FEDERAL TRADE COMMISSION v. COLGATE-PALMOLIVE CO.
SUPREME COURT OF THE UNITED STATES
380 U.S. 374; 85 S. Ct. 1035; 13 L. Ed. 2d 904; 1965 U.S. LEXIS 2300; 1965 Trade Cas. (CCH) P71,409; 4 Rad. Reg. 2d (P & F) 2035
December 10, 1964, Argued  April 5, 1965, Decided

OPINION BY: WARREN

The basic question before us is whether it is a deceptive trade practice, prohibited by § 5 of the Federal Trade Commission Act, n1 to represent falsely that a televised test, experiment, or demonstration provides a viewer with visual proof of a product claim, regardless of whether the product claim is itself true.

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n1 38 Stat. 717, as amended, 52 Stat. 111, 15 U. S. C. § 45 (a)(1) (1958 ed.):

"Unfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce, are declared unlawful."
 

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The case arises out of an attempt by respondent Colgate-Palmolive Company to prove to the television public that its shaving cream, "Rapid Shave," outshaves them all. Respondent Ted Bates & Company, Inc., an advertising agency, prepared for Colgate three one-minute commercials designed to show that Rapid Shave could soften even the toughness of sandpaper. Each of the commercials contained the same "sandpaper test." The announcer informed the audience that, "To prove RAPID SHAVE'S super-moisturizing power, we put it right from the can onto this tough, dry sandpaper. It was apply . . . soak . . . and off in a stroke." While the announcer was speaking, Rapid Shave was applied to a substance that appeared to be sandpaper, and immediately thereafter a razor was shown shaving the substance clean.

The Federal Trade Commission issued a complaint against respondents Colgate and Bates charging that the commercials were false and deceptive. The evidence before the hearing examiner disclosed that sandpaper of the type depicted in the commercials could not be shaved immediately following the application of Rapid Shave, but required a substantial soaking period of approximately 80 minutes. The evidence also showed that the substance resembling sandpaper was in fact a simulated prop, or "mock-up," made of plexiglass to which sand had been applied. However, the examiner found that Rapid Shave could shave sandpaper, even though not in the short time represented by the commercials, and that if  real sandpaper had been used in the commercials the inadequacies of television transmission would have made it appear to viewers to be nothing more than plain, colored paper. The examiner dismissed the complaint because neither misrepresentation -- concerning the actual moistening time or the identity of the shaved substance -- was in his opinion a material one that would mislead the public.

The Commission, in an opinion dated December 29, 1961, reversed the hearing examiner. It found that since Rapid Shave could not shave sandpaper within the time depicted in the commercials, respondents had misrepresented the product's moisturizing power. Moreover, the Commission found that the undisclosed use of a plexiglass substitute for sandpaper was an additional material misrepresentation that was a deceptive act separate and distinct from the misrepresentation concerning Rapid Shave's underlying qualities. Even if the sandpaper could be shaved just as depicted in the commercials, the Commission found that viewers had been misled into believing they had seen it done with their own eyes. As a result of these findings the Commission entered a cease-and-desist order against the respondents.

An appeal was taken to the Court of Appeals for the First Circuit which rendered an opinion on November 20, 1962. That court sustained the Commission's conclusion that respondents had misrepresented the qualities of Rapid Shave, but it would not accept the Commission's order forbidding the future use of undisclosed simulations in television commercials. It set aside the Commission's order and directed that a new order be entered. On May 7, 1963, the Commission, over the protest of respondents, issued a new order narrowing and clarifying its original order to comply with the court's mandate. The Court of Appeals again found unsatisfactory that portion of the order dealing with simulated props and refused to enforce it. We granted certiorari, 377 U.S. 942, to consider this aspect of the case and do not have before us any question concerning the misrepresentation that Rapid Shave could shave sandpaper immediately after application, that being conceded.

I.

