UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


NOVARTIS CORP

v.

FTC


99-1315a

D.C. Cir. 2000


*	*	*


Karen LeCraft Henderson, Circuit Judge: Novartis Cor- poration and
Novartis Consumer Health, Inc (collectively  Novartis), subsidiaries
of Novartis Holding AG, petition for  review of a Federal Trade
Commission (FTC, Commission)  cease-and-desist order. The Commission
found that Novar- tis's advertisements of its Doan's back pain
remedies were  "deceptive" in violation of the Federal Trade
Commission Act  (Act), 15 U.S.C. ss 41 et seq., because they contained
an  unsubstantiated implied claim of superior efficacy. Accord- ingly,
it ordered Novartis to cease the deceptive advertising  and to include
in future Doan's advertisements a corrective  disclaimer of
superiority. For the reasons set out below, we  reject Novartis's
challenge both to the FTC's finding of  deceptiveness and to the


I.


Doan's over-the-counter back pain products have been mar- keted for
over ninety years. After Novartis's predecessor-in- interest
Ciba-Geigy Corporation (Ciba), and Ciba's subsid- iary, Ciba
Self-Medication, Inc.,1 purchased Doan's in 1987,  Ciba conducted a
marketing study which concluded: "Doan's  has a weak image in
comparison to the leading brands of  analgesics and would benefit from
positioning itself as a more  effective product that is strong enough
for the types of  backaches sufferers usually get." Joint Appendix
(JA) 194- 95. To strengthen the Doan's image, Ciba undertook two 
measures. First, Ciba instituted an aggressive television and 




__________

n 1 Novartis was formed in 1996 through the merger of Ciba-Geigy  AG
and Sandoz AG.


newspaper advertising campaign, which lasted from May 1988  through
June 1996. The new advertisements characterized  Doan's as a remedy
effective specifically for back pain and as  containing a special
ingredient (magnesium salicylate) not  found in other over-the-counter
analgesics. At least some of  the advertisements displayed images of
competing over-the- counter pain remedies. Second, Ciba expanded the
Doan's  product line, introducing "Extra Strength Doan's" in late 
1987 (renaming its existing product "Regular Strength  Doan's") and
"Doan's P.M." in September 1991.


On June 21, 1998 the FTC issued an administrative com- plaint alleging
Ciba's advertisements violated section 5 of the  Act by making an
unsubstantiated claim that Doan's prod- ucts, because of their special
ingredients, were more effective  at relieving back pain than other
over-the-counter products.  Following a trial the administrative law
judge (ALJ) issued a  decision dated March 9, 1998 in which he found
that the  advertisements were deceptive in violation of sections 5 and
 12 of the Act, which prohibit, respectively, unfair methods of 
competition and unfair or deceptive acts or practices general- ly, 15
U.S.C. s 45, and in particular dissemination of false  advertisements,
id s 52. Based on these findings the ALJ  issued an order prohibiting
Novartis from asserting unsub- stantiated claims of superior efficacy
for Doan's products.  The ALJ rejected the FTC's request for
corrective advertis- ing, finding so "drastic" a remedy unjustified.
Novartis  appealed the deceptiveness finding to the Commission and the
 FTC's counsel cross-appealed the denial of corrective adver-


In an opinion issued May 13, 1999 the Commission af- firmed the ALJ's
determination that the advertising claims  were deceptive in violation
of sections 5 and 12 of the Act.  Like the ALJ, the Commission
concluded the advertise- ments' dual claims--that Doan's products are
particularly  effective for relieving back pain and that they contain
an  active ingredient not found in other over-the-counter analge-
sics--while each literally true, in combination implied that  Doan's
was superior to other analgesics in relieving back  pain because of
its special ingredient, for which claim there 


was no substantiation. The Commission reversed the ALJ's  corrective
advertising determination, concluding such a rem- edy was warranted
because the Doan's advertisements had  created or reinforced consumer
misbelief in Doan's superior  efficacy and the misbelief was likely to
continue. According- ly, the Commission ordered Novartis to include in
future  advertisements the following disclaimer: "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."  Commission Order
at 3. The Commission ordered that the  remedy "continue for one year
and until respondent has  expended on Doan's advertising a sum equal
to the average  spent annually during the eight years of the
challenged  campaign," subject to an exemption "for any television or 
radio advertisement of 15 seconds or less in duration." Id.2  Novartis
has petitioned for review of both the deception  finding and the
corrective advertising directive.


II.


Novartis first challenges the Commission's finding that the 
advertisements were "deceptive" in violation of sections 5 and  12 of
the Act. The FTC applies a three-pronged test to  determine deceptive
advertising, asking whether "(1) a claim  was made; (2) the claim was
likely to mislead a reasonable  consumer and (3) the claim was
material." Commission  Decision (Comm'n Dec.) at 5 (citing, e.g., In
re Cliffdale  Assocs., Inc., 103 F.T.C. 110, 165 (1984)); see
generally 1983  FTC Policy Statement on Deception (Deception
Statement),  appended to Cliffdale Assocs., 103 F.T.C. at 176-184.
Novar- tis does not dispute that the Doan's advertisements made the 
implied claim charged or that it is likely to deceive but does 
contest the Commission's finding that the claim was material.  We
conclude the materiality finding is adequately supported.


