Ads and Brand Law Digest April 2022

In this edition we report on an ASA enforcement notice on advertising cryptocurrencies, an ASA pilot to improve online transparency, CAP guidance on advertising low alcohol drinks, the UK government’s consultation on online advertising, ICO action against spammers, a CMA investigation into adtech issues and CMA advice on environmental sustainability issues and consumer protection law. We also report on How trade mark oppositions based upon reputation or passing off can fail even for a well-known brand; and a trade mark battle between an upmarket Chines restaurant and a less expensive Chinese takeaway.

In this edition:

• Advertising & marketing

• Regulatory

• Trade Marks and Passing Off

Advertising & marketing

ASA issues enforcement notice on advertising cryptocurrencies

Ads for cryptoassets are a “red alert” priority issue for the ASA and CAP. Following a series of ASA rulings, it has now published an enforcement notice about the advertising of cryptocurrencies, including guidance for advertisers. The ASA says that advertisers should immediately review the guidance and make any changes required. Its compliance team will take targeted enforcement action from 2 May 2022.

When promoting cryptocurrencies – this means coins themselves (for example initial coin offerings), crypto exchanges or promotions that otherwise involve the transfer, sale or supply of cryptocurrencies. It must be made expressly clear in the ad that cryptocurrencies are unregulated in the UK; cryptocurrency profits may be subject to Capital Gains Tax; and the value of investments is variable and can go down as well as up. This can extend to fan tokens and the offer of free crypto. The information must be appropriately prominent.

When designing campaigns for cryptocurrencies, advertisers should ensure they do not trivialise investing in cryptocurrency or take advantage of consumers’ inexperience or credulity. Amongst other requirements, they should take care not to: imply that the product or services are regulated; imply that investments are safe or guaranteed, or that past performance is a guide for the future; employ fear of missing out or imply that investment decisions are simple, easy or for anyone; or encourage people to invest using credit.

For more information, see here and here.

ASA pilot to enhance online transparency

The ASA has also announced a pilot with the largest companies in the digital advertising supply chain, to extend its role online. It will explore formalising and bringing more accountability and transparency to the role that these companies play in helping to uphold advertising regulation in the UK.

The initiative is the result of collaboration between the ASA and members of IAB UK including Adform, Amazon Ads, Google, Index Exchange, Meta, TikTok, Twitter and Yahoo. It will pilot a set of principles covering how participating companies raise advertisers’ awareness of the rules that apply to their ads online and help the ASA to secure compliance in cases when an advertiser appears unwilling or is unable to comply with the rules. The pilot will run for one year from June 2022.

As part of the pilot, participating companies - including online platforms, demand-side platforms and supply-side platforms - voluntarily agree to provide information to the ASA to demonstrate how they operate in accordance with the pilot’s principles. It will use this information, and other intelligence collected throughout the reporting period, to publish an aggregated interim report and a final report. This will provide an independent account of how companies have performed against the principles - with an understanding that different companies can meet the principles in different ways - to identify examples of good practice, as well as areas where the ASA identifies room for improvement.

The information gathered as part of the pilot will establish if gaps exist in the ASA’s ability to enforce the CAP Code online, and how this can effectively be addressed.

For more information, see here.

CAP issues guidance on advertising low alcohol drinks

CAP has issued guidance on advertising low alcohol drinks. Under the CAP and BCAP Codes, low alcohol drinks are defined as having an ABV of above 0.5%, up to and including 1.2%.

The guidance points out that low alcohol drinks are still subject to every rule in the alcohol section. Although the alcohol rules all apply to low alcohol drinks, there is a small exception made for the way in which their alcohol content can be promoted.

Ads for alcoholic drinks may state the ABV of the product but may not make a particular feature of alcoholic strength, state that it is preferable, or imply that it is a reason to purchase the product. However, ads for low alcohol drinks may make a preferential feature of their low alcohol content, provided that they clearly state the ABV.
Marketers can now also include messaging such as “if you like our beer but want to cut down on alcohol, try our 1% version.”

