Manufacturer has no right to attribute medicinal properties to a cosmetic product — Supreme Court

The dissemination by a business entity of information on the packaging of a cosmetic product about its ability to treat diseases without the appropriate registration of the product in the State Register of Medicinal Products of Ukraine constitutes the communication of false information. To qualify such actions as unfair competition, the mere fact of spreading information that may influence consumers' intentions to purchase the product is sufficient, regardless of whether actual damages to competitors occur.

This conclusion was made by the panel of judges of the Commercial Cassation Court within the Supreme Court.

Circumstances of case No. 910/9006/25

The manufacturer of the cosmetic product filed a lawsuit against the Antimonopoly Committee of Ukraine (AMCU) seeking to annul the decision that qualified its actions as a violation of Article 15-1 of the Law of Ukraine "On Protection Against Unfair Competition" in the form of spreading misleading information and imposed a fine.

The AMCU decision stated that the packaging of the cosmetic product contained information about its effectiveness in inflammatory diseases of the oral cavity, which could create the impression among consumers of its medicinal properties. At the same time, the product was not registered as a medicinal product, and the claimed properties were not confirmed by proper studies. Consumer surveys showed that such information influences purchasing decisions and is mostly perceived as a characteristic of a medicinal product. Therefore, the AMCU concluded that the disseminated information was false and could provide the manufacturer with unfair competitive advantages.

Courts of previous instances denied the claim, noting that a product positioned as one used for inflammatory diseases of the oral mucosa must be entered into the State Register of Medicinal Products of Ukraine. The plaintiff, without conducting clinical trials of the cosmetic product, could have gained unfair advantages over other manufacturers not through its own achievements but by spreading false information.

Conclusions of the Supreme Court

Upon review, the Supreme Court noted that spreading misleading information as a manifestation of unfair competition should be assessed in the context of competitive relations and includes the communication of incomplete, inaccurate, or false information that has influenced or may influence consumers' intentions. To qualify the violation, the occurrence of negative consequences is not required — the mere fact of such actions or their potential impact is sufficient.

The courts established that the plaintiff disseminated information on the packaging of the cosmetic product that, by its content, created in consumers the impression of properties inherent to a medicinal product, although such a product was not registered as a medicinal product. Survey results confirmed that this information influences consumers' intentions and is perceived by the majority as a medicinal product. The Supreme Court concluded that the courts of previous instances correctly applied Article 15-1 of the Law of Ukraine "On Protection Against Unfair Competition."

The Commercial Cassation Court of the Supreme Court dismissed the cassation appeal and left the decisions of the lower courts unchanged.

Subscribe to our Telegram channel t.me/sudua, as well as to Google News SUD.UA, and also to our VIBER and WhatsApp, Facebook page Facebook and on Instagram to stay updated on the most important events.