Under the Commission's test, a material claim is one that  "involves
information that is important to consumers and, 




__________

n 2 The Commission determined "that the corrective message would  be
difficult to communicate in such a short ad without unduly 
restricting Respondent's ability to also convey its advertising mes-
sage." Comm'n Dec. 35.


hence, likely to affect their choice of, or conduct regarding, a 
product." Cliffdale Assocs., 103 F.T.C. at 165. The Commis- sion has
historically presumed materiality for certain catego- ries of claims:
(1) all express claims, (2) intentional implied  claims and (3) claims
that "significantly involve health, safety,  or other areas with which
the reasonable consumer would be  concerned," including a claim that
"concerns the purpose,  safety, efficacy, or cost of the product or
service," its "durabil- ity, performance, warranties or quality" or "a
finding by  another agency regarding the product." Deception State-
ment, 103 F.T.C. at 182 (footnotes omitted). The Commission  applied
the presumption here because it found the implied  claim was
intentional and involved both a health matter and  the products'
purpose and efficacy. Nevertheless, given "the  evidence adduced by
Novartis," the Commission deemed it  "necessary to look beyond a
simple presumption of materiali- ty" to the particular facts. Comm'n
Dec. 20. After reviewing  the evidence, the Commission concluded: "The
extensive  record amassed in this proceeding strongly confirms the 
common-sense proposition that efficacy is a pivotal consider- ation
for consumers in selecting an analgesic, and that claims  of superior
efficacy are highly material to those consumer  choices." Commission
Dec. at 20. The Commission's finding  of materiality is substantially
supported by the evidence it  cited, including the opinions of both
sides' experts, see JA 831,  759, 956, and numerous consumer and
marketplace studies,  see JA 640, 329, 270, 282. See Comm'n Dec.
14-15. Accord- ingly, we reject Novartis's challenge3 and uphold the
Commis- sion's finding of an implied deceptive claim in violation of
the  Act. See Thompson Med. Co. v. FTC, 791 F.2d 189, 196 (D.C. 




__________

n 3 In contesting the finding, Novartis argues most vigorously that 
materiality of the implied claim is belied by the fact that Doan's 
market share grew little or none during the relevant period. The 
FTC's definition of materiality, however, embraces any claim that is 
"likely to mislead a reasonable consumer." There is no require- ment
of actual deceit. If a claim is material because likely to  deceive,
it is not rendered otherwise simply because it is unsuccess- fully


Cir. 1986), cert. denied, 479 U.S. 1086 (1987) (court's "task" is  "to
determine if the Commission's finding is supported by  substantial
evidence on the record as a whole").4


III.


Next, Novartis asserts the corrective advertising remedy is  without
sufficient record support. In Warner-Lambert Co. v.  FTC, 562 F.2d
749, 762 (D.C. Cir. 1977), cert. denied, 435 U.S.  950 (1978), we
affirmed the Commission's statutory authority  to impose corrective
advertising and approved the standard it  adopted for doing so:


(I)f a deceptive advertisement has played a substantial  role in
creating or reinforcing in the public's mind a false  and material
belief which lives on after the false advertis- ing ceases, there is
clear and continuing injury to compe- tition and to the consuming
public as consumers continue  to make purchasing decisions based on
the false belief.  Since this injury cannot be averted by merely
requiring  respondent to cease disseminating the advertisement, we 
may appropriately order respondent to take affirmative  action
designed to terminate the otherwise continuing ill  effects of the


Warner-Lambert, 562 F.2d at 762 (quoting In re Warner- Lambert Co., 86
F.T.C. 1398, 1499-1500 (1975)) (alteration in  original). This
language "dictates two factual inquiries: (1)  did [respondent's]
advertisements play a substantial role in  creating or reinforcing in
the public's mind a false belief 




__________

n 4 Novartis contends we should review the Commission's findings  de
novo, relying on Bose Corp. v. Consumers Union of United  States,
Inc., 466 U.S. 485 (1984), in which the Supreme Court  rejected the
"clearly erroneous" standard for appellate review of  the district
court's "actual malice" finding in a defamation case in  favor of
"independent appellate review" to "determine whether the  record
establishes actual malice with convincing clarity." 466 U.S.  at 511.
This court, however, has already concluded that Bose "does  not change
the standard of review in deceptive advertising cases."  FTC v. Brown
& Williamson Tobacco Corp., 778 F.2d 35, 41 n.3  (D.C. Cir. 1985);
accord Kraft, Inc. v. FTC, 970 F.2d 311, 316-18  (7th Cir. 1992).


about the product? and (2) would this belief linger on after  the false
advertising ceases?" Warner-Lambert, 562 F.2d at  762. While the
evidence is thin and somewhat fragmentary,  we have weighed the expert
testimony and, taken as a whole,  we find that the record supports the
Commission's conclusion.


