Johnson & Johnson

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IN THE MATTER OF JOHNSON & JOHNSON COMPLAINT, FINDINGS, AND ORDER IX REJARD TO THE ALLEGED VIOLATION OF SEC. G 01<, AN ACT OF CONGRESS APPROVED SEPT. 26, 1914, Docket 30!29. ('omp7.a·int, Jan. 8, 1.'131-Dccision, Dec . .~.9, 19J1 Where a corporation engaged in manufacture of absorbent cotton, gauze, .bandage, and other first-aid and surgical-dressing products, and in. sale .and distribution thereof to purchasers in other States, in substantial competition with those engaged in manufacture, sale, and distribution of s.imbar products in commerce among the various States and in ·the District of Columbia, and including manufacturers, sellers, and distributors of like and similar products, who truthfully advertise and represent nature, merit, therapeutic, and remedial value thereof, and those who do not falsely advertise and otherwise represent that their products have merits and values not possessed by competitive goods or articles not so wellknown or extensively advertised, and do not unwarrantedly disparage products of competitors; in advertising certain of its said products in newspapers, magazines, and other publications circulated among the various States and In aforesaid District- · Unfairly disparaged competitors or competitors· products througJi statements inferring that, because such competitors did not extensively advertise their respective goods and products and they were not widely known, .. such goodl'l subjected users thereof to dangers of infection, and were not safe and in sanitary condition when opened for use, through such statements as "* * * this young mother is wrapping around her son's wrist a bandage that may invite infection. It is a 'first-aid' dressing of unknown make which can betray the trust imposed in it," and that while probably "sterillzed at some period," as in the "original blea<'hing process," "in subsequent cutting and packing, it may have been handled by dirty hands * * * hands that couldn't help but rob this dressing of its cleanliness-and safety," and accompanying depiction of crutches, and under caption "Monuments to a Misplaced Trust," among others, "You just can't take chances with germs of infection," "The 'sterilized' dressings that you use must be sterilized in fact as well as in name," and "You can't afford to gamble with any 'first-aid' product that Is merely marked 'sterilized'," and "* • * some 'first-aid' dressings of unknown make, which may be sterilized only in an early process of manufacture and subsequently be exposed to germ-laden dirt," etc., facts being there is no necessary relationship between antiseptic properties or safety of any of products in question and fact that manufacturer is known or tmknown;

With capacity and tendency to mislead and deceive purchasers and prospective purchasers of first-aid and surgical-dre~sing good~ or articles into purchase of its said products in erroneous belief that its aforesaid representations were true, and with result that a number of the consuming public, as a direct consequence of such mistaken and erroneous beliefs, purchased substantial volume thereof, and trade was unfairly diverted to it from those JOHNSON & JOHNSON 135 134. Complaint likewise engaged in manufacture, sale and distribution of similar goods and articles; to the substantial injury of competition in commerce : Held, That such acts and practices were to the prejudice of the public and competitors and constituted unfair methods of competition. Before Mr. Edward E. Reardon, trial examiner. Mr. Joseph 0. Fehr for the Commission.

Jfr. [{enneth Perry, of New Brunswick, N.J., for respondent. 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 Johnson &.Johnson, a corporation, has been and now is using unfair methods of competition in commerce, as ''commerce" is defined in said act of Congress, 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. Respondent, Johnson & Johnson, is a corporation organized, existing, and doing business under and by virtue of the laws of the State of New Jersey, with its principal place of business located in the city of New Brunswick, in the State of New Jersey. It is now, and has been for more than one year last past, engaged in the business of manufacturing, selling and distributing absorbent cotton, gauze, bandage, and other first-aid and surgical-dressing products. It ships said products, or causes them tole shipped, when sold, to purchasers located at various points in States of tho United States other than New Jersey. It maintains, and has at all times maintained, a constant current of trade and commerce in the products distributed and sold by it among and between the various States of the United Stutes and in the District of Columbia. In the course and conduct of its business, respondent has been, at all times referred to herein, in substantial competition with other corporations, firms, partnerships, and individuals likewise engaged in the ma11ufacture, sale, and distribution of similar products in commerce between and among the various States of t.he United States and in the District of Columbia.

