Celebrity Advertising: Liability on the Rise
In the past year, there has been extensive media coverage surrounding complaints from the general public against substandard products endorsed by celebrities. A high profile case in 2008 involved endorsements by celebrities of milk products tainted with melamine. The Chinese government imposed severe penalties on the milk manufacturer, including the imprisonment of its executives which led, in part, to the company’s bankruptcy. However, celebrities that endorsed the milk products were not subject to penalties, due to the lack of any clear legal foundation for litigation. This year, the scrutiny and public outrage over the role of celebrities in the advertising industry and the lack of adequate food safety regulation resulted in three significant legal developments affecting celebrity advertising in China. Celebrities and others engaged in advertising for food and/or pharmaceutical products can now face criminal liability (in the case of drug advertisements) and civil liability (in the case of food products) if the products they are advertising are fake, substandard or if the advertisements are misleading.
On May 27, the Supreme People’s Court and Supreme People’s Procuratorate issued "Interpretations on Several Issues Regarding the Application of Law on Criminal Cases Concerning the Production and/or Sale of Fake and Substandard Drugs" to address the manufacture and sale of counterfeit and/or substandard pharmaceutical products in China. Pursuant to Article 5 of these new rules, individuals or companies providing advertising can be found liable as accomplices for the crime of creating, manufacturing or selling fake and/or substandard drugs if they know or should have known that the drugs were fake and/or substandard at the time of the advertisement. In June and July, revisions to the "Food Safety Law" and the newly issued "Measures for the Supervision and Administration of Food Safety in Circulation" established a basis for finding celebrity advertisers liable if they recommend food products to consumers in false or misleading advertisements.
