Eucozone Laboratories, Inc.

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IN THE 1\IATTER OF EUCOZONE LABORATORIES, INC., AND UNIVERSAL EUCOZONE OF AMERICA, INC.1 COMPL:I.INT, FINDINGS, AND ORDER IN REGARD TO THE ALI.EGED VIOLATION OF SEC. 5 OF AN ACT OF CO:s'GRESS APPROVED SEPT. 26, 1!}14 Docket 3478. Complaint, July 9, 1938-Decision, Ma1·. 19, 1941 Where a corporation Pngaged ·as predecessor in Interest to successoi' concern which, with its consent, was joined in instant proceedings and undertook to be bound by proceedings therein and by such order as might be entered, engaged in manufacture, under patent formula, of its "Eucozone" product in Uquld, capsule, ointment, and nose drop form, and In competitive interstate sale and distribution thereof to, chiefly, wholesale druggists and chain stores; in its advertising in various newspapers and periodicals published throughout the United States- ( a) Represented that its said "Eucozone" was an ozonide of eucalyptol, "a new strikingly efficient antiseptic, equal in germicidal strength to pure carbolic acid" against types of micro-organisms causing body surface infections and symptoms usually Incident to described diseases and conditions, and that the antiseptic a~tion thereof was due to the active oxygen released by use of Its special patented formula, whereby oil of eucalyptus was broken down Into vapor and brought under temperatures and pressures whereby it absorbed the ozone and in turn released active oxygen; Facts being said preparation had no properties other than these possessed by oil of eucalyptus and was not an ozonide of eucalyptol nor a holder or can-ier of active or nascent oxygen, and was not a germicide; and therapeutic properties thereof were limited to those of a mild antiseptic and counter-irritant, which would not klll streptococcus or other dangerous germs which cause infections of the nose and throat; and (b) Represented, more specifically, that said product reached "right down to the tissues of the injured areas liberating active oxygen, thus destroying harmful germs," and was "Remarkable, too, for sore throats," destroying "streptococcus and a number of other dangerous germs," and was "Ideally suited for throat infections," and that in capsules it was "used for a wide variety of Internal purposes-including colds, bronchitis, st1·ep throat, etc.," and that such capsules acted "as a general internal antiseptic by supplying active oxygen to the blood stream;"

1 The Commission by order dated July 16, 1940 (1) joined Univer·sal Eucozone of Amer- Ica, Inc., as additional party respondent; (2) provided that testimony and other evidence be conEtldered as though they had been originally taken subsequent to such joining; and (3) allowed said named respondent 20 days within which to reque>st holding of hearings to rebut tPstlmony tberPtofore taken In support of the allegations of the complaint and 60 days within which to file brll'f In opposition to allegations of the complaint; 1t appearing that said Universal Eucozone of America. Inc., was successor In Interest to respondent Eucozone Laboratories, Inc., and was willing to enter Its appearance and to be bound by evidence already adduced aga-Inst the respondent Eucozone LalJOraturiE'R, Inc., In so far afl It atic"Cted the various products ln\'Olved. EUCOZONE LABORATORIES, INC., ET AL. 917 916 Complaint (c) Represented that in nose drops it aided "in relieving the discomforts ot colds, catarrh, sinus infection, hay fever, lose fever, etc.," and that as a rub it was "for cases of localized congestions and inflammations-particularly of head, throat, chest, back, and joints," which stimulated and increased "circulation in affected areas;" and (d) Represented that in ointment form it was "t·eromnwnded in cases ot athlete's foot, itch, carbuncles, and wet or dry skin irritations. Recommended in cases of ltchiug, buming, piles, etc;" Facts beil1g that, lls aforesahl, it was not a carrier of oxygen which would kill dangerous germs, etc., nor an internal antiseptic, which would supply active oxygen to blood stream, nor, taken In form of cnpsnles, would it have any thempeutic effect in treatment of colds and other ailments set forth, nor would it have any such value iu form of nose drops for colds, catarrh, and other conditions claimed or discomforts associuted therewith, in excess t)f that afforded by mild counter-irritant, and would not be effective in destroying )llicro-organisms re~pon-sible for nthlct<>'s foot and other conditions claimed, but, by reason of its irritant action, would nwke such conditions worse, and, for same reason, did not have any beneficial effect lls a rectal ointment In case of itching and burning piles; it could not be regarded as nonpoisonous and, if taken in excessive doses, might be Injurious;

