UNITED STATES DISTRICT COURT FEDERAL TRADE COMMISSION, Plaintiff, v. AMERICAN UROLOGICAL CORPORATION, a Texas corporation; Defendants. Civil Action No. COMPLAINT FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF Plaintiff, the Federal Trade Commission ("Commission" or "FTC"), by its undersigned attorneys, alleges as follows: 1. This is an action under Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b), to secure injunctive relief and other equitable relief, including rescission, restitution, and disgorgement, against defendants' violations of Section 5(a) and 12 of the FTC Act, 15 U.S.C. § § 45(a) and 52. JURISDICTION AND VENUE 2. This Court has subject matter jurisdiction over plaintiff's claim pursuant to 28 U.S.C. §§ 1331, 1337(a) and 1345, and 15 U.S.C. §§ 45(a) and 53(b). 3. Venue in the Atlanta Division of the United States District Court for the Northern District of Georgia is proper under 28 U.S.C. § 1391(b) and 15 U.S.C. § 53(b). PLAINTIFF 4. Plaintiff FTC is an independent agency of the United States Government created by statute. 15 U.S.C. §§ 41, et seq. The Commission is charged, inter alia, with enforcement of Sections 5(a) and 12 of the FTC Act, 15 U.S.C. §§ 45(a) and 52, which prohibit, respectively, deceptive acts or practices, and false advertisements for food, drugs, devices or cosmetics, in or affecting commerce. The FTC is authorized under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), to initiate federal district court proceedings to enjoin violations of the FTC Act, and to secure such equitable relief as may be appropriate in each case, including consumer redress. DEFENDANTS 5. Defendant American Urological Corporation is a Texas corporation with its registered office located at 16800 N. Dallas Parkway, #150, Dallas, Texas 75248. It transacts business in the Northern District of Georgia at 6479A Peachtree Industrial Boulevard, Doraville, Georgia 30360. It markets products for the treatment of impotence. 6. Defendant Institute of Sexual Research, Inc. is a Texas corporation with its registered office located at 2175 North Highway 360, Suite 435, Grand Prairie, Texas 75050. It transacts business in the Northern District of Georgia at 6479A Peachtree Industrial Boulevard, Doraville, Georgia 30360. It markets products for the treatment of impotence under its own name and under the assumed names American Urological Clinic, Carnegie Research Institute, and New England Institute for Impotence and Prostate Care. 7. Defendant Institute of Sexual Research (ISR), Ltd. is a North Carolina corporation with its registered office located at 209 E. Horton St., Zebulon, North Carolina 27597. It transacts business in the Northern District of Georgia at 6479A Peachtree Industrial Boulevard, Doraville, Georgia 30360. It markets products for the treatment of impotence. 8. Defendant The Clinic for Natural Solutions, Inc., a Texas corporation with its registered office at 2175 North Highway 360, Suite 435, Grand Prairie, Texas 75050, transacts business in the Northern District of Georgia at 6479A Peachtree Industrial Boulevard, Doraville, Georgia 30360. It markets products for the treatment of impotence under its own name and under the assumed names United States Academy of Urological Sciences and National Institute for Urological Health. 9. Defendant Old Well Corporation (herein "Old Well (Texas)") is a Texas corporation with its registered office located at 2175 North Highway 360, Suite 435, Grand Prairie, Texas 75050. It transacts business in the Northern District of Georgia at 6479A Peachtree Industrial Boulevard, Doraville, Georgia 30360. It markets products for the treatment of impotence. 10. Defendant Old Well Corporation (herein "Old Well (North Carolina)") is a North Carolina corporation with its registered office located at 209 E. Horton St., Zebulon, North Carolina 27597. It transacts business in the Northern District of Georgia at 6479A Peachtree Industrial Boulevard, Doraville, Georgia 30360. It markets products for the treatment of impotence. 11. Defendant David A. Brady (herein "Brady") is the President, Secretary, sole director, registered agent, and sole incorporator of American Urological Corporation, Institute of Sexual Research, Inc., Clinic for Natural Solutions, and Old Well (Texas). He is the President, registered agent, sole director, and sole incorporator of Institute of Sexual Research, Ltd. He was an incorporator of and currently serves as the President, registered agent, and sole director of Old Well (North Carolina). Individually, or in concert with others, he formulates, directs, controls, and participates in the acts and practices of the corporate defendants, including those alleged herein. He transacts business in the Northern District of Georgia at 6479A Peachtree Industrial Boulevard, Doraville, Georgia 30360. DEFENDANTS' BUSINESS PRACTICES 12. Since at least October of 1997, and continuing thereafter, defendants have marketed products that purportedly treat impotence to consumers throughout the United States. "Impotence" is the inability of man to attain an erection of sufficient rigidity and/or duration to permit him to engage in sexual intercourse. Various prescription medications are administered for the treatment of impotence. These include sildenafil (sold under the trade name Viagra), phentolamine, prostaglandin (also known as Alprostadil), and testosterone. 