Cove Vitamin and Pharmaceutical, Inc., et al.

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Ix THE J\L-\'later OF COVE VITAMIK AKD PHARMACEUTICAL, IKC., ET AL. COX-SENT ORDER ETC., IX BEGARn TO THE .\ALLEGED \'IQL\TIO::T OF THE FEDETI\L TRADE CO:U JUssrox \CT Docket C- 572. Complajnt, Sept. 6. 1963-Decision, Sept. , 1.9, Consent order requiring two associated corporate distributors of saffower oil capsules in Glen Cuye, K. Y., to cease making a variety of false representations in a book " Calories Don t Count", which they promoted jointly with the publisl1ers. and in newspaper and 1ll.gazine ad,ertising. with regard to the importance of polyunsaturated fats ill the diet and their effectiveness ill reducing etc., as in the order below ill detail set forth. COl\IPLAIXT Pursuant to t.he pro\ isions of the Federal Trade Commission A. and by virtue of the authority vested in it by said Act, the Federal 556 FEDERAL TRADE COl\IlIIS'STOX DECISIOXS Complaint 63 )".

Trade Commission having reason to believe that Cove VitamiIl and Pharmaceutical, Inc., a corporation, and Harry Bobley, Edward Bobley and Peter M. Bobley, individually and as offcers of said corporation, and CDC Pha.rmaceuticnl Corporation, a corporation, and Ken neth BeiI'n, individually and hereinafter referred to as respondents, have violated jhe provisions of 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 compbint stating its charges in that respect as follows:

PARAGRAPH 1. Respondent Cove Vitmnin and Pharma.ceutica.l Inc. is a c.orporation organized and existing under and by virtue of the laws of the St.ate of New York. Its address is Boblcy Building, Glen Cove, New York.

Respondents Harry Bobley, Edward Bobley and Peter M. Babicy are offcers of respondent Cove Vitamin Pharmaceutical, Inc. They ea.ch participat.e in the formulation, direction and control of the policies, acts and pra,ctices of said corporation, including the acts and practices hereinafter set forth. Their address is the same as respondent Cove Vit.amin and Pharmaceutical, Inc.. Respondent CDC Pharmaceutical Corporation is a corporation organized and exist.ing under and by virtue of the laws of the Stat of :: ew York. This respondent has offces and its principal place of business at Bobley Building, Glen Cove, X ew York. It is a subsidiary of Cove Vitamin and Pharmaceutical, Inc. Respondent. Kenneth Beirn is an individual whose address is 2;0 Park Avenue, cit.y of New York, State of New York. PAR. 2. Respondents Cove Vitamin and Pharmaceutical, Inc., CDC Pharmac.eutical Corporation, Harry Robley, Edward Robley and Peter M. Bobley have been engaged in the promotion, saJe and distribution of saffower oil c.psules designated "CDC Capsules" and have participated in the acts and practices set forth below. These re- :;pondents have caused sajd capsules when sold to be transported from their place of business in the State of New Yark to purchasers located in various otiler States of the United States and in the District of Columbia. These respondents have maintained, at an times mate. riftl to this compbjnt, a substantial course of trade in said capsules in commerce, as "commerce" is defined in the Federal Trade Commission Act.

Respondent Kenneth Reirn participated in the promotion. sale and distribution of the book entitled "Calories Don t Count" and the saffower oil capsules designated "CDC Capsn1cs" and has participated in the ac.ts and prac.tic.es herein desc.ribed. COVE VIJ1A:.vIIX . 'm PHAR1JACEl;nCAL INC. ET AL. 557 Li5J Complaint PAR. 3. Simon and Schuster, Inc., is a corporfltion organized, existing and doing business under and by virtue of the laws of the State of New York.

Jason C. Berger an offcer of Simon and Schuster, Inc. , actively participates in the formulation, direction and control of the policies acts and practices of said corporation including the acts and practices hereinafter set forth.

Richard L. Grossman was formerly an offcer of Simon and Schuster, Inc., during 1which time he actively partic.ipated in the formulation, direction and control of the policies, acts and practices of said corporation in connection with the acts and practices as hereinafter set forth.