With effect of misleading and deceiving substantial }JOrtion of pnt'chasing public into erroneous and mistaken belief that such false representations were true, and of causing it, because of said erroneous belief, to purchase said product, whereby trade was diverted u11fairly to it from its competitors who truthfully advertise their respective p1·oducts: Held, That such acts and practices, under the circumstances set forth, wet·e all to the prejudice and injury of the public :md competitors, and constituted unfair methods of competition in commerce. Before Mr. Arthur F. Thomeb~, trial examiner. Mr. Merle P. Lyon for the Commission.

Sabath & Sabath., of Chicago, III., and Mr. 0 lwrlPs E. Gallup, of Detroit, Mich., for respondents.

COJ\IPLAINT Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested in it by said act, the Federal Trade Commission having reason to believe that Eucozone Laboratories, Inc., hereinafter referred to as respondent, has violated the provisions of the said act, and it appearing to the 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 is a corporation organized, existing, and doing bu~iness under the laws of the State of Michigan, with its principal office and place of business at 429 Wayne Strt>et, in Complaint 32 F. T. C. the city of Detroit, in said State. It is now, and for more than 1 year last past has been engaged in the business of manufacturing and selling, in constant course of trade and commerce between and among the various states of the United States and in the District of Columbia an alleged proprietary remedy, known as "Eucozone," the formula for which is described as "Eucalyptus Oil Ozonatecl," under United State~o Patent 1,585,602, of May 18, 1926, which patent was issued to one Alexander S. Ramage, upon application filed April 6, 1923. This preparation is sold by respondent for intended nse in the alleviation, remedy ana treatment of sore throats, tht·oat infections, colds, btonchitis, streptococcic throat, catarrh, sinus infections, and various other diseases and conditions.

In the course and conduct of its said business, it causes said prouuct when sold to be transported from the State of Michigan into and through various other States of the United States to the purchasers thereof, namely, wholesale druggists and chain stores located in States of the United States other than the State of Michigan, and in the District of Columbia; and in the conduct of its said business, respondent is: and has been at all times mentioned herein, in substantial competition with other corporations and with individuals, partnerships, and firms likewise engaged in the sale of alleged proprietary remedies, drugs, medicines, antiseptics, and formulae intended for ese and application in the alleviation, prevention and treatment of wre throats, throat infections, colds, bronchitis, streptococcic throat, catarrh, sinus infections, and various other diseases and conditions.

PAR. 2. In the course and conduct of its business as aforesaid, by advertisements in various magazines, newspapers, and other periodicals, and by radio broadcasts, respondent publishes throughout the United States certain advertising claims with respect to its said alleged proprietary remedy, for the purpose of inducing the sale thereof in interstate c.commerce. In such advertising claims, respondent has represented and respresents that its said product is an ozonide of eucalyptol, with a substantial portion of oxygen-liberating substance, which is antiseptic in a diluted condition and of equal germicidal strength to pure carbolic acid against the types of microorganisms capable of causing body surface infectious constituting the symptoms usually incident to the foregoing described diseases and conditions of the human body. Respondent also has represented and represents that the antiseptic action of such product is due to its eucalyptol content; that it is safe for children to use, and that it EUCOZONE LABORATORIES, INC., ET AL. 919 916 Complaint constitutes a competent remedy and adequate treatment for the .alleviation of the following symptoms, diseases and conditions, to "·it: * * "' Sore throats, throat infection:>, cohls, bt·onchitis, streptococcic throat, catarrh, -sinus infections, llay fever, rose fevcr, irritated and congested tissues, localized congestion of head, throat, chest, back and joints, athlete's foot, itch, carbuncles, wet or dry skin irritations, itching or burning piles. Included among such advertising claims aforesaid, and to the same purpose and effect, respondent has published the following claims: Eucozone, a new strikingly efficient antiseptic equal in g!'rmiddal strength to pure carbolic acid and yet sufficiently non-toxic and non-irritating that it is given for internal use in limited doses.

