-QUALITIES OR PROPERTIES OF PRODUCT-EXPERT TESTIMONY-IF FAMILIARITY WITH PARTICULAR PRODUCT LACKING—THERAPEUTIC Value of ALLEGED REJUVENATING CREAM.

In proceeding before Federal Trade Commission to prevent manufacturer's false advertising of a product as having qualities of restoring the youthful appearance of skin, witnesses qualified as experts by their general medical and pharmacological knowledge were competent to testify as to the lack of therapeutic value of the cream despite their lack of familiarity with manufacturer's product. Federal Trade Commission Act, 15 U.S.C.A. sec. 41 et seq.

EVIDENCE-QUALITIES OR PROPERTIES OF PRODUCT REFUSAL of Seller to DISCLOSE FORMULA-EFFECT WHERE FALSE ADVERTISING ALLEGED.

Manufacturer charged with falsely advertising the rejuvenating qualities of a skin cream was not privileged to stand upon its refusal to disclose the true formula of its preparation as a trade secret and its failure to introduce such evidence was strong confirmation of commission's charges.

1 Citations of Commission court decisions, included for convenience beginning with this volume, such as 1 S. & D., 2 S. & D. -, or 3 S. & D., refer respectively to the volume and page of the three volumes of Commission publications entitled "Statutes and Decisions - Federal Trade Commission, 1914-1929," "Statutes," etc., "1930-1938," and "Statutes," etc., "1939-1943," in which are published Commission court decisions for said periods.

'Reported in 143 F. (2d) 676. For case before Commission, see 34 F. T. C. 1203.

J

EVIDENCE-QUALITIES OR PROPERTIES OF PRODUCT-EXPERT TESTIMONY-IF FAMILIARITY WITH PARTICULAR PRODUCT LACKING-WHERE TESTIMONY UNCONTRADICTED THERAPEUTIC VALUE OF CREAM ADVERTISED AS REJUVENATING.

Uncontradicted testimony of experts, having general medical and pharmacological knowledge in the field, that there was nothing known to medical science which could restore the youthful appearance of the skin, was substantial evidence necessary to support Federal Trade Commission order that manufacturer falsely advertised cream as having such rejuvenating qualities, despite expert's lack of familiarity with the product.

METHODS, ACTS AND PRACTICES MISREPRESENTATION-QUALITIES OR PROPERTIES OF PRODUCT-TRADE-MARK USE-IF DECEPTIVE.

Where Federal Trade Commission's finding, that a skin cream advertised as having ingredients which would restore the youthful appearance of the skin did not have such qualities, was supported by substantial evidence, commission was authorized to find that the use of the trade-mark "Rejuvenescence" was deceptive and misleading, since the word is treated as a common word with the plain meaning of a renewing of youth.

METHODS, ACTS AND PRACTICES-MISREPRESENTATION-TRADE-Mark Use—If Mark REGISTERED.

That the word "Rejuvenescence" as applied to skin cream had been registered as a trade-mark did not prevent its use from falling within the prohibition of the Federal Trade Commission when ap[677]plied to face cream which contained no such rejuvenating quality.

METHODS, ACTS AND PRACTICES-MISREPRESENTATION-ADVERTISING FALSELY OR MISLEADINGLY CRITERIA OF DECEPTION-IF "STRAIGHT THINKING" PERSON NOT

MISLED.

That no straight thinking person would believe that a skin cream would actually rejuvenate the skin as advertised would not eliminate element of deception in the advertising, since the act prohibiting false advertising was not made for the protection of experts but for the general public which includes the ignorant, the unthinking, and the credulous.

METHODS, ACTS AND PRACTICES-MISREPRESENTATION-ADVERTISING FALSELY OR MISLEADINGLY CRITERIA OF DECEPTION-NET IMPRESSION ON GENERAL PUBLIC

The important criterion in determining whether a product is falsely advertised is the net impression which the advertisement is likely to make upon the general public.

EVIDENCE-QUALITIES OR Properties of PRODUCT-ADVERtising Falsely or MisLEADINGLY IF Consumers' Testimony as to Deception, NOT PRODUCED.

In proceeding before Federal Trade Commission to prevent false advertising of a skin cream, that the commission did not produce consumers to testify as to being deceived by advertising the cream as having qualities which would restore the youthful appearance of the skin did not make a cease and desist order improper, since actual deception of the public was not required to be shown.

METHODS, ACTS AND PRACTICES-MISREPRESENTATION-CAPACITY TO Deceive, as CRITERION.

Representations merely having a capacity to deceive are unlawful as constituting false advertising.

EVIDENCE-QUALITIES OR PROPERTIES OF PRODUCT-WORDS Used-Buyer UnderSTANDING REJUVENATING QUALITIES OF SKIN CREAM-DERMATOLOGIST'S TESTI

MONY.

In proceeding before Federal Trade Commission to prevent false advertising of a skin cream as having rejuvenating qualities, the testimony of a dermatologist whose occupation took him among the buyers of the cream was a qualified source of information as to buyers' understanding of the words used.

