Nodoz Laboratories, Inc

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IN THE l\IATTER OF NODOZ LABORATORIES, INC.

COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS .APPROVED SEPT. 26, 1914 DocT•et 2810. Complaint, June 10, 1936-Decision, July 28, 193"1 Where a corporation engaged in sale and distribution, to wholesale and retail dealers for ultimate resale to public, of "NoDoz Awakeners," vegetable concentrate with caffeine, made for it by the manufacturer in accordance wlth its formula, and designed to keep users from drowsiness and to keep them awake when sleepy or tired, in general competition with sellers of the class of refreshment and invigorator containing caffeins, such as coffee, ten, and coca-cola, and with the same general therapeutic effects, and who do not advertise and otherwise represent their said products as having merit and therapeutic value which they do not have; in soliciting sale of and selling said products through advertisements in newspapers and periodicals, and in other forms of printed matter, and through radio broadcasts, circulated among the various States to members of the public- (a) llepresented that use of said product would counteract or overcome effects of drinking alcoholic beverages, and would have beneficial effect on persons indulging In use of alcoholics, counteracting "alcoholic effects during the party and the 'morning after'", etc.;

(b) lleprei!ented that said "NoDoz Awakeners" were "tablets made of a pure vegetable concentrate under the U. S. Pure Food and Drug Laws"; and (c) llepresented that more than a million automobile drivel'>! take said prepa· ration to keep awake and alert in long hours of driving, and that said tablets "Keep awake the sleepy motorist, truck driver," etc.; Facts being said tablets did not overcome or counteract effects of use of alco· hollc beverages or have any beneficial effect on Indulgers in use thereof, they were not made under formula approved by Pure Food and Drug Administration, number of users and endorsers of said product was greatly exaggerated, and representations aforesaid were grossly eJ..aggerated, false, misleading, and untrue;

With capacity and tendency to mislead a substantial portion of the purchasing public into the erroneous belief that all of its aforesaid representations were true, and with result that number ot the consuming public, as a direct consequence of t11e mistaken and erroneous beliefs induced by its said acts and representations, purchased a substantial volume of its product, and trade was unfairly diverted to it from competitors likewise engaged in aale and distribution of like and similar caffeine-containing preparations, and who truthfully represent the effectiveness of their products and results to be obtained from use thereot; to the injury of competition in commerce: Held, That such acts nnd practices were to the prejudice of the public and comr1ctltors and constituted unfair methods of competition. Before /1/r. Charles P. Vicini and Mr. Miles J. Furnas, trial £~:x:amin£~rs.

lrlr. P. 0. J(olinslci and Mr. Joseph 0. Fehr for the Commission. Elli{)tt, Atkinson & Sitton, of Sacramento, Calif., for respondent. Complaint 25F. T. C.

Complaint Pursuant to the provisions of an Act of Congress approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," the Federal Trade Commission, having reason to believe that NoDoz Laboratories, Inc., a corporation, hereinafter referred to as respondent, has been and is using unfair methods of competition in commerce as "commerce" is defined in said act, and it appearing to said Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows:

PARAGRAPH 1. Responde>nt, NoDoz Laboratories, Inc., is a corporation organized and existing under and by virtue of the laws of the State of California, having its principal office and place of business located at 307 Mitau Building, in the city of Sacramento, in the State of California. Respondent for more than one year last past has been, and still is, engag£'d in the manufacture of a pharmaceutical preparation known as "NoDoz Awakeners," made of a mixtum of caffeine citrate and sugar of milk, and in offering said product for sale, and selling the same in commerce bebwen the State of California and the several States of the United States and in the District of Columbia. When said product is sold, n•spondent transports or causes the same to be transport£'d from its place of business in the State of California to the purchasers thereof locat('d in States of the United Stat£'s other than the State of California nnJ in the District of Columbia. There has been for mort> than one year last past, and still is, a constant current of trade and commerce in said product so manufactured by respondent, beh\'£'£'11 and among the various States of the United States and in the District of Columbia. Uespondent is now and for more than one )·ear last past has been in substantial competition with otlwr corporations awl with individuals, partnerships, and firms engaged in the manufacture of like and similar products anJ in the sale thereof between tmd among the various States of the United States and in the District of Columbia.

