Ads & Brands Law Digest: March 2024

Advertising and marketing

ASA issues annual report

The ASA has issued its annual report. The report particularly considers the ASA’s use of its AI to carry out ad monitoring. It also covers the following issues:

• Dealing with misleading claims in the energy and transport sectors such as sustainability claims for airlines and misleading omissions by oil and gas companies;
• Worked in partnership with the CMA on shared priorities such as claims for greener homes and the Financial Conduct Authority on green finance;
• Published research and new guidance on recycling, biodegradable and compostable claims;
• Further examined the potential harm arising from the use of digitally altered images in ads;
• Launched multiple investigations and begun enforcement action against ads that trivialised the decision to have cosmetic surgery overseas, pressured consumers and omitted material information about pre-consultations and where they would take place; and
• Dealing with vaping ads appearing in social media and being targeted at or likely to appeal to under-18s.

The ASA received 39,034 complaints (up 16%) about 25,041 ads (up 19%)

27,378 ads were amended or withdrawn due to ASA work. 92% of ads amended or withdrawn resulted from its proactive work, including the Active Ad Monitoring system, and 89% of those were non-paid ads online. Online continues to be the most complained about media with TV second and email third, overtaking outdoor media.

For more information, see here.

FCA issues updated guidance on financial promotions on social media

The Financial Conduct Authority has published its finalised guidance on financial promotions on social media.

Directed at businesses and influencers using digital channels to make financial promotions, the Guidance aims to increase regulatory awareness amidst rising use of social media to advertise financial products and services, and consumers’ reliance on short-form content.

Although the Guidance replaces its predecessor and does not create new rules, it indicates how businesses and influencers may approach complying with their existing requirements.

Firms, influencers and finfluencers need to consider the Guidance – despite the challenges presented by limited screen space and volume of content consumed daily - when preparing financial promotions for social media, as the FCA may seek to have non-compliant financial promotions taken down, and there could be further consequences, including fines for those responsible for such promotions.

For more information, see here.

ICO sets out priorities to protect children's privacy online

The ICO is calling on social media and video-sharing platforms to improve their data protection practices so children are safer when using their services. The ICO has set out its 2024-2025 priorities for protecting children's personal information online.

Since the introduction of its Children’s code of practice in 2021, the ICO has been working with online services including websites, apps and games to provide better privacy protections for children, with the aim of ensuring their personal information is used appropriately within the digital world.

The new Children’s code strategy builds on the progress to date and sets out the priority areas social media and video-sharing platforms need to improve on in the coming year, as well as how the ICO will continue to enforce the law and drive compliance with the code by industry.

For more information, see here.

FCA green claims rules come into force on 31 May 2024

The FCA is also introducing a package of measures to help consumers navigate the market for sustainable investment products, by reducing greenwashing and improving the trust in sustainable investment products.

These involve:

• An anti-greenwashing rule for all authorised firms to make sure sustainability-related claims are fair, clear and not misleading;
• Product labels to help investors understand what their money is being used for, based on clear sustainability goals and criteria; and
• Naming and marketing requirements so products cannot be described as having a positive impact on sustainability when they don’t.

The rules will be introduced in stages:

• From 31 May 2024, firms need to ensure their sustainability references are fair, clear and not misleading and proportionate to the sustainability profile of the product and service. However, firms subject to the naming and marketing rules for asset managers are not required to meet those additional requirements until 2 December 2024.
• From 31 July 2024, firms can begin to use a product label. Note that there is no deadline for using labels, but firms must ensure that they meet the naming and marketing requirements for products using sustainability-related terms without labels by 2 December 2024.
• Firms must ensure they make the necessary changes to meet the naming and marketing requirements by 2 December 2024. If firms are launching new products before this date, they should still be aware of and consider these requirements.

For more information, see here.

DMCC Bill clears Lords with a few changes

The Digital Markets, Competition and Consumers Bill has completed its passage through the House of Lords and now returns to the House of Commons for what may be final approval.

The UK government has made some changes to the Bill concerning subscription contracts, fake reviews and drip pricing.  The CMA asked for changes to the law on secondary ticketing, which the government had rejected, but interestingly the Bill now also contains provisions on secondary ticketing.

