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Free Offers of Medical Products – No Violation of the Prohibition on Promotional Gifts Under Section 7(1) Hwg When the Purchase Price Is Reimbursed in Full

In the case at issue, the plaintiff, based on Sections 8, 3, 3a of the German Law Against Unfair Competition (UWG) in conjunction with Section 7(1) Nr. 1 of the German Law on Advertising in the Field of Healthcare (Heilmittelwerbegesetz, HWG), demanded injunctive relief against the defendant’s promotional offer “Incontinence pants – FREE TRIAL” which was objected to as being in violation of competition law.

Specifically, the defendant had affixed a folded sticker containing the words “FREE TRIAL” to the packaging of its medical product. The inside of the sticker contained instructions on how to obtain a refund of the purchase price after purchasing the product by uploading onto the defendant’s website a photo of the receipt for payment and promotional package and providing name, address and bank account details, after which time the purchase price would be refunded within 14 days.

The Cologne Higher Regional Court (judgment of 17 December 2021, File No. 6 U 91/51) confirmed the decision of the Cologne Regional Court (judgment of 25 May 2021, File No. 33 O 60/20) to dismiss the action and refused the appeal against said decision.

In its appeal, the plaintiff argued that the defendant cannot rely on the exceptions under Section 7(1) No. 1 HWG because the low value limit is exceeded when the purchase price goes over at least eight euros. The further exception in Section 7(1) No. 2(a) of HWG was not relevant because the public would not see the reimbursement of the purchase price as the gift, but rather the acquisition of the product. Moreover, a full refund of the purchase price is not covered by this provision.

The Higher Regional Court, on the other hand, did not find any infringement of Section 7 (1) HWG. According to this provision, it is inadmissible in principle to offer, advertise or grant benefits and other promotional gifts (goods or services). The term “promotional gift” is to be interpreted broadly and includes any complimentary gift in connection with the purchase of a product or service. In the opinion of the Regional and Higher Regional Court, the reimbursement of the purchase price described above does indeed constitute such a complimentary gift. However, the exception under 7 (1) No. 2 (a) HWG applies here, according to which the benefit or promotional gift is permissible if it is granted for a specific amount of money or for an amount of money calculated in a certain way.

In the present case, the Cologne courts thus did not regard the product itself as the gift, but rather the purchase price reimbursed under the described conditions. Consequently, the exception for low-value items pursuant to Section 7(1) No. 1 HWG was not relevant.

The decisive factor in this respect is that the product must first be paid for in full by the consumer. The consumer therefore does not understand the sticker’s message to mean that the product is being given away without payment. Also, the consumer is aware of similar promotions, so that he will take into account the further information on the conditions of the refund on the inside of the sticker. Also, the refund relates to the full purchase price of the product and thus to a “specific amount of money or for an amount of money calculated in a certain way”. Nor is the fact that the full purchase price is reimbursed stand in contradiction to this, since the wording of Section 7(1) (2) (a) of the HWG does not provide for any relative or absolute limitation on the amount of the gift. Accordingly, in the opinion of the Higher Regional Court, the exception of Section 7 (1) No. 2 (a) HWG thus does not fail due to the low value limit of Section 7 (1) No. 1 HWG and is also not in conflict with this provision. 

The Cologne Higher Regional Court thus follows the decision of the Hamburg Higher Regional Court, which had earlier refused a previous application for an injunction (judgment of 20 June 2019, File No. 3 U 137/18).

The decision concerns an interesting and finely drawn demarcation between the two exceptions to the fundamental prohibition of promotional gifts under Section 7 (1) HWG and illustrates the complexity surrounding the legal assessment of promotional activities for medicinal and medical products, especially in the planning of such promotional activities. It is strongly recommended to obtain legal advice here.

The present ruling is one of a number of decisions that raise the bar as regards pharmaceutical companies’ promotion of corresponding products. Special attention should always be paid to the prohibition of promotional gifts under Section 7 HWG discussed here. See also the articles  “Mandatory information in pharmaceutical advertising” dated 7 September 2021and “Supply of free samples to pharmacies pursuant to Section 7 HWG” dated 14 April 2021.

Our blog contributions shall provide an overview with regard to legal topics, legislation and case law and are supposed to provide some general information rather than constituting any specific advice. Please do not hesitate to contact Maiwald and in particular the authors of the particular contributions if have any questions on the addressed topics or on other legal issues.

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Authors

Dr Christian Meyer

Principal

Principal

Attorney-at-Law

Certified Specialist Lawyer for Intellectual Property