CEASE AND DESIST ORDERS-EXTENT METHODS, ACTS AND PRACTICES-MISREPRESENTATION-REJUVENATING QUALITIES OF SKIN CREAM-PROHIBITIONS—WHETHER INCLUSION WORD "REJUVENESCENCE" INAPPROPRIATE.

Where Trade Commission's finding, that manufacturer of skin cream had falsely advertised the cream as having qualities which would restore the youthful appearance of the skin, was supported by substantial evidence, that part of the cease and desist order which prohibited the use of the word "Rejuvenescence" would not be deleted as inappropriate to the order.

(The syllabus, with substituted captions, is taken from 143 F. (2d) 676) On petition to review and set aside order of Commission, order affirmed. Mr. Asher Blum, of New York City (Mock & Blum, of New York City, on the brief) for petitioner.

Mr. Joseph J. Smith, Jr., Asst. Chief Counsel, Federal Trade Commission, of Washington, D. C. (Mr. W. T. Kelley, Chief Counsel, and Mr. Jno. W. Carter, Jr., Sp. Atty., Federal Trade Commission, both of Washington, D.C., on the brief), for respondent.

Before L. HAND, SWAN, and CLARK, Circuit Judges.

CLARK, Circuit Judge:

This is a petition to review and set aside a cease and desist order issued by the Federal Trade Commission, pursuant to a complaint charging petitioner with having violated the Federal Trade Commission Act, 15 U. S. C. A. § 41, et seq., by falsely advertising its cosmetic preparation "Charles of the Ritz Rejuvenescence Cream." Petitioner is a New York corporation engaged in the sale and distribution in interstate commerce of various cosmetics, one of which is the cream in issue. This is a preparation of the type commonly known to the trade as a powder base or foundation cream for make-up. During the years from 1934 until December, 1939, when sales were "temporarily discontinued" because of the issuance of the present complaint, petitioner's Rejuvenescence Cream [678] enjoyed a vast popularity, with total sales amounting to approximately $1,000,000. The extensive advertising campaign which accompanied this business placed emphasis upon the rejuvenating proclivities of the product. The advertisements typically referred to "a vital organic ingredient" and certain "essences and compounds" which Rejuvenescence Cream allegedly contained, and stated that the preparation brings to the user's "skin quickly the clear radiance the petal-like quality and texture of youth," that it "restores natural moisture necessary for a live, healthy skin," with the result that "Your face need know no drought years," and that it gives to the skin "a bloom which is wonderfully rejuvenating," and is "constantly active in keeping your skin clear, radiant, and young looking." (Emphasis as in the original.)

* * *

After a hearing, the Commission found that such advertising falsely represented that Rejuvenescence Cream will rejuvenate and restore youth or the appearance of youth to the skin, regardless of the condition of the skin or the age of the user, since external applications of cosmetics cannot overcome skin conditions which result from systematic causes or from physiological changes occurring with the passage of time and since there is no treatment known to medical science by which changes in the condition of the skin of an individual can be prevented or by which an aged skin can be rejuvenated or restored to a youthful condition. It, therefore, ordered petitioner to cease and desist disseminating in commerce any advertisement of Charles of the Ritz Rejuvenescence Cream "(a) In which the word 'Rejuvenescence,' or any other word or term of similar import or meaning, is used to designate, describe, or refer to respondent's [petitioner's] said cosmetic preparation; or (b) which represents, directly or by inference, that respondent's said cosmetic preparation will rejuvenate the skin of the user thereof or restore youth or the appearance of youth to the skin of the user."

The initial question raised on this appeal concerns the jurisdiction of the Commission in effect to prohibit any advertising which displays a picture of the jar and label of petitioner's product, for the natural consequence of clause (a) of the order is to prevent depiction of the label containing the prohibited word. Petitioner argues that the Federal Food, Drug and Cosmetic Act, 21 U. S. C. A. § 301, et seq., vests exclusive control of the labelling of cosmetics in the Federal Security Administrator, and that the failure of the Commission to object in its complaint and order to labelling, as well as advertising, bears testimony to that fact. The Commission freely admits, however, that its omission to make a separate charge was inadvertent, but easily susceptible of correction by further proceedings, if and as necessary. In any event, we have repeatedly reaffirmed the jurisdiction of the Commission over labelling of this nature. Houbigant, Inc. v. Federal Trade Commission, 2 Cir., 139 F. (2d) 1019 [38 F. T. C. 832]; Fresh Grown Preserve Corp. v. Federal Trade Commission, 2 Cir., 125 F. (2d) 917 [34 F. T. C. 1827; 3 S. & D. 460]; Justin Haynes & Co. v. Federal Trade Commission, 2 Cir., 105 F. (2d) 988 [29 F. T. C. 1578; 3 S. & D. 134], certiorari denied 308 U. S. 616; see, also, Etablissements Rigaud v. Federal Trade Commission, 2 Cir., 125 F. (2d) 590 [34 F. T. C. 1811; 3 S. & D. 446]; Parfums Corday v. Federal Trade Commission, 2 Cir., 120 F. (2d) 808 [33 F. T. C. 1797; 3 S. & D. 392]; Fioret Sales Co. v. Federal Trade Commission, 2 Cir., 100 F. (2d) 358 [27 F. T. C. 1702; 2 S. & D. 481]. Petitioner says that, since the order is directed against its advertising, rather than its label, it is left in the anomalous position of being free to market its product labelled "Rejuvenescence" as long as no advertising accompanies the sales. As a matter of fact, however, it will need to readvertise its cream if it recommences its sales; and it will hardly be practical for it to attempt a misrepresentation (as here found by the Commission) through merely deceptive labelling, especially when the order can be so easily broadened upon issuance of a supplementary complaint.