The Bill now returns to the Commons. It is likely that there will be more changes before the final form of the Bill receives Royal Assent (particularly in relation to the subscription rules), but businesses will now have a clearer idea of their new obligations and when they come into force. The subscription rules will not come into force before the spring of 2026, to give businesses a chance to prepare.

For more information, see here.

CMA resolves investigation into fashion retailers

Way back in July 2022, the Competition and Markets Authority put fashion retailers under the spotlight by launching investigations into ASOS, Boohoo and George at Asda (which together make over £4.4 billion annually from UK fashion sales alone). The CMA has finally resolved this investigation and announced the details.

Back in the summer of 2022, there were concerns the CMA would want to push for financial penalties in this case, as it is the first batch of greenwashing investigations by the CMA. Fast forward to late March 2024, and the CMA has resolved the matter by accepting/eliciting undertakings from those three companies.

The undertakings secured by the CMA commit ASOS, Boohoo and George at Asda to change the way they display, describe, and promote their green credentials, meaning millions of customers can expect to see clear and accurate green claims.

The companies have each committed to a series of undertakings, including a commitment to comply with a set of specific rules around the use of green claims.

For more information, see here.

Tobacco and Vapes Bill introduced to parliament

Following consultation at the end of last year, the government has now introduced the Tobacco and Vapes Bill to parliament. The government says that smoking and vaping are the biggest cause of preventable illness in the UK and cost the NHS and the economy an estimated £17 billion a year.

The Bill's core aims are to:

• make it an offence to sell tobacco products to anyone born on or after 1 January 2009;
  
• introduce measures to reduce the appeal and availability of vapes to children; and
  
• strengthen enforcement activity.

Additionally, the government has committed to ban the sale and supply of disposable vapes from April 2025 under the draft Environmental Protection (Single-use Vapes) (England) Regulations 2024. Similar legislation will apply in other parts of the UK.

The ASA recently issued an Enforcement Notice to e-cigarette manufacturers and retailers to serve notice that they must immediately stop any problem advertising of vaping products online, or in social media, or face sanctions. So even without legislation, vape manufacturers and retailers need to ensure that they are complying with advertising regulation.

For more information, see here and here.

Trade marks

EU General Court upholds invalidity of Puma shoe design registration due to prior disclosure by Rihanna

The EU General Court has upheld a ruling of the EU Intellectual Property Office (EUIPO) Board of Appeal that the publication of images of some distinctive Puma sports shoes more than 12 months prior to Puma’s application to register the shoes for design protection meant that their subsequently-granted EU design registration should be declared invalid.

The sportswear company Puma in July 2016 successfully applied for a Registered Community (i.e. EU) Design for a sports shoe with distinctive white uppers and a thick black sole. But in 2019 a competitor filed an application with the EUIPO for that registration to be declared invalid, on the grounds that the shoe lacked the necessary individual character when compared to the prior art (i.e. previous published designs).

The competitor alleged that it was Puma itself that had disclosed the design for the shoe in advance of making its application for registration. The EU design registration system allows for a 12 month “grace period” during which prior disclosures by the applicant can be ignored, but in this case the alleged disclosures by Puma were made in December 2014 – a good 18 months before they made their application. And somewhat embarrassingly, the disclosures were made in the context of Puma appointing a new Creative Director – a certain Robyn Rihanna Fenty, aka simply Rihanna. As part of the publicity surrounding the appointment, photos of Rihanna had been posted to Instagram and subsequently copied to a website, showing the artist herself wearing shoes with the same key features as the registered design.

In deciding whether the prior disclosure should invalidate Puma’s registration, the EU General Court applied the standard test, which is that the disclosure should only be disregarded if it “could not have become known in the normal course of business to the circles specialised in the sector concerned, operating within the EU.” Puma tried in vain to argue either that the social media photos were not clear enough to disclose the key features of the design, particularly if viewed on the small screen of a mobile phone, or that the relevant specialist circles wouldn’t have become aware of the social media posts or website on which the photos were shared. The General Court rejected both of these lines of argument: it found that the shared photos were clear enough to have disclosed the relevant design features, and noted that Puma had provided no convincing evidence that the relevant business circles would not have come to know of them (an uphill battle in the context of the activities of a celebrity).

The case is a salutary reminder of the need for in-house IP teams to ensure that their creative and marketing colleagues understand the need for caution and careful planning in the timing of announcements and publication of photos featuring new products for which IP protection is to be sought.

For more information, read more here.