13. Defendants have marketed their impotence treatment products under the product names "Alprostaglandin®," "The Celldenaphil-pc System," "Renak-pc," "Oral Phentalomil®," "Prosta-Gen©," "Testosterone-21," "Väegra®," "Urophil," and "VasoGenitine." On May 14, 1998, the United States District Court for the Northern District of Georgia, Atlanta Division, entered a permanent injunction order in Pfizer Inc. v. Institute of Sexual Research, Inc. d/b/a American Urological Clinic, Old Well Corporation, David A. Brady, et al., Civil Action No. 1.98-1136A-JEC, a trademark infringement action, enjoining defendants therein from, among other things, using the product names "Väegra®" and "Celldenaphil-pc." Thereafter, defendants herein changed the product names of "Väegra®" to "Urophil" and "Celldenaphil-pc" to "Renak-pc." 14. Defendants have mailed promotional literature to consumers throughout the United States and have promoted their impotence treatment products through Internet Websites. True and correct copies of the literature mailed by defendants are appended to this Complaint as Exhibits A through G and incorporated herein. In this literature, defendants have marketed their products through the following entities, providing the following addresses and toll-free telephone numbers for these entities:
15.The addresses defendants provide for each of the entities identified above in Paragraph 14 are mail drop addresses registered to defendant Brady or his associates. All mail received at these mail drop addresses is forwarded to 6479A Peachtree Industrial Boulevard, Doraville, Georgia 30360. The toll-free telephone numbers all ring to a telephone line located at 6479A Peachtree Industrial Boulevard, Doraville, Georgia 30360 and maintained in the name of "Old Well." 16. Consumers who telephone the toll-free numbers provided in defendants' promotional materials reach a telephone voicemail recording that offers consumers the choice of placing an order on an "automated order line," listening to a recorded message containing product information, or speaking with one of defendants' sales representatives. The recorded messages containing product information reiterate many of the representations contained in defendants' promotional materials. Defendants' sales representatives also typically reiterate the representations made in defendants' promotional materials and take orders for the products. Consumers may also place an order for defendants' impotence treatment products by completing the order form included in defendants' promotional materials and mailing it to the mail drop address provided in these materials. 17. In the course of marketing their impotence treatment products, defendants represent that their products are being sold by medical enterprises that maintain facilities at their stated addresses and have conducted, or participated in the conduct of, scientific research regarding the efficacy of their products. For example, the brochure defendants have mailed promoting Prosta-Gen© contains a photograph of a building with "NEI-IPC Administrative Offices - 1st Floor, 304 Newbury Street, Suite 508, Boston, Massachusettes [sic] 02115" printed beneath it and further states, in part:
Exhibit D at 5 and 6. 18. In the course of marketing their impotence treatment products, defendants further represent that their products, and/or the ingredients contained in them, are effective in eliminating impotence in 68 to 94 percent of impotent men, depending on the particular product. For example, the brochure defendants have mailed promoting Alprostaglandin® contains a chart purportedly reporting the "Results of testing done on the primary ingredient of Alprostaglandin®" that shows "82%" as the "% Men Obtaining and Maintaining Erections at Will at weeks 6-9." Exhibit A at 9. Similarly, the letter addressed "Dear Sir:" contained in defendants' promotional mailing for "Oral Phentalomil®, states that, "The primary active agents in Oral Phentalomil® have been proven effective in as many as 83.3% of those tested . . . ." Exhibit B at 2. 19. In the course of marketing their impotence treatment products, defendants further represent that scientific evidence has proven their impotence treatment products, and/or the ingredients contained in them, to be effective in eliminating impotence for 68 percent or more of impotent men. For example, the brochure for Urophil states, in part: Research Confirms Urophil's Success
