Misleading Marketing Practices in Email Notice by BAT Subsidiary

Previously, 2FIRSTS reported on the incident where British American Tobacco (BAT) subsidiary, Reynolds Marketing Services (which represents Reynolds American Tobacco Company), sent a "reminder email" titled "FDA Enforcement Notice on the Retail Sale of Elf Bar and Esco Bars e-cigarettes" to distributors and wholesalers. In response to this event, 2FIRSTS sought the expertise of Zheng Mingwei, the equity partner and director of the Corporate Affairs Committee at Beijing Zhongyin (Shenzhen) Law Firm. According to Mr. Zheng, the email sent by Reynolds Tobacco may be considered an exaggeration and misleading, potentially constituting unfair competition.

Potential Motives for Unfair Competition

Looking back at the "Reminder Email" incident, Reynolds Tobacco listed several Chinese e-cigarette brands, including ELFBAR, EBDesign, Kangertech, Lava, Cali, Bang, Esco Bars, Innokin, Puff Max, Hyde, Puff Bar, and Breeze, in the body of the email. Reynolds Tobacco cited a previous announcement by the FDA stating that these products are all disposable e-cigarette products that have not received pre-market tobacco product application (PMTA) approval.

Lawyer Zheng Mingwei pointed out that the controversial "reminder email" from Reynolds primarily involves its competitive relationships with rivals ELFBAR and EB Design. After conducting a fact check on the incident, lawyer Zheng Mingwei believes that Reynolds's email has an overly broad scope in its subject line (the warning letter only targets specific products, not the entire brand, whereas Reynolds's headline exaggerates it as "Notice of FDA Enforcement Against Retailers for Selling Elf Bar and Esco Bars E-Cigarettes"), thereby magnifying the range of products that ELFBAR and EB Design were warned about. Reynolds Tobacco's communication has the potential to mislead readers and may indicate a possibility of engaging in unfair competition tactics against its peers by exaggerating and misleading information.

He emphasized that on one hand, Reynolds Tobacco pointed out that brands such as ELFBAR and EB Design do not have licenses, while on the other hand, they are promoting their own unauthorized product (Vuse Alto), which could "suggest" that their product is legal and has passed the PMTA review. This could be misleading to wholesalers, retailers, consumers, etc. and potentially serve the purpose of unfair competition.

However, he also pointed out that the other comments in the email are all direct quotations from official FDA press releases, and no false information was found.

According to lawyer Zheng Mingwei's comprehensive analysis, although the email contents from Reynolds Tobacco involve exaggerated and misleading practices of unfair competition, the overall context is not remarkable. However, if they persist in the misconduct after receiving a warning letter, the malicious intent becomes more apparent.

Damage Business Reputation of Competitors

Lawyer Zheng Mingwei also commented on the legal impact of the "warning email" at the legal level. This incident involves both the federal level of the United States' laws against unfair competition and state-level laws. Zheng pointed out that the actions of Reynolds Tobacco may constitute false advertising under the Lanham Act, Section 43(a), which prohibits the use of false or misleading statements in advertising.

He emphasized that the majority of the Anti-Unfair Competition Law belongs to the state level in the United States. In this case, the actions of Reynolds Tobacco may constitute trade libel, similar to Article 11 of China's Anti-Unfair Competition Law. According to the jurisdiction of American law, it refers to the defendant's place of residence or the location with the minimum contact with the defendant's actions.

In terms of Chinese law, Reynolds Tobacco may potentially be implicated under Article 8 of the Anti-Unfair Competition Law, as well as Article 17 of the Interpretation of the Anti-Unfair Competition Law: misleading commercial advertising. Furthermore, Article 11 of the Anti-Unfair Competition Law states that operators are prohibited from fabricating or disseminating false or misleading information, which could harm the business reputation and product reputation of competitors.

Lawyer Zheng Mingwei stated that according to Article 27 of the Interpretation of the Anti-Unfair Competition Law, if the alleged unfair competition behavior occurs outside the territory of the People's Republic of China (PRC), but the infringement results occur within the territory of the PRC, the party claiming jurisdiction by the court where the infringement occurred should be supported by the people's court.

However, there is considerable controversy over whether jurisdiction can be obtained domestically. Some viewpoints believe that, based on the "two-convenience" principle ("convenient for the litigants and convenient for the people's courts to exercise their judicial power independently, fairly, and efficiently"), Reynolds Tobacco's actions in this case could potentially be considered as infringement occurring within Chinese territory and therefore fall under the jurisdiction of Chinese courts.