A Medical Device Daily

The U.S. Court of Appeals for the Seventh Circuit has upheld a district court ruling requiring marketers of the “Q-Ray Ionized Bracelet” to give up almost $16 million in net profits as part of a maximum $87 million they must pay in refunds to consumers.

In a decision issued on Jan. 3 and written by Chief Judge Frank Easterbrook, the court concluded: “The magistrate judge did not commit a clear error, or abuse his discretion, in concluding that the defendants set out to bilk unsophisticated persons who found themselves in pain from arthritis and other chronic conditions.”

The court found that the defendants’ claims about how their product worked, for example, through “ionization” or “enhancing the flow of bio-energy” were “blather.”

Judge Easterbrook wrote, “Defendants might as well have said: ‘Beneficent creatures from the 17th Dimension use this bracelet as a beacon to locate people who need pain relief, and whisk them off to their home world every night to provide help in ways unknown to our science.’”

The FTC filed its case in 2003, alleging that QT Inc., Q-Ray Company, and Bio-Metal, located in Illinois, and their owner, Que Te Park, also known as Andrew Q. Park, made false and misleading advertising claims that the Q-Ray bracelet provided immediate and significant pain relief, and that they deceptively advertised their refund policy.

In September 2006, the federal district court in Chicago found in favor of the FTC. In November 2006, the court required the defendants to turn over a minimum of $22.5 million in profits and up to $87 million in refunds to consumers who bought the bracelets between Jan. 1, 2000, and June 30, 2003, when the bracelet was advertised on infomercials, Internet sites and at trade shows. The district court later reduced the minimum disgorgement amount to $15.9 million. n

d the argument that because their bracelet conferred a benefit to consumers through its placebo effect they were vindicated in making their false therapeutic claims. The court held that the FTC Act “lacks an exception for ‘beneficial deceit’.”

The court said, “Deceit such as the tall tales that defendants told about the Q-Ray Ionized Bracelet will lead some consumers to avoid treatments that cost less and do more ... .”

The court also found that the defendants deceived consumers who purchased online and received only a 10-day return period when the infomercials promised a 30-day refund and suggested that consumers purchase online. “The disclosure of this shorter period was buried several clicks away in the web site” and did not ameliorate the infomercial time frame upon which “reasonable consumers” could rely, the court stated.

The Q-Ray defendants are currently in Chapter 11 bankruptcy in the Bankruptcy Court for the Northern District of Illinois.