Remarkable, too, for sore throats, Eucozone destroys strPptocoecus and a lmmber of other dangerous germs. Ideally suited for throat infe>ction. EUCQZONE IN NOSE DROPS: These nose drop:" aid ln rP!iPYing the di;;eomforts of colds, catarrh, sinus infections, hay fever, rose fever, etc. Eucozone IN RUB: For cases of localized congestion and inflammationsl)articulurly of head, throat, chest, buek and joints. Stimulates uud iucrPa~e;~ circulation in affected areas.

EUCOZONE IN RECT.\L OINTMENT; Uecounnended in CU~E'S of itehing, burning piles, etc.

300 times as effective us ordinary germicides! That's EucozoN~:. Yes! It's safe even for baby! Head colds-tonsillitis-bronchitis-are running wild in Detroit. But people who use the great scientific discovery, Eu-Co-Zoue, are finding QUICK, s.\Tis- FACTORY and SAFE relief.

Eu-Co-Zone penetrates deeply with pure, germ killing a-dite o~~Jygen and is safe for children to use.

That ideal purifier * * * for preventing and relieviug bead colds, throat infections, bronchitis, influenza and asthma. New quick cold killer.

El!COZONE is eucalyptol coruuined with ozone hy 1111 ex<'in~ive pnteutPd proce~!-l, forming an ozonide of eucalyptol.

EUCOZONE clears the head-soothes the throat-lenses the chest....o-quilts the aches-and pulls down the fever with a speed _that's amazing. PAR. 3. The foregoing representations by respondent published aiel made are false and misleading in that said Eucozone is not and does not constitute a competent remedy nor adequate treatment for the alleviation of the aforesaid symptoms, diseases, and conditions; in that said Eucozone is not an ozonide of eucalyptol, has but very little oxidizing substance, is not equal in germicidal strength- to pure carbolic acid against the types of micro-organisms capable of causing infections on the surface of the body, and, while it has some germicidal properties, it will not kill all types of germs; in that it is not highly penetrative, does not liberate nctive oxygen, does not destroy ~trPptococcus and other harmful germs, is not 300 times as effecth·e Findings 32 F. T. C. as ordinary ·germicides, is not a "quick" cold killer or a cold killer at all; in that it does not stimulate and increase circulation in human tissues, and does not afford quick, satisfactory, and safe relief for head colds, tonsilitis, or bronchitis. It will not prevsnt head colds, throat infections, bronchitis, influenza, and asthma. It will not "clear the head," "soothe the throat," "ease the chest," "quiet the aches" or "pull down the fever with a speed that's nmazing." It is not safe for children to use by reason that it is composed in part of oil of eucalyptus which is chiefly eucalyptol. PAR. 4. There are among the competitors of respondent, as referred to in paragraph 1 hereof, other corporations and firms, individuals and partnerships engaged in the sale of remedies, drugs, medicines, antiseptics and formulae in interstate commerce who do not engage in the practice or method of making false and mi:,;leading claims with reference to the therapeutic value thereof. PAR. 5. The foregoing false and misleading representations of respondent above set out have the capacity and tendency to mislead and deceive the immediate purchasers thereof, namely, the wholesale druggists and chain stores to whom respondent sells its said product, and also have the capacity and tendency to place in the hands of such immediate purchasers the means of deceiving the ultimate consumers of said product, to whom such wholesale druggists and chain stores in turn sell said product, into the beliefs that Eucozone is and constitutes a competent remedy and adequate treatment for the alleviation of the above-named symptoms, diseases and conditions, and that the specific representations concerning the results to be obtained from its use are true, and cause the said purchasers and ultimate consumers to purchase respondent's product in preference to the products of respondent's competitors who do not resort to such false and deceptive practices and methods, thereby tending to divert trade from respondent's competitors to respondent and causing substantial injury to competition in interstate commerce. PAR. 6. The aforesaid acts and practices of the respondent as herein alleged are a1l to the prejudice of the public and of respondent's competitors, and constitute unfair methods of competition in commerce within the intent and meaning of the Federal Trade Commission Act.