PAn. 2. In the course and conduct of its business, as aforesaid, the respondent, in soliciting the sale of and selling "NoDoz Awakeners" and for the purpose of creating a demand upon the part of the consuming public for said product, now causes anJ for more than one year last past has caused advertisements to be issued, published, and circulated to and among the general public of the United States in various periodicals and publications and in other NODOZ LABORATORIES, INC, 629 627 Complaint forms of printed matter, and by radio broadcasting and in other ways. In said ways and by said means respondent makes and has made to the general public many unfair, false, and misleading f"tatements with reference to the alleged therapeutic value of said product and its effect upon the users thereof, a portion of which are as follows:

NoDoz Awakeners-Particularly beneficial, when driving at night, when effects of alcohol are to be overcome, when working at night, when mentally depi·essed, when keen tllinking, accurate and rapid work are Important and upon hundreds of other dally occasions.

· Counteracts alcoholic effects during the party and the ''morning after." Hestores energy-when tired or sleepy-when working or playing. NoDoz Awakeners are tablets made of a pure vegetable concentrate under the U. S. Pure Food and Drug Laws.

Keep awake the sleepy motorist, truck driver--{)vercome alcoholic depression. . There Is a marked stimulation of the intellectual functions, especially those Of reason, judgment, and self-control. Muscular strength, speed and aceuracy ore all increased. A sense of energy and vitality add to one'!:! capacity for Work or 11lensure without apparent fatigue. When energy is exhau,.;ted. When you've taxed your powers to the limit, an!} yet have long hours of work ahead, take a NoDoz AwakPner and feel the steady, natural return of vitality, the "lift" in morale and general sense of Well-being which follows.

Takpn before or during lndnlgt•nct>, NoDoz AwnkPners will preserve a clear ht'll!l and pprfect poise undrr the mo~t cliffif•ult circumstance~. Tak<'n after- Wnrds-Nonoz Awakrners will restore sobriety. l\lore thnn a million a utomoblle drh·ers now take a NoDoz Awakener to keep awake and alt•rt in long hours of driving. It you feel like dozing, but your job won't let you-NoDoz keeps you fit. Ilut NoDoz doesn't get you.

One little NoDoz Awakener'll kN'P you bright three, four hours, for driving, Working, stuuylng, playing nights.

PAn. 3. The statements and representations set forth in paragraph 2 hereof have the capacity and tendency to mislead and deceive purchasers and prospective purchasers of respondent's product into the belief:

(a) That the use of NoDoz Awak<'ners will keep one equipped for duth•s, or awake while driving;

(b) That the use of said preparation will- 1. Put one back on his feet;

2. Put bright ideas in the head;

3. "Conquer" mental dullness or fatigue;

4. Enable one to steer clear of accidents while driving; 5. ''Overcome" alcoholic depression;

(c) '!'hat said preparation restores energy or "counteracts" alcoholic e!Tccts; (d) That by the use of said preparation- 1. There is a iitlmulation of "intellectual" powers; 630 FEDERAL TRADE COl\Il\IISSION DECISIONS Complaint 25F.T.C.

2. Muscular strength, speed, accuracy are all increased; or 3. Energy or vitality will be added to one's capacity for work or pleasure without fatigue;

(e) That said preparation taken before or during indulgence will preserve a clear head or perfect poise under the most difficult circumstances; (f) That by the use ot said preparation one may feel the natural return of vitality, the "!itt" in morale, or a general sense of well being; (g) '!'hat more than a million automobile drivers, or any other number not established by competent evidence, now take said preparation to l;:eep awake on long hours of driving, or approve the same as the safe, sure way to :;tay n wake while driving;

(h) That said preparation is made under the United Stat<'s Pure Food and Drug Laws;

( i) That said preparation is a pure vegetable concentrate; whereas, in truth and in fact, "NoDoz Awakeners" do not keep persons awake when tired or slePpy, or when working or driving automobiles at night; nor do they overcome the effects of the usc of alcohol. The number of users and endorsers of this product is greatly exaggerated, and the repr<'sentation that "N oDoz Awakeners" are manufactureJ upon a formula conforming to the Pure Food and Drug Law is unauthorized. It is not true, as represented, that a "N oDoz Awakener" is a pure vegetable concentrate. In truth and in fact, the representations made by the respondent with respect to the nature and effect of its pharmaceutical preparation when used, are grossly exaggerated, false, misleading, and untrue, as said preparation will not accomplish in all cases the results claim<'d for it. PAn. 4. There are among the competitors of the respondent in interstate commerce manufacturers of like and similar products who truthfully advertise and represent the nature, merit, and therapeutic value of their respective products. There are also among such competitors of the respondent sellers and distributors of like and similar products who do not ad\·ertise and otherwise repre>sent that such products have the merit or the therapeutic value which they do not have. 1 PAn. 5. The above all<'ged acts and practices of respondent have the capacity to mislead and decei,·e purchasers and prospective purchasers into the errone.ous beliefs described in pamgrnph 3 hereof and into the purchase of respondent's product in such bc>liefs. Thereby trade is diverted by respondent from respondent's competitors in interstate commerce referred to in paragraph 4 and as a consequence thereof substantial injury is done hy respondent to competition in interstate commerce.

