Federal Trade Commission, Plaintiff-Appellant-Cross-Appellee v. Pantron I Corporation, Defendants-Appellees-Cross-Appellants

These consolidated appeals require us to decide a previously unresolved question of federal consumer protection law: Whether it is lawful for a seller to represent a product as “effective” when its efficacy results solely from a “placebo effect.” We conclude that the answer is no and that the representation constitutes a “false advertisement” under the Federal Trade Commission Act.

The Federal Trade Commission, Pantron I Corporation, and Hal Z. Lederman appeal separate parts of the district court’s order which enjoined Pantron and Lederman (Pan-tron’s president and sole owner) from making certain advertising representations regarding the effectiveness of a purported baldness cure which Pantron markets as “The Helsinki Formula.” In its appeal, the F.T.C. claims that the district court erred by not also enjoining Pantron and Lederman from representing that: (1) the Formula “was the subject of medical investigative work by responsible European physicians,” and (2) the For- muía “is effective to some extent for some people in dealing with male pattern baldness.” The F.T.C. also argues that the district court erred in refusing to grant monetary equitable relief. In their cross-appeal,…