Sell\yab, Beatty and Porter, Inc., is a corporation organized and existing under and by virtue of the laws of the State of New York. Simon and Schuster, Inc. , and Jason C. Berger ate now, and for some time last past have been, engaged in the publication, promotion sale and distribution of a book entitled "Calories Don t Count" by Herman Taller. They cause said book when sold to be transported from their place of business in the State of ew York to purchasers located in various other States of the United States and in the District of Columbia. They maintain, and at all times mentioned here. in have maintained, a substantial course of trade in sftid book in' commerce as "commerce" is defined in the Federal Trade Commission Act. Richard L. Grossman has engaged in the business described herein and has participated in the acts and practices herein described.

Schwab, Bea.tty and Porter ! Inc.. , is 11mv and at all timrs mentioned herein has been, the advertising agency of Simon and Schuster, Inc., and now prepares and places, and has prepared and placed for publication the advertising and promot.ional material, referred to herein, to induce the sale of the aforesaid book, and through such means has promoted the sale and distribution of Saffower Oil Oa psules.

Herman TaBer, an individual, is a physician licensed and prac- 6cing in the State of New York.

PAR. 4. In the course and conduct of the business of jointly promoting, seUing and distributing the book "Calories Don t Count" and the saffower oil capsules, CDC Capsules, all respondents named here- , and the corporations and individuals referred to in Paragraph 3 herein, have been in substantial competition, ill commerce, with other corporations, firms and individuals in the snJe of books and, saffower oil capsules.

558 FEDERAL TRADE C011MISSION DECISIONS Complaint G3 F.

PAR. 5. In the course and conduct of their businesses, lwd for the purpose of inducing the purchase in commerce of said book and of sa.ffower oil capsules, respondents and the corporatioils and indi viduals referred to in Paragraph 3 herein have made certain statements and representa.60ns with respect thereto in saiel book and in other advertisements inserted in newspapers and magazines, and in ot.her promotional material, having a ge,neral circulation throughout the various States of the United States and in the District of Columhia.

PAR. 6. Among and typical, but not all inclusive, of the statements and representations made and appearing in said advertisement.s and other promotional material disseminated as herein set forth arc the following:

News about a l'e"olnti01Jary reducing plan, based on a new biochemical di,,:cover,v UXBELIEYABLE-but true! Yon need to eat fat if yon are to be slim. It isn t how many calories you consume that matters - but what kind of calories. The inclusion of polyunsaturated fatty acids in your diet is the ..sential step toward loosening the body s long-stored fat. It is the key to your 10.dng only excess fat rather than Tital billy tissue. In this just-published book, CALORIES DOX'T COVNT, Dr. Herman Taller -explains the principles bebilld this new understanding of the body s chemistry - and tells you in full detail:

1. How to eat three full mcals a day and lose weight in the afest way possible.

4. How this radical IJen- way of losing weigbt is linked with a low cholesterol count, better skin condition, and resistance to colds. 5. Why you may eat fried foods every day and keep slim - what kind of fat" to fry them in.

UteI' painstaking research he put his program into practice on a group of 93 problem dieters with extraordinary success. Today patients from all over the country come to Dr. Taller for treatment. And his principles hate won ever widening interest in the medical field. In the preface to the book he writes:

The concept this book advances is revolutionary. Perhaps all I need say in support of my nutriton principle is that it ,yorks. It has qeen tested in medical laboratories and among large numbers of patients. There have been no failures, nor can there be any when the principle is properly applied. For it is based on ncw knowledge a medical breakthrough. How this radical Dew way of losing weight is linked to a low cholesterol count, bcttcr skin condition and resistance to colds and sinns trouble. CALORIES IJO:,' C01:XT ;), : COVE \T11AMfS AXD PHAIL\IACEUTICAL IXC. ) ET AL. 559 Cmnpliint In acldition. yon must Sllpplf'llWllt yonI' din further unsaturated fats, In all you should take three ounces of highly unsaturated vegetable oil and eat. two ounces of margarine every day ':' Tnt' key snui'tanc:f' in ,\pgetahle oils is linoleic acid, an e sential, unsatnrated fatty acid. The oils with the greatest quantity of linoleic acid are most \"llnable in conquering; obe:oit;y and in kf'eping cllOlf'stpl'ol le"el 10",7 '" ;, Clt'arJy, saffower oil i;J the most yaluahle Oy fbi', , Saffower oil is becoming more easily available, both in liquic form and in capsules obt3inable at drug and department stores or through such mail-order sources Co,e PharUHlceuticals, XC\V York.