In its initial opinion, dated December 29, 1961, the Commission commented that the heart of the commercials was the visual "sandpaper test" which was designed to leave the viewer with the impression that he had actually seen such an experiment being performed. The Commission expressed the view that without this visible proof of Rapid Shave's moisturizing ability some viewers might not have been persuaded to buy the product. The Commission then entered into a far-reaching discussion on the use of mock-ups in television and the relationship between "truth" and "television salesmanship," and finally concluded that the use of the plexiglass prop was a deceptive practice. The Commission's order was as inclusive as its discussion. It ordered both respondents to cease and desist from:

"Representing, directly or by implication, in describing, explaining, or purporting to prove the quality or merits of any product, that pictures, depictions, or demonstrations . . . are genuine or accurate representations . . . of, or prove the quality or merits of, any product, when such pictures, depictions, or demonstrations are not in fact genuine or accurate representations . . . of, or do not prove the quality or merits of, any such product."

The Court of Appeals understandably was concerned with the broad language in the Commission's opinion and order, especially since the Commission was not dealing with an established deceptive practice but was applying the flexible standards of § 5 to a hitherto unexplored area. The breadth of the Commission's order was potentially limitless, apparently establishing a per se rule prohibiting the use of simulated props in all television commercials, since commercials by definition describe "the qualities or merits" of products. The court's impression that the order was "quite ambiguous" was not alleviated when in oral argument counsel for the Commission stated that if a prominent person appeared on television saying "I love Lipsom's iced tea," while drinking something that appeared to be tea but in fact was not, the commercial would be a deceptive practice.

In light of the Commission's order and its oral argument, the court concluded that it was the Commission's intention to prohibit all simulated props in television commercials. The court could not agree with this position since it believed that "where the only untruth is that the substance [the viewer] sees on the screen is artificial, and the visual appearance is otherwise a correct and accurate representation of the product itself, he is not injured." But, in setting aside the Commission's order, the court gave little specific guidance for the drafting of a new one. It merely criticized the Commission for holding that mock-ups are "illegal per se," n7 and indicated that the Commission's order "may" have been too broad in other respects as well.

Following the decision by the Court of Appeals, the Commission entered a new "proposed final order" on February 18, 1963. This order was accompanied by an explanatory opinion that admitted error in the original disposition of the case and expressed an intention to eliminate the errors found by the Court of Appeals. The Commission explained that its new order was not directed toward the broad prohibition of all undisclosed simulated props in commercials, but merely toward prohibiting respondents from misrepresenting to the public that it was seeing for itself a test, experiment or demonstration which purportedly proved a product claim. According to the Commission, the television commercial in question did not merely tell viewers that the experiment had been or could be performed, but instead told them that they were seeing it for themselves and did not have to take the seller's word for it. This, and not the mere use of a prop, was the misrepresentation found to be a deceptive practice. Over the vigorous objection of respondents, the Commission issued its final order on May 7, 1963. Both respondents were ordered to cease and desist from:

"Unfairly or deceptively advertising any . . . product by presenting a test, experiment or demonstration that (1) is represented to the public as actual proof of a claim made for the product which is material to inducing its sale, and (2) is not in fact a genuine test, experiment or demonstration being conducted as represented and does not in fact constitute actual proof of the claim, because of the undisclosed use and substitution of a mock-up or prop instead of the product, article, or substance represented to be used therein."

Respondents again appealed to the Court of Appeals. Despite the urgings of respondents that it limit its review to a determination whether the Commission's order was consistent with the previous mandate, the court re-examined the Commission's new order on the merits. The court recognized that the new order no longer prohibited the use of all simulated props in commercials, but found that it would be impossible under it to distinguish between commercials which depicted a test, experiment or demonstration, and those which did not. The court held that so long as there is an accurate portrayal of a product's attributes or performance there is no deceit and instructed the Commission, "as we thought we had directed it before," to enter an order merely prohibiting respondents from using mock-ups to demonstrate something which in fact could not be accomplished.