On the standard's first prong, the Commission concluded  the evidence
demonstrated that the challenged advertising  played a "substantial
role" in creating or reinforcing a false  belief based almost
exclusively on the opinion of the FTC  counsel's expert witness
Michael B. Mazis that the Doan's  advertising campaign created a
continuing belief in the prod- ucts' superiority. Mazis, in turn,
based his opinion primarily  on two studies: the "Attitude and Usage
Telephone Study"  (A&U Study) commissioned by Ciba in 1987, before the
 implied claim advertising campaign, and the study conducted  by NFO
Research, Inc. (NFO Study) in 1996, after the  campaign ended. Relying
on Mazis's comparison of the study  results, the Commission found that
the A&U Study "showed  that Doan's had a weak image" and that the NFO
Study  "show[ed] that in 1996, a disproportionately high percentage 
of Doan's users and aware non-users believed that Doan's was  more
effective than other OTC pain relievers for back pain  relief." Comm'n
Dec. at 25-26.5 The Commission relied  particularly on Mazis's
testimony that a comparison of the  two studies showed that "
'superior efficacy' beliefs for Doan's  relative to Advil, Bayer, and
Tylenol increased (between 0.5  and 1.25 scale points on a seven-point
scale) between 1987 and  1996 relative to other brands, as did beliefs




__________

n 5 Based on Mazis's testimony, the Commission also found that the 
Brand Equity Study, conducted by Ciba in 1993 (more than halfway 
through the 8-year campaign), "provides strong evidence that the 
advertising had already influenced consumer beliefs." Understand-
ably, however, neither Mazis nor the Commission placed much  emphasis
on this study. To determine whether the advertising  campaign produced
an increased perception of Doan's superiority  that will continue
after its termination, the crucial points to compare  are the start
and end of the campaign. See JA 782-83 (Mazis  explaining that, by
comparing A&U and NFO studies, "we can see,  'Did beliefs change?'


'special ingredient' (between 0.75 and 1.875 points)," while  "[a]t the
same time, consumer beliefs that Doan's 'is safe to  use'--a claim not
made in its advertising campaign--declined  in rough proportion to the
other products." Comm'n Dec.  26.6 We conclude that Mazis's opinion
testimony constitutes  substantial evidence in support of the
Commission's holding  that the Doan's advertisements created or
reinforced false  beliefs in the products' efficacy.


We also believe that the record sufficiently supports the  Commission's
finding that the advertisements' effects are  likely to linger. The
Commission rested its finding primarily  on the conclusion of the NFO
Study that six months after the  advertising ended in 1996, "77% of
Doan's users and 45% of  those who were aware of but did not use
Doan's believed that  the product was superior to other brands for the
treatment of  back pain." Comm'n Dec. 29. Characterizing these
percent- ages as "disproportionately high for both groups relative to 
other brands," the Commission concluded that "at least six  months
after the challenged ads stopped being aired, their  effect continued
to linger." Comm'n Dec. 29. We cannot say  this was an irrational
inference from the study data on which  the Commission relied.7


IV.


Finally, Novartis challenges the corrective remedy on the  ground that
it impermissibly restricts Novartis's free speech 




__________

n 6 While Mazis found that the A&U and NFO studies showed only  "a
slight increase in beliefs about Doan's from 1987 to 1996," JA  788,
he opined that even a slight increase was significant because 
consumer belief in the efficacy of the other three pain-reliever 
brands studied went down during the same period.


7 The Commission also relied on three circumstances to infer the 
advertising's lingering effect: "[T]he challenged claims were (1) 
very salient to consumers (because superior efficacy is among the 
primary considerations for a consumer in selecting a back pain 
remedy), (2) clearly and consistently conveyed by the challenged  ads,
and (3) an integral part of an eight-year campaign," in which 
Novartis "spent approximately $65,000,000 disseminating these 


in violation of the First Amendment. We perceive no First  Amendment
impediment to the remedy.


In Central Hudson Gas & Elec. Corp. v. Public Serv.  Comm'n, 447 U.S.
557, 563 (1980), the United States Supreme  Court set out the
standards applicable to governmental re- strictions on commercial


The State must assert a substantial interest to be  achieved by
restrictions on commercial speech. More- over, the regulatory
technique must be in proportion to  that interest. The limitation on
expression must be  designed carefully to achieve the State's goal.
Compli- ance with this requirement may be measured by two  criteria.
First, the restriction must directly advance the  state interest
involved; the regulation may not be sus- tained if it provides only
ineffective or remote support  for the government's purpose. Second,
if the govern- mental interest could be served as well by a more
limited  restriction on commercial speech, the excessive restric-


447 U.S. at 563. The remedy here advances precisely the  "interest
involved," namely the avoidance of misleading and  deceptive
advertising. Further, as this court noted in  Warner-Lambert, whether
a corrective remedy imposes a  restriction "greater than necessary to
serve the interest  involved ... goes to the appropriateness of the
order" under  the Commission's two-pronged standard addressed above. 
Warner-Lambert, 562 F.2d at 758. Because the standard has  been
satisfied here, as it was in Warner-Lambert, we con- clude the
Commission's remedy is not overly broad.


For the preceding reasons Novartis's petition for review is


Denied.