Translator：Xu Xinyuan

On Jul.21,2023, LANDING and LexisNexis conducted a special event on the topic of “Review and Response under New Regulations on Internet Advertisement” in Shanghai LANDING Law Office, located at 16/F, East Tower, Raffles City in the North Bund, Shanghai. A number of professional lawyers specialized in Internet and new media laws delivered presentations and interacted with the guests from enterprises on the key compliance issues in the industry, such as live-streaming advertising, soft-sell advertising on new media, and ads for drugs, medical devices, health food and formula food for special medical purposes, in order to help the enterprises to establish a systematic perspective on advertising compliance and risk control, and to point out high-risk issues that the enterprises are prone to overlook. What the honored speakers shared is as follows.

01

Compliance guidelines on live-streaming advertising

Speaker

Chunsong YUAN

Shanghai LANDING Law Office, Senior Partner

Director of the Department of Sports, Entertainment and Culture

In recent years, with the development of new media advertising on the Internet and the enhanced attention of regulatory authorities, the number of cases of advertising penalty has increased and the market demand for relevant compliance has expanded. According to the Opinion Analysis Report on Consumer Rights of Live-streaming Advertising (2022), during 2022, a large number of subjects related to live-streaming activities have been punished for false advertising. Ms Yuan shared her views on the main types of false advertising and promotion, the subjects of liability, and the notes on advertising and promotion, along with other key issues.

I. Main Types of False Advertising

False advertising is clearly defined under China’s laws, but in practice, many entities did not realize that their acts constituted false advertising until they got punished. Therefore, Ms. Yuan categorized the false advertising acts in practice into 12 types, such as “non-existence of goods or services”, “false advertising on the effect of goods”, “false advertising on the function of goods”, “false advertising on key information of goods”, “false advertising on the origin of goods”, “false advertising on the nature and ingredients of goods”, “false advertising on the content and specification of the ingredients of goods”, “usage of false credentials”, “misleading promotion”, “data forgery”, “false advertising on prices”, and “false advertising on lottery information”. Ms. Yuan then elaborated on the connotation of false advertising and interpreted the laws by different cases.

 II. Subjects of Liability of False Advertising

The legal liabilities of false advertising mainly include administrative liability, civil liability and criminal liability.

Advertisers, advertising agents, ad publishers and endorsers may be subject to civil or administrative liabilities. In severe cases, advertisers, advertising agents or ad publishers may even assume criminal liabilities.

III. Common Notes on Advertising

• Not using terms in the superlative form
• The requirements for the endorsers
• Advertising promotion regarding patents
• No disparagement of others and no unfair competition
• Not damaging the physical and mental health of the minors
• Using another person’s name or image
• Not disturbing the public order or departing from a good social manner

02

‘Solid’ Compliance on Soft-sell Advertising on New Media

Speaker

Boyi LIU

Shanghai LANDING (Nanjing) Law office, Attorney

Patent Agent

By introducing examples of Internet soft-sell advertisements, Ms. Boyi Liu vividly demonstrated various types of hidden soft-sell advertising on the Internet. Ms. Liu then analyzed the key compliance issues on endorser subject, advertiser’s acts, advertising agent’s acts, ad publisher’s acts, endorser’s acts, and how to promote around the current focuses of Internet soft-sell advertising regulations.

The Definition of Soft-sell Advertising

Soft-sell advertising, also known as product placement, refers to a form of marketing that strategically integrates products, services or brands and their representative visual symbols into various media content such as live streaming, short videos, knowledge introductions, experience sharing, consumer reviews, online games, etc., so that viewers are left with an impression of the products and brands in the form of text, pictures, audio, video or other forms, which in turn fulfills the marketing purposes.

Relevant Regulations

 Laws and Regulations

Advertising Law of the People’s Republic of China

Article 14

An advertisement shall be identifiable so that consumers could identify it as an advertisement.