PAR. 7. Through the use of said n.h-ertisements, and others simi1a.r thereto not specific any set out herein, respondents and the corpora.t.ions and individual1s referred to in Paragraph 3 herein have represented, directly and by implication:

1. That the dietary principles expounded in said book are new that t.hey are ba.sed on a. new discovery, new knowledge and new understanding, and that they constitute a medical breakthrough; 2. That a person "ill be able to Joosen long stored fat by the in elusion of polyunsaturated fatty acids in his diet; 3. That the book truthfnJ1y rcflects an established scientiflc fact that. polyunsaturated fatty aeids are essential to an cfiec.tive reducing diet, and that polyunsaturated fatty ac.ids are more effective in a reducing diet than are other fats;

4. That said book enables a person t.o improve the condition of his skin and increase his resistanrc to colds and sinus trouble; 5. That all other reducing programs and principles win cause loss of vital body tissue or are less safe than those set forth in said book; 6. That the book truthfull ' reflects an established scientific fact that 1t is necessary for a person to eat fat in order to lose ,-.eight; 7. That calories are not important in relation to obesity, and that a person can reduce his body weight, regardless of the number calories consumed, by following the principles set forth in the book sold under the title "Calories Don t Count" 8, That saffm\er oil capsules win be of substantial va1uc as a part of diet in reducing body weight.

PAR. 8. In t.ruth and in fact:

1. The dietary principles expounded in said book are not new. They are not based upon a new discovery, new knowledge or new understanding and do not. constitute a medical breakthrough; 2. A person, by t.he inclusion of polyunsaturated f Ltty acids in his diet, will not he able thereby to loosen long stored fat; 560 EDEHAL TIL DE CO DllSSION DECISIO Complaint 63 F.

3. It is not an established scientific fact that polyunsaturated fatty acids are essential to an effective reducing diet, or that they are more effective in a reducing diet than are other fats; 4. Said book will not enable a person to improve the condition of his skin or increase his resistance to colds or sinus trouble; 5. Many reducing programs and principles other than those of respondents' and the corporations and individuals referred to in Paragraph 3 herein when properly administered, wil not cause loss of vital body tissue and are no Jess safe than the reducing programs and principles of the respondents and the corporations and the individual1s referred to in Paragraph 3 herein;

6. It is not an established scientific fact that it is necessary for a person to cat rat. in order to lose weight; 7. Calories are important in their relation to obesity, and the number of calories consumed by the indhridual is important to, and directly related to, the reduction of his body s weight. Contrary to representations of the respondents and the corporations and individlla1s referred to in Paragraph 3 herein a person cannot, by following the principles set forth in the book "Calories Don t Count", rednce his body weight without. regard to the number of calories consnmed:

8. Saffower oil capsules are not of substantial value as a part of a diet in the reduction of body weight.

Therefore, the statements and representations as set forth in Paragraph 6 and 7 were and are false, misleading and deceptive. PAR. 9. In the course and conduct of their businesses, the respondents and the corporations and individuals referred to in Paragraph 3 herein have entered into understandings, agreements and planned courses of action to mislead and deceive the public into believing that the reducing plans outlined in said book, including the use of saffower oil c.psules, would proc1nce the results in bringing about the reduction in body weight specified and implied through representations contained in said book. Thus, through their understandings, agreements, and p1canned courses of action, respondents and the corporations and indj-vic111ais referred to in Paragraph 3 herein conc.eived t.he scheme to make the. book entitled "Calories Don t Count," an ndvertising- material which would promote the saJe of snffower oil capsules. In doing so tJle respondents and the corporations and individuals referred to in Pamgraph 3 herein and each of them acted to induce members of the public to p11chase said book and also to purchase satlmver oil ca.psules in commerce.

