Marketers whose ads are judged deceptive by the U.S. Federal Trade Commission may face heightened pressure to run corrective ads.
Advertising lawyers say the Aug. 18 decision by the U.S. Court of Appeals for the District of Columbia that unanimously upheld the FTC's right to demand corrective advertising could ease the standard the agency must meet to demand corrective ads. The case involved Novartis' ads for Doan's pills; the agency now known as Jordan McGrath Case & Partners/Euro RSCG, New York, created the campaign.
"What it means is [that] it is going to be very difficult to talk the commission out of corrective advertising," said Bill MacLeod, an attorney who represented the Grocery Manufacturers of America, in filing a friend of the court brief in the case.
Barry Cutler, an ad attorney and former FTC official, said the Doan's case could change how much proof of a lingering effect the FTC needs before seeking comparative advertising.
Since a Warner-Lambert Co. case more than 25 years ago involving a Listerine claim, the FTC has been required to show "clear-cut evidence" that without corrective ads the deceptions would continue to affect consumer purchase decisions.
Under FTC Chairman Robert Pitofsky, the agency in recent years has proposed corrective ads as a remedy in negotiating with marketers. But the Doan's case is the first time the FTC unilaterally ordered the remedy without first reaching an agreement with a marketer.
The judges in their opinion described the evidence of lingering effect the FTC amassed as "thin and somewhat fragmentary," but upheld the commission's decision based on the record "as a whole."
In the Doan's case, the FTC last year ruled Novartis and predecessor Ciba-Geigy from 1987 to 1996 advertised Doan's as more effective against back pain than rivals--without substantiation. The FTC said statements that Doan's was particularly effective for relieving back pain, and that it contained an active ingredient not found in other over-the-counter medications, combined to wrongly suggest that Doan's was more effective than other analgesics.
The FTC ordered corrective ads in May 1999. Novartis was also ordered to include the statement "Although Doan's is an effective pain reliever, there is no evidence that Doan's is more effective than other pain relievers for back pain." The statement was to be put on packaging for a year, and in ads, until $8 million had been spent on the campaign. The company will comply with the packaging order.
A Novartis spokeswoman said no decision had been made whether to appeal the case to the U.S. Supreme Court. She said no Doan's ads are running, partially because of the decision. But the company is concerned because of the decision's impact on marketing other products.
"What we said [in the ads] was true. The facts asserted were never questioned by the FTC," she said. "The decision goes to the question of our freedom of speech."
Several ad lawyers said the appeals court decision differs significantly from those in similar cases in other jurisdictions, but could have an impact because many cases against the FTC are filed in the U.S. District Court in the District of Columbia, where the decision would set a precedent.
"We are disappointed that the court saw fit to uphold an agency action that is unprecedented," said Shawn Gunnarson, senior counsel of the Washington Legal Foundation, which filed its own friend of the court brief.
Mr. Cutler said the appeals court took the viewpoint that requiring corrective advertising isn't such a big step. "What is really significant in the commission's decision is that the court didn't think of requiring corrective advertising as a drastic remedy," he said.
FTC officials, while pleased with the ruling, said they don't believe it will substantially change the FTC's requests for corrective ads.
Ira Teinowitz, Advertising Age. September 6, 2000
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