PAR. G. Said acts and practices of respondent are all to the prejudi?e of the public and respondent's competitors, and constitute unfair methods of competition in commerce within the intent and NODOZ LADORATORIES, INC. 631 627 Findings meaning of Section 5 of an Act of Congress entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," approved September 26, 1914. REPORT, FnmiNGs As To THE Facts, AND Onder Pursuant to the provisions of an Act of Congress approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," the Federal Trade Commission, on June 10, 1936, issued and served its complaint in this proceeding upon respondent, N oDoz Laboratories, Inc., a corporation, charging it with the use of unfair methods of competition in commerce, in violation of the provisiolls of said act. After the issuance of said complaint, and the filing of respondent's answer thereto, testimony and other evidence in support of the allegations of said complaint were introduced by P. C. Kolinski, attorney for the Commission, and in opposition to the allegations of the complaint by 'Vm. A. Sitton, attorney for the respondent, before Chas. P. Vicini and Miles J. Furnas, examiners of the Commission theretofore duly designated by it, and said testimony and other evidence Was duly recorded and filed in the office of the Commission. Thereafter this proceedi11g regularly came on for final hearing before the Commission on said complaint, the answer thereto, testimony and evidence, and brief in support of the complaint (respondent having filed no brief and having not requested oral argument), and the Com- :rnission having duly considered the same and being now fully ad vised in the premi~rs, finds that this proceeding is in the interest of the public, and inakes this its findings as to the facts and its conclusion drawn therefrom:

FINDINGS AS TO Tile FACTS PARAGRAPH 1. Respondent, NoDoz Laboratories, Inc., is a Cali· fornia corporation, with its principal office and place of business in ~acramento, Calif. Respondent began doing business as a corporat~on in the month of August 1D3-i. Respondent is now, and ever Since August, 1D34, has been, engaged in the sale and distribution of a pharmaceutical preparation known as "NoDoz Awakeners." HPspondent's said product, known as "NoDoz ..tbn1keners," is a V£'gctable concentrate containing caffeine, which is designed to keep l:.sers from drowsiness and to keep them awake when sleepy or hrcu. Respondent sells and distributes its said product to whole- Rule and retail dealers for ultimate resale to members of the public, Und also sells direct to members of the purchasing public located Findings 25F.T.C.

in the various States of the United States other than the State of California. In the course and conduct of its business, the respondent causes its said product, when sold by it, to be transported. in commerce from its place of business in California to, into and through !>aid other States, and in the District of Columbia, to the purchasers to whom said product was sold by the respondent. PAR. 2. The respondent herein, in soliciting the sale of and in selling said product known as "N oDoz Awakeners,'' has made use of advertisements inserted in newspapers and magazines and in other forms of printed matter, and broadcasts by radio, which are circulated in and among the various States of the United States to members of the public. Said advertisements contain many mis- 1Pading and deceptive statpments with reference to the alleged therapeutic value of said "NoDoz Awakeners" and their effect upon the users thereof.

Among such statements so used in advertising said "NoDoz Awakeners" are the following:

NoDoz Awal•eners-Partlcularly bcnetidn~ \~hen driving at nlght, when effects of alcohol are to be overcome, when working at night, when mentally dl'presf!ed, wlwn keen thlnkin~, a!'cnrate and rapid work are Important and 11pon hundrPd!'l of other dally occa~ions. CountPracts alcoholic dlc(·ts during the party and the "morning aft£'r." Tie· stores £>energy-wllt'n tired or slet'py-when working or playing. "NoDoz .Awakeners" are tablets made of pure V('getnble concentrate under the U. S. Pure Food and Drug Laws.

Keep awake the sleepy motorist, truck driver--overcome alcoholic dPpresslon.