We hold that the Commission's order of May 7, 1963, was not in disregard of the Court of Appeals' first mandate and was a good-faith attempt to incorporate the legal principles contained therein. An examination of the Commission's first order and accompanying opinion shows an overriding emphasis on mock-ups as such and a failure to articulate with precision the actual deceptive practice found. As a result, it is not surprising that the court criticized the order as "ambiguous," interpreted it as prohibiting the substitution of a mock-up for a product in any commercial, and found that it rested on a premise that mock-ups were "illegal per se." It is true that the court also said that viewers are interested in what they see and not in the means by which they see it, but this statement occurred immediately after the court discussed the contention in oral argument that it would be a deceptive practice to represent that a person was drinking "Lipsom's iced tea" when in fact he was not. The only clear directive in the court's mandate was for the Commission to remove the "fundamental error [which] so permeates the order"-- i. e., the error that every use of mock-ups is a deceptive practice.

II.
 
In reviewing the substantive issues in the case, it is well to remember the respective roles of the Commission and the courts in the administration of the Federal Trade Commission Act. When the Commission was created by Congress in 1914, it was directed by § 5 to prevent "unfair methods of competition in commerce." Congress amended the Act in 1938 to extend the Commission's jurisdiction to include "unfair or deceptive acts or practices in commerce"-- a significant amendment showing Congress' concern for consumers as well as for competitors. It is important to note the generality of these standards of illegality; the proscriptions in § 5 are flexible, "to be defined with particularity by the myriad of cases from the field of business." Federal Trade Comm'n v. Motion Picture Advertising Service Co., 344 U.S. 392, 394.

This statutory scheme necessarily gives the Commission an influential role in interpreting § 5 and in applying it to the facts of particular cases arising out of unprecedented situations. Moreover, as an administrative agency which deals continually with cases in the area, the Commission is often in a better position than are courts to determine when a practice is "deceptive" within the meaning of the Act. This Court has frequently stated that the Commission's judgment is to be given great weight by reviewing courts. This admonition is especially true with respect to allegedly deceptive advertising since the finding of a § 5 violation in this field rests so heavily on inference and pragmatic judgment. Nevertheless, while informed judicial determination is dependent upon enlightenment gained from administrative experience, in the last analysis the words "deceptive practices" set forth a legal standard and they must get their final meaning from judicial construction. Cf. Federal Trade Comm'n v. R. F. Keppel & Bro., Inc., 291 U.S. 304, 314.

We are not concerned in this case with the clear misrepresentation in the commercials concerning the speed with which Rapid Shave could shave sandpaper, since the Court of Appeals upheld the Commission's finding on that matter and the respondents have not challenged the finding here. We granted certiorari to consider the Commission's conclusion that even if an advertiser has himself conducted a test, experiment or demonstration which he honestly believes will prove a certain product claim, he may not convey to television viewers the false impression that they are seeing the test, experiment or demonstration for themselves, when they are not because of the undisclosed use of mock-ups.
 
We accept the Commission's determination that the commercials involved in this case contained three representations to the public: (1) that sandpaper could be shaved by Rapid Shave; (2) that an experiment had been conducted which verified this claim; and (3) that the viewer was seeing this experiment for himself. Respondents admit that the first two representations were made, but deny that the third was. The Commission, however, found to the contrary, and, since this is a matter of fact resting on an inference that could reasonably be drawn from the commercials themselves, the Commission's finding should be sustained. For the purposes of our review, we can assume that the first two representations were true; the focus of our consideration is on the third, which was clearly false. The parties agree that § 5 prohibits the intentional misrepresentation of any fact which would constitute a material factor in a purchaser's decision whether to buy. They differ, however, in their conception of what "facts" constitute a "material factor" in a purchaser's decision to buy. Respondents submit, in effect, that the only material facts are those which deal with the substantive qualities of a product. n16 The Commission, on the other hand, submits that the misrepresentation of any fact so long as it materially induces a purchaser's decision to buy is a deception prohibited by § 5.

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n16 Brief for Respondent Colgate, p. 16: "What [the buyer] is interested in is whether the actual product he buys will look and perform the way it appeared on his television set." Id., at 17: "[A] buyer's real concern is with the truth of the substantive claims or promises made to him, not with the means used to make them." Id., at 20: "The Commission's error was to confuse the substantive claim made for a product with the means by which such claim was conveyed."

