Ads & Brands Law Digest: May 2022

In this edition we report on the delay to the restrictions on HFSS advertising, changes to the rules on promotions in Northern Ireland, the ASA highlighting the importance of ensuring significant terms are reflected in wider advertising of promotions; new CAP Code rules on gambling advertising which come into force in October 2022 and the ASA’s latest update on its Scan Alert system. We also consider proposed consumer protection rules in Great Britain and the EU’s Digital Services Act, which confirms a ban on targeted advertising towards minors or when using sensitive personal data. Finally, we consider an impact of Brexit on trade marks. We hope you enjoy reading.

In this edition:

• Advertising & marketing
• Regulatory
• Trade Marks and Brexit 

Advertising & marketing

HFSS restrictions delayed for a year

The UK government has announced that the much-heralded restrictions on HFSS advertising will be delayed for (at least) a year. The restrictions banning HFSS adverts on TV before 9pm and paid-for adverts online will come into force January 2024. This is due to a delay to the Health and Care Bill receiving Royal Assent, as well as a growing recognition that the industry needs more time to prepare. In addition, the rules on promotions of such foods will also be delayed, except for the rules on placement of products in shops. These will mean less healthy products are no longer promoted in key locations, such as checkouts, store entrances, aisle ends and their online equivalents. The government says the delay is because economies across the world have been affected by higher-than-expected global energy and goods prices, leading to increased costs across supply chains which are affecting both businesses and consumers.

For more information see here.

No need for no purchase necessary in Northern Ireland

As of 27 April 2022, the laws on promotional marketing have changed in Northern Ireland to bring them more (although not entirely) into line with the rest of the UK. This means that you can run a promotion across the whole of the UK without having to worry about no purchase necessary routes as long as you are not inflating the cost of a product or using premium rate telephone lines. The new legislation helpfully makes it clear that buying goods at their normal price, including newspapers, won’t count as payment to participate. This is likely to be welcome news for most FCMGs and promotional marketers.

However, NI gambling law is complex, and other restrictions can affect draws in specific situations: specialist advice should always be obtained.

For more information, see here.

ASA highlights importance of ensuring significant terms are reflected in wider advertising of promotions

The ASA has upheld two complaints regarding a Cadbury’s Match and Win promotion. The promotion involved buying a promotional Cadbury’s product and entering a barcode and batch code found on the product on the promotional website. The promoter clamed there were millions of prizes to give away, including, among other things, club shop vouchers.

The ASA received complaints (including from a “compers” magazine, aimed at “professional” competition entrants) that the website did not make clear that postage costs applied to purchases from club shops; and that club shop voucher prize was only available at six of the 19 participating clubs.

The ASA ruled that the limitations were not sufficiently well communicated and upheld both complaints. It is an important decision on what the ASA may consider to be a significant condition as well as highlighting that such conditions need to be reflected in the wider advertising of the promotion and not hidden away in the terms and conditions.

For more information, see here.

CAP announces new rules on gambling advertising

CAP has announced new rules for gambling ads as part of its commitment to safeguarding young people and vulnerable audiences.

The new rules state that gambling and lottery ads must not: “be likely to be of strong appeal to children or young persons, especially by reflecting or being associated with youth culture.” This is a step-change from the existing rules that gambling ads must not be of ‘particular appeal’ to children. A ‘strong’ appeal test prohibits content (imagery, themes and characters) that has a strong level of appeal to under-18s regardless of how it is viewed by adults.

In practice, this will significantly restrict the imagery and references that gambling ads will be allowed to use and should decrease the potential for gambling ads to attract the attention of under-18s in an audience. For example, ads will not be able to use:

• Topflight footballers and footballers with a considerable following among under-18 on social media.
• All sportspeople well-known to under-18s, including sportspeople with a considerable volume of under-18 followers on social media.
• References to video game content and gameplay popular with under-18s.
• Stars from reality shows popular with under-18s, such as Love Island.

Advertisers have until 1 October 2022, when the rules will come into effect.

For more information, see here.

ASA issues update on Scam Ad Alert system

The ASA has issued an update on the numbers and trends for its Scam Ad Alert system. In June 2020, it launched its Scam Ad Alert system in partnership with major online ad and social media platforms to help tackle scam ads online.

The majority of Scam Ad Alerts it has sent over the last 12 months have been for scams relating to cryptocurrency. However, it also covered fake energy saving devices and diet pill subscription scams.

The ASA considers whether reports which are not suitable for a Scam Ad Alert still merit action, where sufficient information is provided. This could include referring clear breaches of existing ASA rulings to its compliance team; launching a proactive ASA investigation; or providing intelligence to the relevant platform.

It says that it will monitor the performance of the system and work collaboratively with stakeholders to tackle scam ads online.

For more information, see here.

Regulatory

ICO fines company for sending thousands of spam text messages during the pandemic

The Information Commissioner’s Office has fined H&L Business Consulting Ltd £80,000 for sending hundreds of thousands of text messages to people who had not consented to receive them. H&L sent 378,538 unsolicited direct marketing text messages between January 2020 and July 2020. This resulted in more than 300 complaints. The company sought to capitalise from the pandemic by directly referencing lockdown.

