Erectile Dysfunction Merchant Guilty of Contempt of Court

I don’t want to be premature but a well planned blog is a lot like erecting a tent; annoying as hell but better than having a dysfunctional tent that collapses too early leaving everyone disappointed. As such I have considered the values imposed by the Canberra Commercial Law editorial team and have agreed not to make any lewd puns when reporting this case. Disclaimer fulfilled.

Australian Competition and Consumer Commission -v- ACN 117 372 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Ltd) [2015] FCA 1441 dealt with an application by the ACCC asking the Federal Court to make findings of contempt against the Advanced Medical Institute over its continued advertising despite court orders.

I think deep down we all knew it was coming. Erectile dysfunction ads have always skirted that fine line between paying $8 for popped salt-air at the cinemas and literally selling snake-oil…you choose which one of those is less ethical. Preying on male insecurity seems to have paid the bills for a number of years, but the guardians of consumer justice have finally caught up AMI.

In April 2015, North J made orders restraining the Australian Medical Institute and a number of associated individuals and entities (AMI) from advertising their erectile dysfunction and premature ejaculation products as effective. At hearing the ACCC accused the AMI of unconscionable conduct in it’s marketing and that this constituted a breach of (as then) s51AB of the Trade Practices Act 1974 (Cth). As part of the orders, the AMI was still allowed to advertise but was not allowed to make claims as to the efficacy of their products to any prospective patients.

Civil Contempt

The ACCC brought proceedings seeking a finding of civil contempt following a number of advertisements from the AMI on radio, television and publications on their website despite the orders.

To satisfy the test of civil contempt ACCC was required to show that the orders were clear enough not to be ambiguous and that AMI was capable of complying with them. In terms of an injunction this test is somewhat lightened by the circumstances alone as the test now becomes essentially the question of: were the orders clear and could the AMI have stopped itself from publishing the ads? This test has developed over a number of cases and is articulated clearly in Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd [31]. The test seems simpler when put in terms of a negative and the Court barely hesitated on the point even noting that Senior Counsel did not contend the point that the advertisements were deliberate. [54]

AMI based its argument primarily on the definition of “prospective patients” contending that the term “prospective patient” is not clear and unambiguous and alternatively that a “prospective patient” is only someone that expresses an interest rather then the public at large therefore rendering the ads not in breach.

In the views of Moshinsky J, a “prospective patient” extended beyond people who contacted AMI and included those members of the general public suffering from sexual dysfunction. Therefore the advertisements being broadcast to the general public were capable of reaching “prospective patients”.

Given the Court’s findings that the previous orders were clear, unambiguous and capable of compliance, Mohinsky J accordingly made declarations of contempt and listed the matter for a hearing on costs and damages.

BONUS: schedule 1 of the judgment contains transcripts from 20 premature ejaculation ads…it’s grim stuff but still better than watching any of the Star Wars prequels…shots fired.

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