Brief for Respondent Bates, pp. 2-3: "If the viewer or reader of the advertisement buys the product, and it will do exactly what the portrayal in the advertisement asserts it will do, can there be any unlawful misrepresentation?" Id., at 13-14: "What induces the buyer to purchase is the claim that the product will perform as represented in the portrayed test. That is the material claim." Id., at 25: "It is not a representation in any way relating to the product or to its purchase, so that even if the strained suggestion that there is such an implied representation were realistic, the representation plainly would be immaterial."
 

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The Commission's interpretation of what is a deceptive practice seems more in line with the decided cases than that of respondents. This Court said in Federal Trade Comm'n v. Algoma Lumber Co., 291 U.S. 67, 78: "The public is entitled to get what it chooses, though the choice may be dictated by caprice or by fashion or perhaps by ignorance." It has long been considered a deceptive practice to state falsely that a product ordinarily sells for an inflated price but that it is being offered at a special reduced price, even if the offered price represents the actual value of the product and the purchaser is receiving his money's worth. Applying respondents' arguments to these cases, it would appear that so long as buyers paid no more than the product was actually worth and the product contained the qualities advertised, the misstatement of an inflated original price was immaterial.

It has also been held a violation of § 5 for a seller to misrepresent to the public that he is in a certain line of business, even though the misstatement in no way affects the qualities of the product. As was said in Federal Trade Comm'n v. Royal Milling Co., 288 U.S. 212, 216:
 
"If consumers or dealers prefer to purchase a given article because it was made by a particular manufacturer or class of manufacturers, they have a right to do so, and this right cannot be satisfied by imposing upon them an exactly similar article, or one equally as good, but having a different origin."
 
The courts of appeals have applied this reasoning to the merchandising of reprocessed products that are as good as new, without a disclosure that they are in fact reprocessed. n18 And it has also been held that it is a deceptive practice to misappropriate the trade name of another. 

Respondents claim that all these cases are irrelevant to our decision because they involve misrepresentations related to the product itself and not merely to the manner in which an advertising message is communicated. This distinction misses the mark for two reasons. In the first place, the present case is not concerned with a mode of communication, but with a misrepresentation that viewers have objective proof of a seller's product claim over and above the seller's word. Secondly, all of the above cases, like the present case, deal with methods designed to get a consumer to purchase a product, not with whether the product, when purchased, will perform up to expectations. We find an especially strong similarity between the present case and those cases in which a seller induces the public to purchase an arguably good product by misrepresenting his line of business, by concealing the fact that the product is reprocessed, or by misappropriating another's trademark. In each the seller has used a misrepresentation to break down what he regards to be an annoying or irrational habit of the buying public -- the preference for particular manufacturers or known brands regardless of a product's actual qualities, the prejudice against reprocessed goods, and the desire for verification of a product claim. In each case the seller reasons that when the habit is broken the buyer will be satisfied with the performance of the product he receives. Yet, a misrepresentation has been used to break the habit and, as was stated in Algoma Lumber, a misrepresentation for such an end is not permitted.
 
We need not limit ourselves to the cases already mentioned because there are other situations which also illustrate the correctness of the Commission's finding in the present case. It is generally accepted that it is a deceptive practice to state falsely that a product has received a testimonial from a respected source. In addition, the Commission has consistently acted to prevent sellers from falsely stating that their product claims have been "certified." We find these situations to be indistinguishable from the present case. We can assume that in each the underlying product claim is true and in each the seller actually conducted an experiment sufficient to prove to himself the truth of the claim. But in each the seller has told the public that it could rely on something other than his word concerning both the truth of the claim and the validity of his experiment. We find it an immaterial difference that in one case the viewer is told to rely on the word of a celebrity or authority he respects, in another on the word of a testing agency, and in the present case on his own perception of an undisclosed simulation.