As with all alcoholic drinks, ads for low alcohol drinks are heavily restricted in terms of health and nutrition claims. The only acceptable claims are low alcohol (as defined above); reduced alcohol; and reduced energy (calories). As a low alcohol content can be a factor resulting in a large reduction in calories, and because of the similarity between the words ‘low’ and ‘lower’, marketers should take particular care not to make “low energy (calorie)” claims. For instance, marketing claims such as “low alcohol, low calorie!” or “only 1% ABV and only 10 calories” would not be permissible.

For more information, see here.

Regulatory

UK government launches online advertising consultation

The UK government has launched a public consultation on its Online Advertising Programme (OAP). The content and placement of online ads is currently overseen by the ASA under a system of self-regulation. But the government is concerned that rapid tech developments have transformed the scale and complexity of online advertising, leading to increased consumer harm.

Scam ads will come within the updated Online Safety Bill, and measures will be taken to tackle various harms, like ‘crypto jacking’ (ads that, when clicked, allow hackers to commit malicious cyber security attacks and mine for crypto).

The consultation prominently mentions that “Influencers failing to declare payment for promoting products could face tougher penalties”. The consultation also confirms that influencer marketing will be within the extended scope of the updated Online Safety Bill, which means that 'paid-for advertising' is not limited to payments made to the media owners (i.e. the platforms and search engines) themselves.

The DCMS will look at the current regulations and regulators, including whether they are properly empowered and funded - presumably focusing on the ASA. It will also consider the whole supply chain and whether those within it should do more to combat harmful advertising, including social media platforms and search engines. This means advertisers, influencers, platforms, search engines, etc.

The consultation ends on 1 June 2022.

For more information, see here and here.

ICO takes action against companies over predatory marketing calls targeting elderly, vulnerable people

The ICO has issued fines totalling £405,000 to five companies responsible for over 750,000 unwanted marketing calls targeted at older, vulnerable people. The ICO also issued the companies with enforcement notices requiring them to immediately stop making the calls.

After receiving complaints from the public and information from partner organisations, including Action Fraud, Trading Standards, the consumer group Which? and the call blocker provider trueCall, the ICO began investigating a number of companies that were calling people to sell insurance products or services for white goods and other large household appliances, such as televisions, washing machines and fridges. Many of the complainants said the people receiving the calls were vulnerable, with some having been suffering with dementia or other underlying health conditions.

The ICO investigation found that these companies were deliberately targeting older people by buying marketing data lists from third parties, specifically asking for personal information about people who are aged 60 and over, homeowners and with landline numbers. The evidence gathered suggested that the companies were either working together or using the same marketing list to target these people. This resulted in some people losing thousands of pounds for white goods insurance and servicing which the companies often knew they did not need.

The ICO is continuing to investigate a number of other companies that appear to be operating in the same way.

For more information, see here.

CMA investigates Google and Meta over ad tech concerns

The CMA is investigating Google and Meta following concerns that they hampered competition in markets for online display advertising services. It is focusing on whether the companies restricted or prevented the uptake of header bidding services and whether Google also affected the ability of other firms to compete with its products in this area.

Header bidding is a service which allows sellers, such as news publishers, to offer their online advertising space to multiple buyers at the same time, rather than receiving offers one by one. As a result, buyers – or advertisers – compete against each other for ad space and publishers can compare bids from multiple buyers simultaneously. This competition between buyers can make auctions more competitive.

As part of its investigation, the CMA will consider whether an agreement between Google and Meta (previously Facebook) – which Google internally codenamed “Jedi Blue” – broke the law. The CMA is also scrutinising Google’s conduct in relation to header bidding services more widely to see if the firm abused a dominant position and gained an unfair advantage over competitors trying to provide a similar service.

The European Commission has also launched its own investigation and the agreement is also the subject of a complaint by the State of Texas (and other US States) currently in the US courts. The CMA will seek to work closely with the Commission as the independent investigations develop.

For more information, see here.

CMA publishes environmental sustainability advice to government

The CMA has published advice on how competition and consumer laws can help meet the UK's environmental goals, and has outlined plans for a Sustainability Taskforce.

Following consultation, the CMA has recommended a number of actions for the government to consider, including changes to consumer law which make it easier for shoppers to make sustainable choices. This could be achieved by, for example, introducing legislative definitions for potentially misleading terms like “recyclable” and “carbon neutral.” Standard definitions of commonly used terminology would help shoppers to compare similar products. It would also complement the CMA’s work on the Green Claims Code which helps businesses accurately communicate their green credentials to shoppers in an honest and transparent way.