Pursuant to the. said understandings, agreements, arrangements planned courses of action. combina.tion and conspiracy and in further- COYE YITA IIN A D PHAH JACEUTICAL. I ET AL. 561 3;' COlll11aint ance thereof, respondents and the corporations and individuals referred to in Paragraph 3 herein have acted in concert and in cooperation in the performance of the things hereinabove alleged and in order to a.ssist them in the effectuation of their scheme, respondents and the corporations and individuals referred to iu Paragraph 3 herein performed the following acts and practices. 1. Dr. Herman Taller, the nominal author of " Calories Don O Count", presented a draft of the manuscript of his original version of the aforesaid book to the publisher, Simon and Schuster, Inc. :\fr. Berger and his associates concluded that in order to further the schemes of the respondents and the corporations and individuals referred to in Paragraph 3 herein the book should be revised by some professional writer. Therefore, arrangements were made with Roger ICahn, a sports writer, to revise the manuscript. 1Vhen the revision was completed, Mr. Kahn had made substantial contributions to tile eonlent of the book. :\fr. Kahn also conceived the title for the book Calories Don t Count"

2. During the period of time that Kahn was rewriting the book respondents and the corporations and individuals referred to in Paragraph 3 herein devised the scheme to make the book a piece of advertising material which would promote the sale of safHower oil capsules. That was done. Respondents and the corporations and individuals referred to in Paragraph 3 berein thereupon embarked on a joint sales campaign for advertising the book "Calories Don t Count" and of advertising through it the sale and distribution of saffower 011 capsules. It 'Ivas their hope that they would develop through the advertising contained in the book a market for the safHower oil capsules. In this way it was intended that the owners of Cove Vitamin and the offcials of Simon and Schuster would profit at the expense of deceiving and misleading the public through the misleading and false statements contained in the book. 3. By agreement and general understandings, respondents and the corporation and individuals referred to in Paragraph 3 herein made it the primary responsibility of Richard L. Grossman and the advertising agency, Schwab, Beatty and Porter, Inc. , to prepare, disseminate and make effective various forms of advertising to induce t.he sale and distribution of the book "Calories Don t Count", and through it the advertising, sale and distribution of saffower oil capsules. 4. This scheme and planned course of action of respondents and the corporations, and individuals referred to in Paragraph 3 herein 'vent so much further ill deceiving and misleading the public than the original version of the manuscript prepared by Dr. Taller that he took the position privately, but did not inform the public that the portion : ;

562 FEDERAL TRADE COj\nUSSI01\ DECISIQXS 11l1 int 63 F.

of the book "Calories Don t. COlln( which.h refer'ed to snffmver oil capsules ,vas without justifieabon.

5. By arrangement or respondents a.nd t.he corporations and in(lividuals referred to in Paragraph 3 l1erein CDC Pharma.ceuticals Corporation planned to, find did, llse the title of the book "Calories Don t Count", pict.ures of its cover, and abstracts from -its pages ror use in the promotion or saffower oil enpsules. 6. Respondents and the corporations and individuals referred to in Paragra,ph 3 herein carried out newspaper eampaigns and Ot!Wf advertising and promotional activities pl'ornoting the sale of the book Calories Don t Count" and the saJe and distribution of saffower oil capsules.

PAR. 10. Each or the respondents and t.he corporations and indiyiduals referred to in Paragraph 3 herein hftVe added to promote. the dissemination and circulation of false and misleading advertising. including the publication, sale and distrilmtioll of the advert.ising material contained in the book "Calories Don t COl1nt and the advertising material appea.ring in newspapers, magazines, counter displays and in other forms, to induce not only the sale fwd distribution of the book "Calories Don t Count" but also of sliflm\'er oij capsules. Among the acts thus committed were those invoh-ing t.he adve.rtising hereinafter a.alleged.