Exhibit A at 5. 20. Defendants offer for sale, sell and distribute their impotence treatment products in bottles containing tablets and cream. Defendants charge between $39.45 and $98.95 for one bottle of the product, depending on which product is purchased, with additional charges for "rush delivery." Defendants have sold their impotence treatment products to thousands of consumers throughout the United States. DEFENDANTS' VIOLATIONS OF THE FTC ACT 21. Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), makes unlawful deceptive acts or practices in or affecting commerce. Section 12 of the FTC Act, 15 U.S.C. § 52, makes unlawful false advertisements, in or affecting commerce, for the purpose of inducing, or which are likely to induce, the purchase of food, drugs, devices or cosmetics. As set forth below, defendants have engaged in such unlawful acts or practices in connection with the offer, sale or advertising of impotence treatment products, in or affecting "commerce," as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44. 22. The bottled tablets and cream sold and distributed by defendants are either a "food" or "drug" for purposes of Section 12 of the FTC Act, 15 U.S.C. § 52. Yohimbine hydrochloride, an ingredient contained in defendants' product Oral Phentalomil®, is a "drug" for purposes of Section 12 of the FTC Act, 15 U.S.C. § 52. COUNT ONE 23. Defendants have represented, expressly or by implication, that their impotence treatment products are sold by bona fide medical enterprises that maintain facilities at their stated addresses and have conducted, or participated in the conduct of, scientific research regarding the efficacy of these products. In truth and in fact, defendants' products are not sold by bona fide medical enterprises that maintain facilities at their stated addresses and have conducted, or participated in the conduct of, scientific research regarding the efficacy of these products. Rather, defendants market their products through corporations and assumed names that maintain mail drop addresses and perform no medical or scientific research functions. 24. Therefore, defendants' representation as set forth in the previous paragraph is false and misleading, and constitutes a deceptive act or practice and false advertising for food or drugs, in violation of the FTC Act, 15 U.S.C. §§ 45(a) and 52. COUNT TWO 25. Defendants have represented, expressly or by implication, that their impotence treatment products, or the ingredients contained in them, are effective in eliminating impotence for 68 percent or more of impotent men. In truth and in fact, none of defendants' impotence treatment products eliminates impotence for 68 percent or more of impotent men. Rather, defendants' products have little or no effect on impotence beyond a mere placebo effect for most, if not all, impotent men. 26. Therefore, defendants' representation as set forth in the previous paragraph is false and misleading, and constitutes a deceptive act or practice and false advertising for food or drugs, in violation of the FTC Act, 15 U.S.C. §§ 45(a) and 52. COUNT THREE 27. Defendants have represented, expressly or by implication, that scientific evidence has proven their impotence treatment products, and/or the ingredients contained in them, to be effective in eliminating impotence for 68 percent or more of impotent men. In truth and in fact, defendants' products have not been scientifically proven to be effective in eliminating impotence for 68 percent or more of impotent men. None of defendants' products have been scientifically demonstrated to be effective in reversing impotence. 28. Therefore, defendants' representation as set forth in the previous paragraph is false and misleading, and constitutes a deceptive act or practice and false advertising for food or drugs, in violation of the FTC Act, 15 U.S.C. §§ 45(a) and 52. COMMON ENTERPRISE 29. Defendants American Urological Corporation, Institute of Sexual Research, Inc.; Institute of Sexual Research, Ltd.; Clinic for Natural Solutions, Inc.; Old Well Corporation (Texas); Old Well Corporation (North Carolina); and David A. Brady have operated as a common business enterprise while engaging in the deceptive acts and practices alleged above and are therefore jointly and severally liable for said acts and practices. CONSUMER INJURY 30. Defendants' violations of Sections 5(a) and 12 of the FTC Act have injured and will continue to injure consumers absent injunctive relief. Defendants' false representations and advertising have induced consumers to purchase defendants' impotence treatment products, thereby causing substantial financial injury in monies paid to defendants. In addition, such representations and advertising may lead consumers to forego other impotence treatments, all to consumers' substantial detriment. THIS COURT'S POWER TO GRANT RELIEF 31. Section 13(b) of the FTC Act empowers this Court to issue injunctive and other relief against violations of the FTC Act and, in the exercise of its equitable jurisdiction, to award redress to remedy the injury to consumers, to order disgorgement of monies resulting from defendants' unlawful acts or practices, and to order other ancillary equitable relief. PRAYER FOR RELIEF WHEREFORE, plaintiff requests that this Court:
Respectfully submitted, DEBRA A. VALENTINE
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