Schering-Plough Healthcare Products, Inc v Nu Skin International, Inc

Schering-Plough Healthcare Products, Inc (Schering-Plough) and Nu Skin International, Inc (Nu Skin) were parties to proceedings in the Federal Court of Australia concerning alleged contraventions of the Trade Practices Act 1974 (Cth) (the Act). Schering-Plough, the applicant, alleged that Nu Skin, the respondent, had engaged in misleading and deceptive conduct in contravention of section 52 of the Act. The dispute centred on representations made by Nu Skin concerning the efficacy and scientific basis of its "Epoch" range of skincare products, particularly the "Epoch Glacial Marine Mud" product. Schering-Plough contended that these representations were false and misleading, causing damage to its business.

The primary legal issue before the Federal Court was whether Nu Skin's representations regarding the Epoch products, including claims about their ability to treat acne, reduce wrinkles, and their unique glacial marine mud composition, constituted misleading or deceptive conduct in trade or commerce under section 52 of the Act. This required the court to assess the truthfulness and accuracy of Nu Skin's marketing statements and determine if they were likely to mislead or deceive a significant proportion of the relevant consumer audience. The court also had to consider whether any such misleading conduct had caused, or was likely to cause, loss or damage to Schering-Plough.

In its reasoning, the court examined the evidence presented by both parties, including scientific studies, expert testimony, and marketing materials. The court applied the established legal principles for assessing misleading or deceptive conduct, focusing on the overall impression created by the representations on the ordinary consumer. It considered whether the claims made by Nu Skin were substantiated by reliable scientific evidence and whether the marketing language used was likely to create an exaggerated or false impression of the products' benefits. The court found that certain representations made by Nu Skin were indeed misleading and deceptive, as they were not supported by adequate scientific evidence and overstated the products' efficacy.

Consequently, the Federal Court found that Nu Skin had contravened section 52 of the Trade Practices Act 1974. The court made orders in favour of Schering-Plough, including declarations that Nu Skin had engaged in misleading and deceptive conduct and injunctions restraining Nu Skin from continuing to make such representations. The court also ordered that Nu Skin pay damages to Schering-Plough, the quantum of which was to be determined at a later stage.