Th£'re Is a marlted stimulation of the lntelll'actual . functions, eApeclally thm~e of reason, jndgnwnt and self-control. Muscular strength, spt•ed and nccurary are all Increased. A Hense ot en('rgy and vitality add to one's capacity for work or plrasnre without apparent fatigue. When Pner~y Is e:rh:msted. Wlwn you've taxed your powe·s to the limit, 11nd you Y<'t have long hours of work ahend, take a NoDoz Awalwuer and feel the steady, natural return of vitality, the "lift'' In morale and general IWHHe of well-being which follows.

Taken before or during lndulg£'nce, NoDoz Awake1wrs will presen·e a clear head and perfect polRe under the mort difficult rircumstances. Taken llfter· wurds-NoDoz AwakPncrs wlll restore sobriety. More than a million automobile drivers now take a NoDoz Awakener to keep awake and alert In long hours of driving.

If you feel like dozing, but your job won't let you-NoDoz kerps you fit. Dut NoDoz doesn't get you.

One little NoDoz Awakeurr'll keep you bright three, four hours, for dl'ivlug, working, studying, playing nights. · PAR. 3. Respon<lent's "NoDoz Awakeners" are manufactured for it by McKesson-Hobbins, of llridgf'port, Conn., and lloericke & Runyan, of San Francisco, Calif., both of which firms are manufacturing' NODOZ LABORATORIES, INC. 633 627 • Findings pharmacists. Said product is manufactured according to a formula submitted to said manufacturers by the respondent. The formula consists of a mixture of three and one-half grains of caffeine citrate and one and one-half grains of sugar of milk. When manufactured, said product is shipped in bulk by the aforementioned manufacturing pharmacists to respondent's plant in Sacramento, Calif., where it is packaged in two sizes, one containing two tablets, designed to sell for ten cents (10¢) each (or $3.20 for thirty-two packages), and the other package containing fifteen tablets, designed to sell for fifty cents (50¢) per package (or $G.OO per dozen packages). Thus packaged, the product is sold and shipped by respondent to wholesale druggists throughout the country, by whom it is resold to retailers who seh and distribute the product to the consuming public. More than eighty per cent ( 80%) of respondent's said "NoDoz Awakeners" are sold on the Pacific Coast and in the Rocky Mountain States, where the product is well known and has a ready market. PAn. 4. Several witnesses, two of them doctors of medicine, testified that they had used "N oDoz Awakeners," and that the preparation counteracted sleepiness and urowsiness, without harmful effect. One doctor of medicine testified that the drug caffeine, used by a human, Would tend to increase mental invigoration, to stimulate the motor areas of the brain, to increase the motor activities of the spinal cord, and to stimulate the muscles. He further testified that the drug caffeine, applied to humans in tablet form, as prepared in respondent's "NoDoz Awakeners," was not desirable for use by persons who partake of liquor to the point of intoxication. This witness also testified that said "NoDoz Awakeners" act as a diuretic. All witnesses testified that the use of three and one-half grains of citrate of caffeine Would and did stimulate the brain and restore vitality. There is also undisputed medical testimony of record that the use of citmte of caffeine by way of respondent's product by children of the age of ~Ye years or over would have no different effect on them than the use of ordinary coffee. One doctor of medicine stated that tht·ee and one-half grains of citrate of caffeine are equivalent to the amount of caffeine in an ordinary cup of coffee represented by a tablPspoonfnl of ground coffee, and that three and one-half grains of ~afi'E>ine citrate would serve to stimulate the individual taking it by Increasing his blood supply to the brain, stimulating the action of the ~nu~des nn(l the cord, thereby increasing the flow of blood to the ll'UJn. This witness further stated that such an amount of citrate of raffeine would tend to clarify the individual's t1linking apparatus :~cl make it function a little more rapidly, and that it would also· tunulate the kidneys. 634 FEDERAL TRADE COl\IMISSION DECISIONS Findings 25F.,T. C. The evidence, however, establishes the fact that caffeine, which is the active ingredient in respondent's product, will not counteract er overcome the effects of alcoholism, as represented by respondent, nor will caffeine sober an individual who has become intoxicated from the use of alcoholic beverages. The use of said preparation does not have any beneficial effect on those persons who indulge in the use of alcoholic beverages.