We agree with the Commission, therefore, that the undisclosed use of plexiglass in the present commercials was a material deceptive practice, independent and separate from the other misrepresentation found. We find unpersuasive respondents' other objections to this conclusion. Respondents claim that it will be impractical to inform the viewing public that it is not seeing an actual test, experiment or demonstration, but we think it inconceivable that the ingenious advertising world will be unable, if it so desires, to conform to the Commission's insistence that the public be not misinformed. If, however, it becomes impossible or impractical to show simulated demonstrations on television in a truthful manner, this indicates that television is not a medium that lends itself to this type of commercial, not that the commercial must survive at all costs. Similarly unpersuasive is respondents' objection that the Commission's decision discriminates against sellers whose product claims cannot be "verified" on television without the use of simulations. All methods of advertising do not equally favor every seller. If the inherent limitations of a method do not permit its use in the way a seller desires, the seller cannot by material misrepresentation compensate for those limitations.

III.
 
We turn our attention now to the order issued by the Commission. It has been repeatedly held that the Commission has wide discretion in determining the type of order that is necessary to cope with the unfair practices found, e. g., Jacob Siegel Co. v. Federal Trade Comm'n, 327 U.S. 608, 611, and that Congress has placed the primary responsibility for fashioning orders upon the Commission, Federal Trade Comm'n v. National Lead Co., 352 U.S. 419, 429. For these reasons the courts should not "lightly modify" the Commission's orders. Federal Trade Comm'n v. Cement Institute, 333 U.S. 683, 726. However, this Court has also warned that an order's prohibitions "should be clear and precise in order that they may be understood by those against whom they are directed, " Federal Trade Comm'n v. Cement Institute, supra, at 726, and that "the severity of possible penalties prescribed . . . for violations of orders which have become final underlines the necessity for fashioning orders which are, at the outset, sufficiently clear and precise to avoid raising serious questions as to their meaning and application." Federal Trade Comm'n v. Henry Broch & Co., 368 U.S. 360, 367-368.
 
The Court of Appeals has criticized the reference in the Commission's order to "test, experiment or demonstration" as not capable of practical interpretation. It could find no difference between the Rapid Shave commercial and a commercial which extolled the goodness of ice cream while giving viewers a picture of a scoop of mashed  potatoes appearing to be ice cream. We do not understand this difficulty. In the ice cream case the mashed potato prop is not being used for additional proof of the product claim, while the purpose of the Rapid Shave commercial is to give the viewer objective proof of the claims made. If in the ice cream hypothetical the focus of the commercial becomes the undisclosed potato prop and the viewer is invited, explicitly or by implication, to see for himself the truth of the claims about the ice cream's rich texture and full color, and perhaps compare it to a "rival product," then the commercial has become similar to the one now before us. Clearly, however, a commercial which depicts happy actors delightedly eating ice cream that is in fact mashed potatoes or drinking a product appearing to be coffee but which is in fact some other substance is not covered by the present order.
 
The crucial terms of the present order -- "test, experiment or demonstration . . . represented . . . as actual proof of a claim" -- are as specific as the circumstances will permit. If respondents in their subsequent commercials attempt to come as close to the line of misrepresentation as the Commission's order permits, they may without specifically intending to do so cross into the area proscribed by this order. However, it does not seem "unfair to require that one who deliberately goes perilously close to an area of proscribed conduct shall take the risk that he may cross the line." Boyce Motor Lines, Inc. v. United States, 342 U.S. 337, 340. In commercials where the emphasis is on the seller's word, and not on the viewer's own perception, the respondents need not fear that an undisclosed use of props is prohibited by the present order. On the other hand, when the commercial not only makes a claim, but also invites the viewer to rely on his own perception for demonstrative proof of the claim, the respondents will be aware that the use of undisclosed props in strategic places might be a material deception. We believe that respondents will have no difficulty applying the Commission's order to the vast majority of their contemplated future commercials. If, however, a situation arises in which respondents are sincerely unable to determine whether a proposed course of action would violate the present order, they can, by complying with the Commission's rules, oblige the Commission to give them definitive advice as to whether their proposed action, if pursued, would constitute compliance with the order.