1. Two advertisements side-by-side in New York Times, Sunday: December 17 , 1961.

(a) for the book "Calories Don t Count" Read the book the wbole country s talking about CALORIES DON'T COUNT by Dr. Herman Taller. (b) for "CDC Capsules Crash! Go Crash Diets. . . Eat and lose wei!;ht' i'ays Dr. Herman ':lal1er, prominent 1\. Y. Plly.,:;ician. A Revolutionary ncw ,,-ay to lose pounds, inch by inch, while eating- and enjoyil1g three square meals a day supplemented by CDO Capsules * .. " 2. Counter display picturing bottle of "CDC ('apsl1Jes: and cO\ of book "Calories Don t Count"

ve Got It! CDC Capsules Calories Don t Count '''eight Control Prograll.

PAR. 11. The nse by the respondents of the foregoing false, misleading a.nd deceptive statements has had, and now has, the tendency and capaeity to mislead and deceive members of t.he purchasing public into the erroneous and mistaken be.lief that sllch statements "ere , COVE 'iTIl.-\:\IIX A.'W PHARMACEUTICAL. L\TC.. ET AL. 563 533 Decision and Order and are, true and into the purchase of substantial quantities of the aforesaid book and saffower oil capsules by reason thereof. PAR. 12. The aforesa.id acts and practices of respondents, including the aforesaid understanding agreement, and planned course of action, as herein alleged were, and are all to the prejudice and injury of the public and of respondents' competitors and c.onstituted, and now constitute, unfair met hods of competition in commerce and unfair and deceptive acts and practices, in commerce, in violation of Section 5 of the Federal Trade Commission Act.

DECISTOX AND ORDER The Commission IHl, ing heretofore determined to issue its complaint charging the respondents named ill the caption hereof with violation of the J, ecleral Trade Commission Act, and the respondents having been selTed with notice of said determination and with a COP)' of the complaint the Commission intended t.o issue, together with a proposed form of order; and The respondents and counsel for the Commission having t.hereafter executed an agreement containing a consent order, an admission by respondents of all the jnrisdictiona1 facts set forth in the complaint to issue herein, a statement that the signing of said agreeille,nt is for settlement purposes only and does not eonstit.nte an admission by respondents that the law has been violated as sct fort.h in such complaint, and waivers and provisions as required by the Commission s rnles; and The Commission, having considered the agrec11enl hereby accepts sa, , issues its compla.int in the form contemplated by said agreement, makes the following jurisdictional findings, and enter.Js the following order:

1. R.esponclent Cove Vit.amin and Pharmaceutical, Inc" is a corporation organized, existing and doing business under and by virtne of t.he laws of the State of New York, wit.h its offces and principal place of business located in the Boblcy Building, Glen Cove, "ew York. Respondents Harry Bobley, Edward Boh1cy and Peter M. Bol,ley are offcers of said corporation, and their address is the SflJle as that of said corporation.

Respondent CDC Pharmaceutical Corporation is 11 corporation organized, existing and doing business under and by virtue of the laws of the State of ew York, with its offces and principal place of business located in the Bobley Building, Glen Cove, lew York. 564 FEDERAL TRADE CO:\lMIS.SIO DECISIOXS Decitoion and .order 63 F. Respondent Kenneth Beirn is an inc1iyidual \yhose address is 270 Park Ayenue, city of Xew York, State of New York. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER 1 t is ordered That Cove Vitamin Q,nd Pharmaceutical, Inc., a corporation, and its offcers, and Harry Bobley, Edward Bobley, and Peter M. Bobley, individually and as offcers of said corporation, and CDC Pharmaceutical Corporation, a corporation, and its offcers, and Kenneth Beirn, individually, and respondents' representatives, agents and employees, directly or through any corporate or other device, in connection with the offering for sale, sale or distribution of a book entitled "Calories Don t Count", or any other book or bocks of the same or approximately the same content, material or principles whether sold under the same name or any other name, in commerce as "commerce" is defined in the Federal Trade Commission Act, do :forthwith cease and desist from:

1. Representing, directly or by irnplica.tion: a. That the dietary principles expounded in this book are new, are based on a new discovery, are based on new knowledge or understanding, or constitute a medical breakthrough. b. That a person wil be able to loosen long-stored fat by the inclusion of polyunsaturated fatty acids in his diet. c. That the book reflects an established scientific fact that polyunsaturated fatty acids are essential to an effective reducing diet, or that polyunsaturated fatty acids are more effective in a reducing diet than are other fats. d. That said book enables a person to improve the condition of his skin or his resistance to colds or sinus trouble. e. That other reducing principles and programs will cause loss of vital body tissue or are less safe than those set forth in said book.

f. That the book reflects an established scientific fact that it is necessary for a person to eat fat in order to lose weight. g. That saffower oil in capsules or in any other form, or any other preparation of substantially the same ingredients is of substantial value as a part of a diet for the reduction of body weight.

COVE VITLAJV1IN AND PHAR:\1ACEUTICAL, INC., ET AL. 565 553 Decision Hnd Order 2. The use in advertising of the title "Calories Don t Count" or representing in any other manner in advertising or promotional material, directly or by implication, that a person can reduce bod weiO'ht reO'ardless of the number of calories consumed by following the principles set forth in said book; provided, however, that any advertising or listing of the book which contains only the title and names of the ,"uthOl' and publisher without any reference to the qualifications of the author, and which makes no claims concerning the effcacy of the dietary principles of the book shall not be prohibited hereby.

It is further ordered That Cove Vitamin and Pharmaceutical, Inc. a corporation, and its offcers, and Harry Bobley, Edward Bobley, and Peter :M. Bobley, individually and as offcers of said corporation and CDC Pharmaceutical Corporation, a corporation, and its offcers and Kenneth Beirn, individually, and respondents' representatives agents and employees, directly or through any corporate or other device, in connection with the offering for sale, sale or distribution of a book entitled "Calories Don t Count", or any other book or books or in connection with the oifering for sale, sale and distribution of saffower oi1 capsules or any other product or products, in commerce as "commerce" is defined in the Federal Trade Commission Act, do cease and desist from:

1. Entering into, continuing, cooperating in or carrying out any planned course of action, understanding, agreement or combination between any of said respondents and any other respondent or respondents in the instant case or between said respondents, or any of them, and any others not parties hereto, to engage 1n:

a. fisrepresenting by any means or in any manner in connection with the advertising, offering for sale, sale or distribution of saffower oil capsules or any other product offered as a source of polyunsaturated fatty acids, the quality or merits of said products, or advertising, offering for sale, selling or distributing said products with the effect, purpose or intent to deceive, to mislead, or to make any false claims concerning the quality or merits of said product or products. b. Publishing, participating in, or causing the publication of a book without clearly and conspicuously labeling same as an advertisement or otherwise clearly and conspic. uously disclosing in the book and on its dust jacket, or on its cover if there be no dust jacket, or by its title that it is 780-018--09-- , , 566 FEDERAL TRADB C01B1IS'SI0 DECISIOKS Order 63 F.

published in cooperation or in association with or by a supplier or associated group of suppliers of a service or commercial product mentioned or referred to in the book, the identity of such supplier or group and the identity of such service or product, when an objective or such publisher is the substantial use of the book as a merchandising tool for such service or commercial product, or an accord is present between the publisher and the supplier or associated group of suppliers which contemplates substantial use of the book as such merchandising tool.

c. Advertising any book which the respondent knows or reasonably should know is required by the preceding subparagraph (b) to contain a disclosure, without making substantially the same disclosure, in such advertising for said book as is required by the said preceding subparagraph (b). 2. Individually engaging in, doing, or performing any act, practice, or thing prohibited in the immediately foregoing provisions l(a), (b) or (c) of this order.

It is further ordered That the respondents herein shall, within sixty (GO) 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. By the Commission, Commissioner Elman not participating.