PAR. 2. In the course and conduct of its business, as described in paragraph 1 hereof, and for the purpose of creating a. demand for its products on the part of the purchasing public, the respondent has caused advertisements and advertising matter pertaining to certain of its products to be inserted in newspapers and magazines, ap.d other publications having a circulation between and among the various 136 :FEDERAL TRADE COMMISSION DECISIONS Complaint 26F'. T.C. States of the United States and in the District of Columbia. In said ways and by said. means, the respondent has caused. and now caus~ its said products to be advertised and represented as follows: ·Following the picture of a young woman binding the wrist o:f a child are the statements :

In all . innocence, this young mother is wrapping around her son's wr·ist a bandage that may invite infection. · It is a ''first-aid" dressing of unknown make which can Lett·ay the trust imposed in it.

True, it probably was sterilized at some period of its manufacture * '!' * as in the original bleaching process.

But in subsequent cutth1g and packing, it m:ay have been handled by dirty hands * * * hand>; that couldn't help hut rob this dressing of its cleanliness-and safety.

Following the picture of a pair of crutches and as part of an advertisement entitled "Monuments to a Misplaced Trust" appear the following representations:

You just can't take chances with germs of infection. No matter how small the cut, the greatest care must be exercised In dressing ' the wound-or something serious * • • tragic may happen. The "sterilized" dressings that you use must be sterilized in fact as well as in name • • •.

You can't afford to gamble with any "first-aid" product that Is merely marked "sterilized."

• * • some ":fit·st-nid'' dressings of unknown make, which may be sterilized only in an early process of manufacture and subsequently be exposed to germladen dirt • • •.

PAn. 3. In truth and in :fact, the statements and representations thus made by respondent as set out in paragraph 2 hereof, aud others similar thereto, are misleading and deceptive in that they represent, directly or by inuendo, that users of first-aid and surgical-dressing products o:f unknown make, or which are manufactured by other than well-known and extensively advertised organizations, run grave risk of infecting wounds or cuts upon which such dressings are used. Further, respondent's said statements and representations constitute an unwarranted disparagement o:f the products of those competitors who, nJthough they do not advertise their products extensively and may not be as well known, manufacture first-aid and surgical-dressing products that are equal in ahtiseptic properties and are as safe for use and in as sanita,ry condition when opened for use. as are the products manufactured and sold by the respondent. PAn. 4. There are, among the competitors of the respondent in commerce, as herein set out, manufacturers, sellers, and distributors o:f like and similar products who truthfully advertise and represent thr nature, merit, therapeutic and remedial value of their respective JOHNSON & JOHNSON 137 134':· ., Findings ptoclucts. There are also among such competitors of the respondent, manufacturers, sellers, and distributors of like and similar products who do not advertise and otherwise represent that their products have merits and values not possessed by competing products that are not so well known or as extensively advertised, when such is not the case, and who do not unwarrantedly disparage the products of competitors.

PAR. 5. The above-alleged acts and practices of respondent have ana have had the capacity and tendency to mislead and deceive purchasers and prospective purchasers of first-aid and surg-ical-dr~ssing products into the purchase of respondent's products in the erroneous beliefs that respondent's repre::;entations, as aforesaid, are true. Further, as a direct consequence of the mistaken and erroneous beliefs aforesaid, a number of the consuming public purchase and have purchased a substantial volume of respondent's products with the result. that trade has been unfairly diverted to respondent from· corporations, firms, and individuals likewise engaged in the business: of manufacturing, selling and distributing similar products, and thereby substantial injury has been done, and is now being done, by respondent to competition in commerce among and be.tween. the various States of the United States and in the Distt·iet of Columbia. : .. PAR. 6. The aforesaid methods, acts, and practices of the respondent: are all to the prejudice of the public and of respondent's comp~t~tors, as hereinabove alleged, and said methods, acts, and practices constitute. unfair methods of competition in ·commerce within the inte11.t and meaning of Section 5 of an Act of Congress entitled "An A<tt· .to create' a Federal Trade Commission, to define its powers and d~ties, and for other purposes," approved September 26, 1914. · ,, ..

