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17 March 2021

Ukraine’s comparative advertising laws and its new rules on advertising medical devices

Source: Intellectual Property Magazine

On 12 November 2019, the Ukrainian Parliament adopted the Law of Ukraine “On Amending Certain Legislative Acts of Ukraine regarding Harmonization of Legislation in the Field of Comparative Advertising with Laws of the European Union” (“New Regulations”). New Regulations entered into force on 11 December 2019 and introduced amendments not only to the regulations on comparative advertising, but also amended the trademark law, the laws on protection against unfair competition, as well as the consumer law.

With media coverage in the background for major changes to the comparative advertising law, such as requirements to legitimate comparative advertising, the abolition of a general prohibition in medical device advertising to compare medical devices of one party with competitor’s medical devices has entered into force with no fanfare and precious little media scrutiny.

The prohibition has been in effect since September 2003, restricting marketing and promo opportunities of market players to clash competing products closely to each other.

The title of the adopted law suggests that Ukrainian regulations on comparative advertising is aligned with the regulations of the European Union, especially Directive 2006/114/EC concerning misleading and comparative advertising and Directive 2005/29/EC concerning unfair business-to-consumer commercial practices (“Directives”). This is true only to some extent. The New Regulations do not merely mirror of what the Directives stipulate, but rather constitute a blend: they consist of the new regulations made on the basis of the local interpretation of the Directives, with addition of the comparative advertising regulations which have been in effect since before the amendments have been introduced.

Without doubt, the medical devices market players have got additional opportunities to promote their products on the market. However, before jumping in a blue ocean of new opportunities, it may be important to check out the rocks which might be hidden behind the expanse of the promised EU-like regulations.

Market authorizations for medical devices to be compared

Under a general rule stipulated by paragraph 1 of Article 21 of the Advertising Law, medical devices must pass Ukrainian national conformity assessment procedure prior to be advertised. The effective comparative advertising laws and regulations do not specify whether both compared devices (the medical device of an advertiser and the medical device of the competitor) should pass the conformity assessment.

However, under the reasonable interpretation of the regulations, it is assumed that an advertiser would act diligently and check the validity of authorizations for competing medical device that it considers using for comparative advertising beforehand. It is also important to make sure that proper conformity assessment for the competitor’s medical device is valid during the whole comparative advertising campaign, otherwise the competitor may claim that advertiser intentionally structured its comparative advertising campaign in a way to damage its reputation and show its device in a bad light.

Not by comparative ad alone

Although the regulations on comparative advertising have been significantly improved, the New Regulations have not ensured consistency of the regulations in this field. Regulations on comparative advertising remains scattered over the advertising laws, the consumer protection laws and the laws regarding protection against unfair competition. The new general requirements regarding advertising illustrate this issue.

In particular, the Advertising Law was supplemented by an additional general prohibition to include information in the advertising that contains elements of unfair commercial practice and/or misleading consumers or unfair competition practice.

Respectively, advertisers should bear in mind not only the new requirements regarding lawful comparative advertising, but also amended regulations on unfair commercial and competition practices.

General prohibitions on advertising of medical devices should also be kept in mind when preparing a comparative advertising campaign. For example, advertising of medical devices shall not contain:

  • recommendations or links to recommendations of healthcare professional, scientists, medical institutions and organizations concerning the advertised medical device
  • references to specific cases of successful use of medical devices
  • references to medical devices as the most effective, harmless and exceptional due to absence of side effects

It also prohibits advertising medical devices with participation of doctors, healthcare professionals or individuals whose appearance imitates appearance of the healthcare professionals.

Notably, general restrictions for advertising of medical devices do not apply to advertising aimed at healthcare professionals. The effective Ukrainian laws and regulations do not provide for specific restrictions with respect to medical device advertising to healthcare professionals. However, such relaxed regulations do not apply to comparative advertising of medical devices.

Updated ‘comparative advertising’ definition and other definitions

Before the New Regulations, Ukraine’s Advertising Law defined a comparative advertising as an advertising that contains a comparison with other persons and/or goods of another person.

Now (as of 11 December 2019), the Advertising Law defines a comparative advertising as an advertising that contains a comparison with other persons and/or goods (activity) of another person, and explicitly or by implication identifies a competitor or goods or services offered by the competitor.

It seems that the Ukrainian legislature was more inclined to combine the previous definition of the comparative advertising with the notion of ‘comparative advertising’ given in Article 2 of the Directive 2006/114/EC concerning misleading and comparative advertising rather than just take the definition from the foregoing EU Directive.

