UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION

FEDERAL TRADE COMMISSION,

Plaintiff,

v.

AMERICAN UROLOGICAL CORPORATION, a Texas corporation;
INSTITUTE OF SEXUAL RESEARCH, INC., a Texas corporation;
INSTITUTE OF SEXUAL RESEARCH, LTD., a North Carolina corporation;
THE CLINIC FOR NATURAL SOLUTIONS, INC., a Texas corporation;
OLD WELL CORPORATION, a Texas corporation;
OLD WELL CORPORATION, a North Carolina corporation;
and DAVID A. BRADY, individually and as an officer and director of American Urological Corporation, Institute of Sexual Research, Inc., Institute of Sexual Research, Ltd., The Clinic for Natural Solutions, Inc., and Old Well Corporation (Texas and North Carolina);

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:

A.Alprostaglandin®: National Institute for Urological Health, 4412 California Ave., SW, Suite 16216, Seattle, Washington 98116-0216. 1-888-697-6890
 
B. The Celldenaphil-pc System and Renak-pc: Carnegie Research Institute, Cameron Village Station, Unit 10157, Raleigh, NC 27605. 1-888-796-0795
 
C. Oral Phentalomil®: United States Academy of Urological Sciences, 4401-A Connecticut Ave., N.W., Suite 214, Washington, D.C. 20008. 1-888-775-7928
 
D. Prosta-Gen©:New England Institute for Impotence and Prostate Care, NEI-IPC Administrative Offices - 1st Floor, 304 Newbury Street, Suite 508,
Boston, MA 02115. 1-888-262-5702
 
E. Testosterone-21: Institute of Sexual Research, 575 Pharr Road, NE, Post Office Box 11630, Atlanta, GA 30355-1630. 1-800-269-0506
 
F. Väegra®/Urophil: American Urological Clinic, Country Club Plaza, 4741 Central - Suite 186, Kansas City, MO 64112. 1-800-969-9466
Urophil: American Urological Corporation, 16800 North Dallas Parkway, Dallas, TX 75248. 1-800-969-9466
 
G. VasoGenitine: Clinic for Natural Solutions, 2300 West 32nd Street, P.O. Box 610716, Dallas, TX 75261. 1-888-301-0011

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:

The researchers at New England Institute for Impotence and Prostate Care have combined the powerfully effective agents in Orligen© (muira puama/epimedium) with the protective properties found in Prostana© (serenoa repens) to formulate this unique, proprietary formula engineered specifically to help men suffering from mild to chronic impotence.

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

In clinically controlled double-blind/placebo studies independent of the AUC, Urophil's active agent was given to a panel of impotent males who had not had sexual activity in as many as six years. The all-natural ingredients effectively reversed the impotence in 68-70% of all men tested.

Exhibit F at 21. Similarly, the "Press Release" for Alprostaglandin® quotes an Alec Coleman, who is identified as "NIUH Chief Resident-Medical Director and Product Development Director," as stating that:

Extensive studies have shown the Alprostaglandin® formula to be effective in 14 days of [sic] less, with clients describing the effects as `an explosion of sexual energy.'

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:

(1) Award the Commission all temporary and preliminary injunctive and ancillary relief that may be necessary to avert the likelihood of consumer injury during the pendency of this action, and to preserve the possibility of effective final relief, including, but not limited to, temporary and preliminary injunctions, and an order freezing each defendant's assets;
 
(2) Enjoin defendants permanently from violating Sections 5(a) and 12 of the FTC Act, including committing such violations in connection with the advertising, offering for sale, or other promotion of impotence treatment products;
 
(3) Award such relief as the Court finds necessary to redress injury to consumers resulting from defendants' violations of Sections 5(a) and 12 of the FTC Act, including, but not limited to, the rescission of contracts or refund of money, and the disgorgement of unlawfully obtained monies; and
 
(4) Award plaintiff the cost of bringing this action as well as such additional equitable relief as the Court may determine to be just and proper.

Respectfully submitted,

DEBRA A. VALENTINE
General Counsel

_________________________
SONDRA L. MILLS
SEENA D. GRESSIN
Federal Trade Commission
600 Pennsylvania Ave., N.W.
Room 200
Washington, D.C. 20580
(202) 326-2673 (voice)
(202) 326-3392 (facsimile)
_________________________
ANTHONY E. DIRESTA
Georgia Bar No. 222675
Federal Trade Commission
Suite 5M35, Midrise Bldg.
60 Forsyth Street, S.W.
Atlanta, GA 30303
(202) 656-1355 (voice)
(202) 656-1379 (facsimile)