REPORT, FINDINGS AS TO THE FACTS, .AND ORDER Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission, on July 9, 1938, issued and served its complaint in this proceeding upon respondent, Eucozone Laboratories, EUCOZONE LABORATORIES, INC., ET AL. 921 916 Findings Inc., a corporation, charging it with the use of unfair methods of competition in commerce in violation of the provisions 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 Merle P. Lyon, attorney for the Commission, before Arthur F. Thomas, an examiner o£ the Commission theretofore duly designated by it, and said testimony and other evidence were duly recorded and filed in the office of the Commission. The respondent was represented by Sabath and Sabath, 33 North Lasalle Street, Chicago, Ill., but no testimony or other evidence was introduced by the respondent in opposition to the allegations o£ the complaint. Thereafter, on June 19, 1940, the attorneys for the respondent advised the Commission that the respondent Encozone Laboratories, Inc., had been dissolved, and that a new corporation, Universal Eucozone of America, Inc., had succeeded to tbe rights of the Eucozone Laboratories, Inc., to manufacture and distribute Eucozone products in the United States, and offered to have this new corporation bound by the proceedings and by any order the Federal Trade Commission might enter. Acting upon said offer, the Commission entered an order dated July 16, 1940, making Uni· versal Eucozone of America, Inc., an additional party respondent for all purposes and further ordered that the testimony theretofore taken be considered to the same extent as if it had been taken subsequent to the joining of Universal Eucozone of America, Inc., as party respondent.

Thereafter, the proceeding regularly came on for final hearing before the Commission on the said complaint, the answer thereto, testimony and other evidence, and brief in support of the complaint, respondents not having filed brief and oral argument not having been requested; and the Commission, having duly considered the matter, and being now 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 drawn therefrom. FINDINGS AS TO THE FACTS PARAGRAPH 1. The original respondent, Eucozone Laboratories, Inc., was a corporation organized in the year 1936 under the laws of the State of Michigan, formerly doing business with its principal ofiice and place of business at 429 'Vayn~ Street, in the city of Detroit, Mich. On September 15, 1939, said respondent filed with the Corpo· ration and Securities Commission of the State of Michigan, Lansing, Findings 32 F. T. C. Mich., a certificate of dissolution of said corporation, pursuant to an amendment to its articles of incorporation fixing the term to expire July 15, 1939. During the years 1936 and 1937 said respondent ad. vertised extensively in magazines and periodicals of national circubtion, including several medical journals and some newspapers, but no advertising was done subsequent to the year 1937. In March of 1937 a resolution was passed by said respondent's board of directors discontinuing the business and stopping all advertising expenditures, and nothing was done by said respondent in the way of manufacture and sale of its products since July 9, 1938. Its total volume of sales during the period of its active corporate existence was only about $4,000. Said respondent manufactured its product "Eucozone" in several forms, a liquid, ointment, and nose drops, under a formula described as "Eucalyptus Oil Ozonated" under United States Patent 1,585,602 issued on May 18, 1926, to one Alexander S. Ramage. This preparation was sold by said respondent for use in the alleviation, remedy, and treatment of sore throats, throat infections, colds, bronchitis, streptococcic throat, catarrh, sinus infections, and various other diseases and conditions.

In the course and conduct of its said business, said respondent, Eucozone Laboratories, Inc., a corporation, caused said product, when sold, to be transported from its place of business in the State of l\Iichigan to purchasers thereof, chiefly wholesale druggists and chain stores located in various other States of the United States and in the District of Columbia. In the conduct of its said business, respondent was in substantial competition with other corporations, and with individuals, firms and partnerships likewise engaged in the sale and distribution in commerce among and between the various States of the United States of proprietary remedies, drugs, and medicines, such as iodine, mercurochrome, peroxide, sodium perborate, Vick's Vaporub, Vick's Nose Drops, and other products generally intended for the alleviation, prevention, and treatment of the various diseases and bodily conditions hereinbefore set out.

The respondent Universal Eucozone of America, Inc., is a corporation organized, existing, and doing business under the laws of the State of Michigan, with its principal office and place of business in the city of Detroit, l\Iich., and is a succ('ssor in interest to Eucozone Laboratories, Inc.