The spam messages promoted a “government-backed” debt management scheme, even though the company was not authorised by the Financial Conduct Authority to provide regulated financial products or services.

For more information, see here.

BEIS announces new consumer protection rules

Last year, the UK government consulted on changes to consumer law, particularly in relation to issues such as fake reviews and subscription traps. It has now announced that it will be taking those changes forward. Significantly, the CMA will be given powers to directly enforce consumer law, including new powers to fine organisations up to 10% of their global turnover for breaching consumer laws.

The government intends to consult further on new laws to deal with fake reviews, including:

• commissioning someone to write or submit a fake review;
• hosting consumer reviews without taking reasonable steps to check they are genuine; or
• offering or advertising to submit, commission or facilitate fake reviews.

It also intends to deal with “subscription traps” in which businesses make it difficult to exit a contract will also be stopped. Under new rules, businesses will be required to:

• provide clearer information to consumers before they enter a subscription contract;
• issue a reminder to consumers that a free trial or low-cost introductory offer is coming to an end, and a reminder before a contract auto-renews onto a new term; and
• ensure consumers can exit a contract in a straightforward, cost-effective and timely way.

For more information, see here.

EU Digital Services Act passes another stage in legislative process

The European Parliament and the EU member states have reached agreement on the European Commission’s draft Digital Services Act (DSA), which was proposed in December 2020.

The DSA’s scope covers online intermediary services. Their obligations under the DSA depend on their role, size, and impact on the online ecosystem.

The DSA contains measures to counter illegal goods, services or content online, such as a mechanism for users to easily flag such content and for platforms to cooperate with so-called ‘trusted flaggers'; and new obligations on traceability of business users in online marketplaces.

It also includes measures to empower users and civil society, including:

• the option to challenge platforms' content moderation decisions and seek redress, either via an out-of-court dispute mechanism or judicial redress;
• provision of access to vetted researchers to the key data of the largest platforms and provision of access to non-government organisations for public data, with the aim of providing more insight into how online risks evolve;
• transparency measures for online platforms on a variety of issues, including on the algorithms used for recommending content or products to users;
• measures to assess and mitigate risks, such as obligations for very large platforms and very large online search engines to take risk-based action to prevent the misuse of their systems and undergo independent audits of their risk management systems;
• mechanisms to adapt swiftly and efficiently in reaction to crises affecting public security or public health;
• new safeguards for the protection of minors and limits on the use of sensitive personal data for targeted advertising; and
• enhanced supervision and enforcement by the Commission when it comes to very large online platforms.

For more information, see here and here.

Trade Marks and Brexit

EUIPO Brexit Guidance and practice called into question on relevance of UK prior rights to registrability/validity of EUTMs applied for before the end of the transition period

It is 16 months since the end of the Brexit transition period, and it is tempting now to treat the various complexities relating to trade marks arising from the UK’s departure from the EU as being purely of technical or historic interest. But a series of recent EU General Court rulings, supported by a UK High Court judgment (see link below), have called into question how oppositions and invalidity claims based upon UK prior rights should have been handled post-Brexit where they relate to EU Trade Marks applied for before the end of the transition period, i.e. before 1st January 2021 (that’s still most EUTMs if you think about it).

Whereas EUIPO official Guidance and practice has been to say that UK prior rights have no relevance in support of any opposition or invalidity proceedings from 1st January 2021 onwards, and that such UK-based lines of argument in ongoing EUIPO proceedings should just fall away, the recent EU General Court rulings say that this policy has been incorrect, and have annulled EUIPO Board of Appeal rulings in oppositions that have relied upon it. The key date for deciding whether an EUTM application should be rejected on relative grounds (e.g. because there are prior UK rights) is the date of filing of the application, and so prior UK rights could still be relevant in considering any EUTM application filed before the end of the transition period. The EUIPO argued that the special circumstances of Brexit required also consideration of whether prior UK rights were still relevant at the time that the EUIPO division or Board of Appeal reached its decision (i.e. post-transition), but the General Court rejected this argument.

These EU General Court rulings call into question numerous decisions and rulings made by the EUIPO divisions and Boards since 1st January 2021, but as yet no policy change has been announced. This may be because at least two of the rulings have been appealed to the EU Court of Justice – we will probably have to wait until the outcome of those cases before there is certainty on this subject.

In the meantime, a UK High Court judgment of April 2022 has now adopted the reasoning of the EU General Court and applied it in the context of ongoing EUTM invalidity proceedings before it. The judge held that “the conditions for a declaration of invalidity [under Article 60(1)(c)] mirror the conditions for opposition under Article 8(4)” and there was no policy justification for distinguishing between the two. The relevant date for assessing the UK prior rights for the purposes of the invalidity claims being considered were the filing dates of the EUTMs in question, which were before the end of the Brexit transition period.

We must await the rulings of the EU Court of Justice, but as things stand the EUIPO approach has been over-ruled, and it will be prudent to treat arguments based upon prior UK rights as potentially viable against EUTMs applied for before the end of the transition period, whether in the context of EUIPO opposition/invalidity proceedings or ongoing UK proceedings relating to EUTMs.

Read more here (paragraphs 90–114).