On the merits, petitioner first attacks the finding of fact that its preparation does not act as a rejuvenating agent and preserve or restore the youthful appearance of the skin. Two medical experts, one a leading dermatologist, testified for the Commission; and both affirmatively stated that there was nothing known to medical science which could bring about such results. There was no testimony to the contrary; but petitioner as

serts that, since neither expert had ever used Rejuvenescence Cream or knew what it contained-petitioner being unwilling to reveal its secret formula-their testimony was not the substantial evidence necessary to support the final findings and order below. Despite their lack of familiarity with petitioner's product, however, the general [679] medical and pharmacological knowledge of the doctors qualified them to testify as to the lack of therapeutic value of the cream. Justin Haynes & Co. v. Federal Trade Commission, supra, 105 F. (2d) at page 989 [29 F. T. C. 1578; 3 S. & D. 134]; John J. Fulton Co. v. Federal Trade Commission, 9 Cir., 130 F. (2d) 85, 86 [35 F. T. C. 946; 3 S. & D. 499], certiorari denied 317 U. S. 679; Neff v. Federal Trade Commission, 4 Cir., 117 F. (2d) 495, 496-497 [32 F. T. C. 1842;3 S. & D. 332]; Goodwin v. United States, 6 Cir., 2 F. (2d) 200, 201; Dr. W. B. Caldwell, Inc. v. Federal Trade Commission, 7 Cir., 111 F. (2d) 889, 891 [30 F. T. C. 1670; 3 S. & D. 218]. Further, petitioner was not privileged, under the circumstances, to stand upon its refusal to disclose the true formula of its preparation as a trade secret, Coco-Cola Co. v. Joseph C. Wirthman Drug Co., 8 Cir., 48 F. (2d) 743, 747; 8 Wigmore on Evidence, 3d Ed. 1940, § 2212; and its failure to introduce evidence thus within its immediate knowledge and control, if existing anywhere, of the rejuvenating constituents and therapeutic effect of its preparation is strong confirmation of the Commission's charges. Mammoth Oil Co. v. United States, 275 U. S. 13, 51; Local 167 v. United States, 291 U. S. 293, 298; United States v. Denver & R. G. R. Co., 191 U. S. 84, 92; Kirby v. Tallmadge, 160 U. S. 379, 383; Interstate Circuit v. United States, 306 U. S. 208, 225-226; cf. United States ex rel. Vajtauer v. Commissioner of Immigration, 273 U. S. 103, 112.

Next, and as the crux of its appeal, petitioner attacks the propriety of the finding that by use of the trade-mark "Rejuvenescence" it has represented that its preparation will rejuvenate and restore the appearance of youth to the skin. In view of the finding which we have just held supported on the evidence, that in fact there are no rejuvenating qualities in petitioner's cream, the question is then simply whether or not the trademark is deceptive and misleading within the meaning of the Federal Trade Commission Act. But the dictionaries treat "rejuvenescence" as a common word with a plain meaning of "a renewing of youth" or the perhaps more usual "rejuvenation"; cf. Webster's New International Dictionary, 2d Ed., Unabridged, 1939. Nor does the record show any other special meaning to have developed in the trade. On the contrary, the Commission's expert and practicing dermatologist testified directly that rejuvenescence still meant not only to him, but also, as far as he knew, to his female patients, the restoration of youth. In the light of this plain meaning, petitioner's contention can hardly be sustained that "rejuvenescence" is a nondeceptive "boastful and fanciful word," utilized solely for its attractiveness as a trade-mark. That the Patent Office has registered "Rejuvenescence" as a trade-mark is not controlling. Even conceding its nondescriptive quality and hence its validity as a trade-mark-a concession sufficiently doubtful in itself to be made only arguendo the fact of registration does not prevent its use from falling within the prohibition of the Federal Trade Commission Act. N. Fluegelman & Co. v. Federal Trade Commission, 2 Cir., 37 F. (2d) 59, 61 [13 F. T. C. 602; 2 S. & D. 62]; Federal Trade Commission v. Real Products Corp., 2 Cir., 90 F. (2d) 617, 619 [25 F. T. C. 1685; 2 S. & D. 404]; Marietta Mfg. Co. v. Federal Trade Commission, 7 Cir., 50 F. (2d) 641, 642 [15 F. T. Č. 613; 2 S. & D. 129]; Federal