PAR. 2. In the ('Course and conduct of its business as aforesaid, respoml('nt Eueozone Laboratories, Inc., a corporation, by advertise· ments in various magazines, newspapers, and other periodicals, pub. lished throughout the United States certain advertising claims with EUCOZONE LABORATORIES, INC., ET AL. 923 916 Findings respect to its alleged proprietary remedy "Eucozone," for the purpose of inducing the sale thereof in commerce. In such advertising claims, said respondent represented that its said product is an ozonide o£ eucalyptol, with a substantial portion of oxygen-liberating substance, that it is antiseptic in a diluted condition and of equal germicidal strength to pure cnrbolic acid against the types of microorganisms capable of causing body surface infections constituting tile symptoms usually incident to the foregoing described diseases and conditions of the human body. Said respondent also represented that the antiseptic action of its product is due to the active oxygen released by the use of its special patented formula, whereby oil of eucalyptus is broken down into vnpor and brought under temperatures and pressures whereby it absorbs the ozone and in turn releases active oxygen.

· Among the claims published by said respondent as aforesaid, and typical thereof, are the following:

Eucozone, a new strikingly efficient antiseptic equal in germicidal strength to pure carbolic acid, yet sufficiently non-toxic and non-in-itating that it is given for internal use in limited doses.

Eucozone is a holder and carrier of an extremely powerful antiseptic agentactive oxygen-which it releases only in the presence of moisture. Highly l'enetrative, Eucozone reaches right down to the tissues of the injured areas liberating active oxygen, thus destroying harmful germs. Remarkable, too, for sore throats. Eucozone destroys streptococcus and a number of other dangerous germs. Ideally suited for throat Infections. Eucozone In Capsules: Used for a wide variety of internal purposes-including colds, bronchitis, strep tJn·oat, etc. Capsules act as a general internal 'antiseptic by supplying active oxygen to the blood stream. Eneozone In Nose Drops :-These nose drops aid In relieving the discomforts of colds, catarrh, sinus infection, hay fever, rose fever, etc. Eucozoue in Rub: For cases of localized congestions and inflammationsparticularly of head, throat, chest, back and joints. Stimulates and increases cirl·nlation in affected areas.

Eueozone In Ointment: Recommended in cases of athlete's foot, Itch, carbuncles ami wet or dry skin irritations. Heeommended lu cases of itching, burning, piles, etc.

Eucozone, a New Strikingly Efficient Antiseptic. Liberates nascent or active ox~·gen. Eucozone is eucalyptol combined with ozone by an exclusi\·e patented process-forming an ozonide of eucalyptol.

PAR. 3. The foregoing representations of sai<l respondent Encozone Laboratories, Inc., as well as others 0£ similar import and effect, are false and misleading. Enc·ozone is not a competent remedy or an atlequate tn•atment for the alleviation of the aforesaid symptoms, c}i~eaSPS Hlld condition<;. Tiased Upon the testimony of two clwmistS wh0 m:\lle Ynrious te!->ts of Encozone, the Commission fin1ls that this 924 FEDERAL TRADE COMl\HSSION DECISIONS F'lndings 32F. T. C.