Advertisements shall not be published in the disguised form of a news report on mass media. Any advertisement published on mass media shall be conspicuously indicated as an “advertisement” to distinguish it from other non-advertisement information and avoid misleading consumers.

Measures for the Administration of Internet Advertising

Article 9

An Internet advertisement shall be identifiable, enabling consumers to identify it as an advertisement.

For goods or services that appear resulting from advertisement auction, an advertisement publisher shall clearly indicate “advertisement” to clearly distinguish them from organic search results.

Except under circumstances where laws and administrative regulations prohibit publishing advertisements directly or in disguise, when promoting goods or services in the form of knowledge imparting, experience sharing, or consumption evaluation, among means, accompanied by a shopping link or any other purchase method, the advertisement publisher shall clearly indicate “advertisement”.

Compliance Requirement for soft-sell Advertising in New Media

In terms of the selection of endorsers, we should pay attention to the prohibitive provisions regarding underage endorsers, artists who has been disciplined for undue endorsement and artists with records of illegal or unethical performance.

In terms of behavior, advertisers, advertising agents, advertisement publishers and endorsers are all faced with different compliance requirements and risks. For example, advertisers should be responsible for the authenticity of advertising content, and for advertisements containing links, advertisers should also be responsible for the authenticity of the advertising content related to the front-end advertisement to which the link leads. Advertisers and ad publishers should have advertising reviewers familiar with advertising laws and regulations or set up advertising review institutions to cooperate with investigations conducted by market regulation authorities. Endorsers should fulfill the background investigation and promise to keep honest in their endorsement.

03

Key Points on Promotions for Ads for Drugs, Medical Devices, Health Food and Formula Food for Special Medical Purposes

Jiejing ZHAO

Shanghai LANDING Law office, Attorney

Drugs, medical devices, health food and formula food for special medical purposes(“special products”) are special products and the regulatory requirements of their promotions are stricter than those of common products. Ms. Zhao conducted in-depth analysis of the key points of advertising and promotion of these special products from the aspects of advertisement review documents and materials, advertisement contents, and appearance review.

 I.Grading rules of advertising

Under China’s laws, products of drugs, medical devices, health food and formula food for special medical purposes are categorized into 3 types, and the advertising of different type of special products are regulated by different rules.

1. No advertisement is allowed for absolutely prohibited products. Common absolutely prohibited products include narcotic drugs, psychotropic drugs, essential medicine for army, etc.

2. Relatively prohibited products can only be advertised on specialized medical or pharmaceutical journals jointly designated by the health and the drug administration departments of the State Council, such as advertisements for prescription drugs and specific whole-nutritional formulas for special medical use.

3.Advertisements for generic drugs, medical devices, health food and formula food for special medical purposes are censored by market regulatory departments and drug supervision and administration departments of provinces, autonomous regions and municipalities ( “advertisement censoring authorities”). In accordance with the laws, advertisement censoring authorities can entrust other administrative organs to implement specific advertisement reviews.

II. Key Points about Reviews on Advertisements for Drugs, Medical Devices, Health Food and Formula Food for Special Medical Purposes

Drugs, medical devices, health food and formula food for special medical purposes are special products and they are faced with stricter advertisement reviews than those of common products.

Advertisements for special products shall not contain:

1. any recommendation or certification by means of the endorser;
2. any assertion or guarantee on efficacy or safety, or statement on cure rates or effective rates;
3. any content that is inducing, or content that contains comprehensive evaluation and guarantees, or induces consumers to arbitrarily or excessively use medicines, health food and formula food for special medical purposes;
4. any advertisement for medical treatments, medicines, medical devices, or health food products disguised as introduction of health knowledge.

In addition, if special product advertisements involve patented products or patented methods, the patent number and patent type should be marked. If the patent has not been obtained, it shall not be falsely claimed in the advertisement that the patent has been obtained. Any use of patent applications that have not been granted patent rights and patents that have been terminated, revoked or invalidated for advertising is prohibited.