The testimony of the several medical witnesses was not contraclicted by the testimony of any other witness. P .AR. 5. 1\Iany of the statements and representations set forth in paragraph 2 hereof have the capacity and tendency to deceiye anll mislead purchasers and prospective purchasers of respondent's product into the belief that the use of said product- ( a) 'Viii "counteract" alcoholic effects and overcome alcoholic depression;

(b) That said product is made under a formula appron'd by the United States Pure Food and Drug Administration; (c) That more than a million automobile drivers, or any other number not established by competent evidence, now take said preparation to keep awake on long hours of driving, or approve the same as the safe, suro way to stay awake while driving. In truth and in fact, "NoDoz Awakeners" do not overcome or counteract the effects of the use of beverages containing alcohol, nor do they ha\'e any beneficial effect on persons indulging in the use of alcoholic beveragl'S. Further, the number of users and indorsers of said product is greatly exaggerated; nor is it tme that "NoDoz Awakeners" are manufactured upon a formula approved by the Pure Food and Drug Administration. Insofar as reprl't>entn,· t ions made by respondent in connection with the sale and distl·ibution of its pharmaceutical preparation have the effect of misleading und tkceiving users of "NoDoz Awakeners" into the beliefs set out in this paragraph, such representations are grossly e.xaggeratetl, false, misleading and untrue, as said preparation will not aeeom· plish such results as represented.

PAn. G. The evidence does not establish the fact that the re· ~pondent has any specific competitors manufacturing, selling or distrilmting a similar drug or pharmaceutical preparation. Jlowen•r, the record of testimony taken docs establish the fact that r!.'spondent is in general competition with sellers of the class of refreshment and invigorator containing caffeine, such as coffee, tea and coca-cola, lmving the same general therapeutic effects that respondent's prod· uct has, who do not adrertise and otherwise represent that such products have merit and therapeutic value which they do not han'. NODOZ LABORATORIES, INC. 635 627 Order PAR. 7. Each and all of the misleading and deceptive statements and representations made by the respondent, as herein set out, in offering for sale and selling its product, had and now have the capacity and tendency to mislead a substantial portion of the purchasing public into the erroneous belief that all of said representations are true. Further, as a direct consequence of the mistaken and l'IToneous beliefs induced by the acts and representations made by the respondent, as hereinabove detailed, a number of the consuming public have purchased a substantial volume of respondent's product, with the result that trade has been and is unfairly diverted to respondent from competitors likewise engaged in the business of selling und distributing like and similar caffeine-containing preparations, and who truthfully represent the effectiveness of their products and the results to be obtained from their use. As a result, injury has lJeen and is now being done by respondent to competition in comlllerce, as herein set out.

CONCLUSION The aforesaid acts and practices of the respondent, No:Ooz Laboratories, Inc., a corporation, are to the prejudice of the public and of competitors, and constitute unfair methods of competition in commerce, within the intent and meaning of Section 5 of an Act of Congrpss approved September 26, 1914, entitled "An Act to create a Feueral Trade Commission, to define its powers and duties, and for other purposes."

ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission, the answer of respondent, testimony and evidence taken before Charles P. Vicini and Miles J. Furnas, examiners of the Commission theretofore duly ~lesignated by it, in support of the charges of said complaint and In opposition thereto, and brief on behalf of the Commission filed herein (respondent having filed no brief and having not requested ora} argument), and the Commission having made its findings as to the facts and its conclusion that said respondent has violated the Provisions of an Act of Congress approved September 26, 1914, ~ntitled "An Act to create a Federal '!'rude Commission, to define lts powers and duties, and for other purposes", It i'l ordered, That respondent, N oDoz Laboratories, Inc., a cor- Poration, its officers, directors, agents, representatives, servants, a~<} cmploye('s, in connection with the offering for sale, sale or distribution in interstate commerce of a pharmaceutical preparation 636 FEDERAL TRADE COJ.IMISSION DECISIONS Order 25F. T. C.

known us "N oDoz Awakeners," or of said preparation or of any similar preparation containing substantially the same ingredients, sold under the same or ru1der any other name or names, cease and desist, directly or indirectly, from:

Uepresenting in newspapers and magazines, and. through circulars, catalogs, or in any other form of printed matter, or by radio broad~ casting, or in any other way or manner:

(a) That the use of said product will counteract or overcome the effects of drinking alcoholic beverages, or will have any beneficial effect on persons indulging in the use of alcoholics; (b) That said product is manufactured under a formula approved by the United States Pure Food and Drug Administration; (c) That more than a million automobile drivers, or any other number not established by competent evidence, now take said prep~ aration to keep awake on long hours of d.riving, or approve the same as the safe, sure way to stay awake while driving; and from making any other representations of similar intent or import.

It is furtl~er ordered, That respondent, NoDoz Laboratories, Inc., a corporation, within GO days after the service upon it of this order, shall file with the Commission a report in writing, setting forth in detail the manner and form in which this order has been complied with and conformed to.

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