preparation has no properties other than those possessed by oil of eucalyptus, and is not an ozonide of eucalyptol, it is not a holder or a carrier of active or nascent oxygen, and will not release or liberate oxygen in the presence of moisture or under any other conditions. The Commission further finds that the product Eucozone is not a germicide but that its therapeutic properties are limited to those of a mild antiseptic and counter-irritant. It will not kill streptococcus or other dangerous germs which cause infections of the nose and throat. This product, when taken internally, is not an internal antist:>ptic and will not supply active oxygt:>n to the blood stream. The ingestion of this preparation in the form of capsules as recommended in the advertising would have no therapeutic effect in the treatment of colds, bronchitis, streptococcus infections of the throat, or other conditions. Said preparation, when used in the form of nose drops, has no therapeutic value in the treatment of colds, catarrh, sinus infection, rose feyer, hay fevt:>r, or the discomforts associated therewith, in excess of that afforded by a mild counterirritant, and may be distinctly objectionable in case of an inflamed and congested mucus membrane. The use of this preparation as a rub would be effective for localized congestions and inflammations only to the extent afforded by a mild irritant. Eucozone has no value in the treatment of athlete's foot, as it is not effective in destroying the mirco-organisms causing such condition, and for such conditions as itch, carbuncles, or wet or dry skin irritations, its irritant action would make such conditions worse, for the same reason it does not have nny brnrficial effrct as a rectal ointmrnt in case of itching and burning pilrs. This prrparation cannot be regarded as nonpoisonous and if taken in excessive doses may be injurious. PAR. 4. The use by the respondent, Eucozone Laboratories, Inc., of the foregoing false, deceptive, and misleading statements, representations and advertisements with rrspect to the therapeutic value of this preparation, "Eucozone," has had the capacity and tendency to mislead and deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that such false statements, representations, and advertisements are true and to cause a portion of the purchasing public, because of such erroneous and mistaken belief, to purchase rrspondent's preparation. As a result trade has been diverted unfairly to the respondent Eucozone Laboratories, Inc., from its competitors who are also engaged in the sale and distribution in commrrce betwern and among the various States of the lTnited States and in the District of Columbia of preparations for use in the treatment of ailments, diseases and conditions for which EUCOZONE LABORATORIES, INC., ET AL. 925 916 Or~er said respondent recommended its preparation who truthfully advertise the therapeutic value of their respective preparations. CONCLUSION The aforesaid acts and practices of the respondent Eucozone Laboratories, Inc., a corporation, as herein found are all to the prejudice nnd injury o£ the public and of respondent's competitors and con- ~titute unfair methods o£ competition in commerce within the intent and meaning of the Federal Trade Commission Act. ORDER TO CE..:\.SE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission, the answer of respondent Eucozone Laboratories, Inc., a corporation, testimony and other evidence taken before Arthur F. Thomas, an examiner of the Commission theretofore duly designated by it, in support of the allegations of said complaint, and brief in support of the allegations of the complaint, and the record herein, and the Commission having made its findings as to facts and its conclusion that said respondent Eucozone Laboratories, Inc., has violated the provisions of the Federal Trade Commission Act and that respondent Universal Eucozone of America, Inc., is the successor in interest of respondent Eucozone Laboratories, Inc.

It is ordered, That the respondent Eucozone Laboratories, Inc., a corporation, and Universal Eucozone of America, Inc., a corporation, successor in interest to Eucozone Laboratories, Inc., and their respective oflicers, representatives, agents and employees, directly or through any corporate or other device, in connection with the offering for sale, sale and distribution of their preparation designated "Eucozone," or any product of substantially similar composition or possessing substantially similar properties, whether sold under the Eame name or under any other name, in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing:

1. That said preparation is an ozonide of eucalyptol or that it has the capacity to or does release active or nascent oxygen in the presence of moisture or under any other conditions.

2. That said preparation possesses any therapeutic properties or elements other than that possessed by ordinary oil of eucalyptus or eucalyptol.

322695m--41--VOL.32----59 926 FEDERAL 'trade COMMISSION DECISIONS Order 32 F. T. C.

3. That said preparation is a germicide or that it has any therapeutic properties in excess of those of a mild antiseptic and counterirritant.

4. That said preparation is an internal antiseptic or that it w1Jt supply oxygen to the blood stream.

5. That said preparation has any therapeutic value in the treatment of colds, catarrh, sinus infection, rose :fever, hay :fever, or in the treatment of localized congestion or discomforts associated with such conditions in excess of that afforded by a mild antiseptic and counterirritant.

6. That said preparation is a cure or remedy :for athlete's foot or has any therapeutic value in the treatment of such condition in excess of that afforded by a mild antiseptic.

7. That said preparation has any therapeutic value in the treatment o:f itch, carbuncles, wet or dry skin irritations, or itching or burning piles.

8. That said preparation is nonpoisonous, nontoxic or nonirritating, or that it is suitable or safe :for internal use. It is further ordered, That said respondents shall, within 60 days after service upon them of this order, file with the Commission a report in writing setting forth in detail the manner and form in which they have complied with this order.

CERTANE CO., ETC. 927 Syllabus