REI'ORT, FINDINGS AS TO THE FACTS, .\ND ORDF.R 'fur~uant 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 the 8th day of January 1937, issued and served its complaint in this proceeding upon respondent, ~John­ son•' &. Johnson, a corporation, charging it with :the use of unfair triethods of competition in commerce in vioiation of the pi·ovisions of s.aid act. After the issuance of said complaint nnd the filing of said' respondent's answer and amended answer thereto a stipulation as t~ tlle facts was entered into by and between I the respondent and "\V~:T. ·Kelley, Chief Counsel for the Commission, by which "it was agreed that, subject to the approval of the Commission, the ~;tatement 138 :federal TRADE COMMISSION DECISIONS Findings 26 F. 'l'.·C. of facts ·so agreed upon should be taken as the facts in this proceeding and in lieu of testimony in support of the charges stated in the complaint or in opposition thereto; and by which stipulation it was further agreed that the Commission might proceed upon said statement of facts to issue its report stating its findings as to the facts (including inferences which it might draw :from the said stipulated facts) and its conclusion bas('cl thereon and enter its order disposing of the proceeding without the presentation of arguments or the filing of briefs. Said stipulation as to the :facts has been duly filed in the office of the Commission and approved by it. Thereafter the proceeding came on for final hearing before the Commission on said complaint, the answer thereto and the statement of facts as agreed upon in lieu of testimony, briefs and argument having been waived and the Commission having duly considered the same and being fully advised in the premises, finds that this proceeding is in the interest of the public and makes this its findings as to the facts and its conclusion drn.wn therefrom:

FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent, Johnson & Johnson, is a corporation organized, existing, and doing business under and by virtue of the Jaws of th~ State of New Jersey, with ifs principal place of business located in the city of New Brunswick, in the State of New, Jersey. It is now, and has bee~ for more than one year last past, engaged in the business of manufacturing, selling, and distributing absorbent cotton, gauze, bandage, and other first-aid and surgical-dressing products. It ships said products, or causes them to be shipped, when sold, to purchasers located at various points in States of the United States other than New Jersey. It maintains, and has at all times maintajned, a constant current of trade and commerce in the products distributed and sold by it among and between· the various States of the United States and in the District of Columbia .. In·the course and conduct of its business, respondent has been, at all 'times referred to herein, in substantial competition with other corporations, firms, partnerships and individuals likewise engaged in the manufacture, sale, and distribution of similar products in commerce between and among the ·various States of the United States and in the District of Columbia.

PAR. 2. In the course and conduct of its busin£>ss, as described in paragraph 1 hereof, and for the purpose of creating a demand for its products on the part of the purchasing public, the respondent has caused advertisements and advertising matter pertaining1to cer-tain of its products to bE' insert.ed ii1 newspapers and 1nagnzin~, iln:d JOHNSON & JOHN~ON 139 134 '.'. '"!': Findings other iniblication8 having a circulation between and among the ''arious· Stri.tes of the United States and in the District of Columbia. In said ways and by said means, the respondent has caused its said products ·to be advertised and represented as follows: :Following the picture of a young woman binding the wrist of a child are the statements :

In all' ·innocence, this young mother is wraplJing ttrouud her son's wrist a bandage' that may invite infection.

· It Is a "llrst-ald" dressing of unknown make which can betray the trust 1mposed in. it,.

True, it probably was sterilized at some period of its manufacture • •. • as in. the original bleaching proceE!s.

Bot ih subsequent cutting and packing, it may have been handled by dirty hands · • · •: • bands tlwt couldn't help but rob this d1·essing of its cleanllnes~r-and safety.

Following the picture of a pair of crutches and as part of an advertisement entitled "Monuments to a. Misplaced Trust" appear the followi~g representations:

You just can't take chances with germs of infection. No matter 'how small the cut, the greatest care must be exercised in dressing the· wound-or something serious • • • tragic may happen. The "sterilized" dressings that you use must be sterlllzetl in fact us well as in name • • •.

You can't affor<i to gamble with any "llrst-aid" produd that is merely ~·arke<J "sterlli7.ed."

• *' '• r. some ":llr!<t-ald" dressiugs of unknown make, which may I.Je sterll1zed only in an early proces:s of manufa(•tnre and subsequently be exposl'd to germladen dirt • • •.