It is far from clear whether the first or second part of the definition is sufficient to qualify a certain marketing activity as comparative advertising, or whether advertisers should bear in mind and take both parts of the new definition together when considering a comparative advertising campaign and assessing whether their campaign complies with the comparative advertising requirements.

Unlike Directive 2006/114/EC concerning misleading and comparative advertising, no definition of “misleading advertising” has been introduced by the New Regulations but the Advertising Law still contains the questionable notion of ‘unfair advertising’. Instead, with the New Regulations, Article 19 of the Consumers Protection Law was amended and now contains a list of commercial practices which qualify as those which mislead consumers.

Requirements for lawful comparative advertising

Restated Article 11 of the Advertising Law now provides for a number of key requirements that any comparative advertising should meet in order to be legitimate. These requirements equally apply to comparative advertising of medical devices and can be summarized as follows:

  • it does not qualify as one of the unfair business-to-consumer commercial practices under consumer law
  • it compares homogeneous (similar) goods which meet the same needs or are intended for the same purpose or compares activity in one and the same industry or one and the same type of activity
  • it objectively compares one or more material, comparable and representative features of a homogeneous (similar) product or activity, including price, information on which may influence a consumer’s choice
  • it does not discredit or contain false information about the quality of homogeneous (similar) goods of other manufacturers or sellers or discredit activity or reputation of other persons or denigrate the trademarks, trade names, other identifiers of competitors or designation of origin
  • for a product with designation of origin (plain or protected designation of origin), it relates to a product with the same designation
  • it does not create confusion between the advertiser and a competitor or between the advertiser’s goods, trademarks, trade name and other identifiers and those of competitors
  • it does not present goods as imitations of the competitor’s goods protected by a trademark or trade name

The list of the above requirements is exhaustive.

The amended Advertising Law expressly provides that the advertiser bears liability for an unlawful comparison in advertising, as well as a failure to comply with the requirements relating to the content of the comparative ad.

Long-awaited “fair use” exception for comparative advertising

Ukrainian Trademark Law finally permits the use of third party’s trademarks in comparative advertising. However, the new “fair use” exception is conditional. In particular, the use of third party’s trademarks in comparative advertising should not constitute trademark infringement, provided that such use complies with the advertising law, laws on protection against unfair competition, and does not qualify as one of the unfair commercial practices under consumer law.

The amended Advertising Law also now permits the use of images, references to the product, trademarks or other designations by which the medical device is marketed and in relation to which the comparative ad is performed, as well as the use of the trade name of a competitor in relation to which activity or medical device the comparative advertising is performed.

Enforcement of comparative advertising requirements

With the New Regulations in force, there is now less certainty regarding which local authority will enforce the comparative advertising laws.

Before the New Regulations, Article 11 of the Advertising Law stipulated that the relations regarding comparative advertising shall be regulated by the laws regarding protection against unfair competition. On this basis, comparative advertising regulations were mainly enforced by the Ukrainian Competition Authority (the Antimonopoly Committee of Ukraine).

Article 7 of the Law of Ukraine “On Protection against Unfair Competition” (comparative advertising) is still in effect (i.e. comparative advertising is still a type of unfair competition practice), but this article now stipulates that lawfulness of comparison in advertising, as well as liability for non-compliance with requirements to the contents of comparative advertising are regulated by the Advertising Law.

The amendment effectively means that the consumers protection authority (the State Service of Ukraine on Food Safety and Consumer Protection) now has more power and, thus, can take a more active role in the enforcement of the comparative advertising regulations.

We predict that both the Unfair Competition Authority and the Consumers Protection Authority will enforce the comparative advertising regulations, but the Unfair Competition Authority will focus more on the cases where fair competition is affected, while the Consumers Protection Authority will focus on the cases where the rights of consumers are more affected. In order to bring certainty to the blurred line between the power of these two state authorities, the Unfair Competition Authority and Consumers Protection Authority entered into the Memorandum of Cooperation of 22 December 2016.

As a result, in case an unlawful comparative advertising is classified as:

  • a violation of advertising law – a fine amounted to five times the value of the distributed/produced advertisement per each instance of violation may apply. A violation committed repeatedly during the same year doubles the amount of fine applicable to such violation
  • an unfair competition practice – a fine amounted to up to 5 per cent of the offender’s turnover for the year preceding the year when the fine is imposed may apply to each such violation

 

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