For more information, see here and here.

Trade Marks and Passing Off

How trade mark oppositions based upon reputation or passing off can fail even for a brand as well known as WONDER WOMAN

The High Court has recently turned down an appeal by DC Comics (owner of marks in various classes for the WONDER WOMAN brand) against the rejection by a Hearing Officer in the UK Intellectual Property Office (IPO) of its opposition to an application for the mark WONDER MUM by Unilever. Amongst other grounds of opposition, DC Comics had argued that the reputation of the WONDER WOMAN brand was so well established around the world – whether from comics, films or the related merchandise – that Unilever’s proposed WONDER MUM mark for Class 3 products (soap, perfumes, oils, cosmetics, etc) would be bound to confuse UK customers into thinking there was some association between the two.

Neither the High Court judge nor the IPO Hearing Officer doubted the fact that the WONDER WOMAN character, comics and films had a very strong global public reputation, but when it came to the detailed requirements of the Trade Marks Act in demonstrating the right kind of reputation associated with its UK trade marks, or the sort of goodwill needed to found a claim in passing off, the arguments of DC Comics fell short. In particular, it seems that facts and figures were lacking from the evidence when it came to demonstrating reputation and goodwill specifically in the UK. At the same time, the judge accepted the Hearing Officer’s conclusion that the conceptual similarity between the marks was fairly low – the MUM element of Unilever’s mark had particularly distinctive connotations, and this would have militated against confusion between the marks.

The lesson here is to put one’s best foot forward in terms of submitting UK-specific evidence and argument before the IPO, even if the global repute of the brand that one is representing is clear. On appeals to the High Court such as this, the role of the judge is not to rehear the case, but to assess whether the IPO Hearing Officer made a reasonable decision based upon the evidence put before them: the courts are reluctant to overturn such decisions relating to complex trade mark comparisons unless a material error of principle can be shown.

For more information, see here.

A David v. Goliath brand battle between purveyors of Chinese cuisine

Similar issues of reputation and goodwill to those discussed above also arose in another recent case, this time heard in the Intellectual Property and Enterprise Court (IPEC). Proceedings for trade mark infringement and passing off had been brought by the owners of UK trade marks for CHINA TANG in Class 43 (Restaurant services, catering services, cafes, cafeterias, and self-service restaurants) against the owners of a small Chinese take-away in Barrow-on-Furness, also operating under the name “China Tang”. By contrast to the Defendant’s low-profile and low-status take-away, the proprietors of the CHINA TANG marks run a very up-market restaurant by that name in the Dorchester Hotel on Park Lane.

When it came to the arguments based upon reputation and passing off, it was again David rather than Goliath that came out on top in this case. To establish the necessary reputation in the CHINA TANG marks, the judge found that both a geographical and an economic element were required. He was prepared to accept (narrowly) that the up-market China Tang restaurant at the Dorchester had established some kind of UK-wide public awareness based upon newspaper reviews and awards that it had received. But there was insufficient economic weight to go with the geographic element – the China Tang restaurant at the Dorchester was just a single restaurant, which was tiny in the context of the UK market for restaurants as a whole: so the Claimants did not have a “reputation” for the purposes of making a claim under section 10(3) Trade Marks Act.

Likewise when it came to passing off, the judge found that “the claimants’ business enjoyed goodwill stretching beyond London courtesy of the press coverage, but it was patchy goodwill which probably did not stretch into the 3 mile radius around [the Defendants’] takeaway business in Barrow.” Moreover, there was no “misrepresentation” as is also required for passing off – there was no evidence of actual confusion between the two China Tang businesses, nor any likelihood of consumers thinking that there was any connection between them should they become aware of both.

In this case, Goliath (i.e. the trade mark owners and proprietors of the high-end restaurant) did win its case on other grounds - straight forward trade mark infringement based upon section 10(2) Trade Marks Act. Despite there being no evidence of actual confusion, the judge accepted that there was a technical “likelihood of confusion” under the Act given that the Claimants’ registration did also cover take-aways. As the Defendants hadn’t bothered to do any trade mark or internet searches when adopting their China Tang name they couldn’t rely upon a defence of “honest concurrent use”.

For more information, see here.