Respondent's advertisements as above set out were discontinued in or about.the month of February, 1937.

·PAR. 3. · The. statements and represt>utatious made by respondent as set out> in paragraph 2 hereof, and others similar thereto have a capacity and tendency to deceive and mislead the pu1lic in that they represent indirectly, that users of first-aid and surgical products of unknown. make, or those manufactured by other than well-known manufacturers, run grave risk of infecting wounds or cuts upon· which such dressings are used. Further, respondent's said statements and representations have the capacity and tendency to disparage the products of those competitors, if any, who, although their prollucts may not be well-known, manufacture first aid and surgical dressing products that are safe for use and sanitary when opened for use. There is no necessary relationship between the antiseptic properties or safety of any of the products in question and the fact that the manufttdurer is known or unknown. 1{0 FEDERAL TRADE COMMISSION DECISIONS Order 26F.T. C.

PAR. 4. There are, among the competitors of the respondent in commerce, as herein set out, manufacturers, sellers, and distributors of like and similar products who truthfully advertise and represent thenature, merit, therapeutic and remedial value. of their respective products. There are also among such competitors of the respondent, manufacturers, sellers, and distributors of like and similar products who do not advertise and otherwise represent that their products have merits and values not possessed by competing products that are not so well known or as extensively advertised, when Sl.lch is not the case, and who do not unwarmntedly disparage the products of competitors.

PAR. 5. The above-alleged acts and practices of respondent have had the capacity and tendency to mislead and deceive purchasers and prospective purchasers of first-aid and surgical-dressing products into the purchase of respondent's products in the erroneous beliefs that respondent's representations, as aforesaid, are true. ' Further, as a direct consequence of the mistaken and erroneous beliefs aforesaid, a number of the consuming public have pl]rchased a . substantial volume of respondent's products with the result that trade has been unfairly diverted to respondent from corporations, firms; and individuals likewise engaged in the business of manufacturing, selling, and distributing similar products, and thereby substantial ·injury has been done by respondent to competition· in qomrperce among and between the various States of the' .United States and in the District of Columbia.

,·, CONCLUSION The aforesaid acts and practices of respondent, Johnson & Johnson, a corporation, are to the prejudice of the public and of respondent's competitors, and constitute unfair methods of competition in corrnnerce, within the intent and meaning of Section 5 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."

' ' ORDER TO CEASE AND DESIST Ti1is proceeding having been heard by the Federal Trade' C~m~ m1s$ion upon the complaint of the Commission, the answer a~d ail de~ .answer of the respondent, and the agreed stipul~tion of fr,~t~· ~n·rere~l into between the respondent herein, Johnson & J ohilson, a coi·p<mition, and '\V. T. Kelley, Chief Counsel for the Commission, which provides, among other things, that without further eviden~e JOHNSON & JOHNSON 141 134'1 .,. Order or other intervening proced.ure, the Commission may issue and servs upon the respondent herein findings us to the facts and conclusion base9. thereon and an order disposing of the proceeding, and the Commission having made its findings as to the facts and conclusion that sa.i,d}·respondent has violated 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."

··It is ordel·ed, That the respondent, Johnson & Jolmson, a corporation, its representatives, agents, and employees, in connection with the· advertising, offering for sale, sale, distribution and manufacture of absorbent cotton, gauze, bandages anu other first-aid and surgical dressing products in interstate commerce or in the District of Columbia, do forthwith cease and desist :

From unfairly disparaging competitors or their products through use of statements which, directly or indirectly, infer that because said competitors do not extensively advertise their respective products and are not wiuely known such competitive products subject the users thereof to the dangers of infection and are not safe and in a s!uiitary condition when opened for use, or through any other such nie~ns or device or in any similar manner.

''.And it is hereby further ordered, That the said responde>nt shall, within 60.days from the date of the service upon it of this order, file with this Commission a report, in writing, setting forth the manner and form in which it shall have complied with this order . . I' ' . : .

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' I ~~ 160451"'-39-vol. 26--12 142 FEDF.RAL TRADE COMMISSION DECISIONS Syllabus