Ads & Brands Law Digest: December 2022

In this issue, we discuss CAP’s interim statement on advertising alcohol alternatives, the ASA’s interim report on intermediary and platform principles, the news that HFSS advertising restrictions will now come into force on 1 October 2025, a Ofcom call for evidence on risks of harms to children online and the ICO’s fines of a total of £435,000 on five companies for making nearly half a million unlawful marketing calls. We also discuss the EU Court of Justice judgment on the liability of Amazon for third-party selling of infringing Louboutin shoes on its site, as well as EUIPO Enlarged Board of Appeal confirmation that Iceland supermarket’s EU trade marks are invalid.

In this edition:

• Advertising & marketing

• Regulatory

• Trade marks

Advertising & marketing

CAP issues interim statement on advertising alcohol alternatives

CAP has issued an interim statement following its consultation about advertising alcohol alternatives in 2022. The UK advertising codes include rules that prohibit condoning or encouraging immoderate, irresponsible, or anti-social drinking. The increasing popularity of alcohol alternatives led CAP and BCAP to consider marketers of such products would benefit from new rules and guidance to clarify how these products can be marketed responsibly.

The significant number of detailed responses highlighted some areas meriting further analysis and potential expansions to the guidance. CAP and BCAP will continue to develop their proposals with a view to finalising them in Q1 of 2023. Areas for further enquiry include “new drinking occasions”, in particular regarding depictions of pregnancy in ads for low or no alcohol products, as well as questions about the pros and cons of shared branding between full strength alcoholic drinks and alcohol alternatives.

For more information, see here and here.

ASA issues interim report on intermediary and platform principles

The ASA has published an interim report which provides opening observations on how participating companies have, to date, implemented its Intermediary and Platform Principles as part of its pilot. The pilot was launched in June 2022 to help promote advertisers’ awareness of, and compliance with, advertising standards online.

The majority of participating companies provided information which suggests that they are wholly or mainly fulfilling the Principles relevant to them so far. The ASA notes the interim nature of the report, but considers that the information provided to date is encouraging, and, over the full twelve months of the Pilot, the ASA is optimistic it will see full implementation of all applicable Principles by the participating companies.

The ASA notes that the applicability and implementation of certain Principles can be limited by individual circumstances of participating companies, including their business models, and looks forward to considering the ways in which such factors may be addressed in the remainder of the Pilot.

The ASA will publish a final report in quarter three, 2023 reflecting on the full twelve months of the Pilot. The information gathered through the IPP Pilot will help the ASA, the industry, and other stakeholders to collectively consider whether and where further action could be taken to enhance the ASA’s ability to enforce the CAP Code online by working with the participating companies and other online intermediary businesses. In this way, the Pilot may serve to inform future policy thinking in this area.

For more information, see here.

Regulatory

HFSS advertising restrictions to come into force on 1 October 2025

The UK government has announced that the delayed HFSS advertising restrictions will come into force on 1 October 2025. It is also consulting on draft regulations that will deal with some technical issues arising from the new restrictions.

The draft regulations define the products in scope of the advertising restrictions; food and drink small and medium-sized enterprises for the SME exemptions - businesses with 249 employees or fewer that pay to advertise HFSS products will be exempt from the HFSS restrictions. The draft regulations also clarify that a company’s number of employees internationally count towards their total number of employees and that franchises are treated as part of the franchisor business and not as a separate business. The regulation also define services connected to regulated radio under the Communications Act 2003 to ensure that the exemption for radio services (which are outside the scope of the prohibition) covers online services provided by commercial and community radio broadcasters.

The government is also asking if the secondary legislation should contain an exemption for audio-only media to cover other non-broadcast radio services that are carried online, including UK-based internet radio services.

The consultation ends on 31 March 2023. The government says it will work with regulators to issue guidance for industry before the new rules come into force on 1 October 2025.

For more information, see here and here.

Ofcom calls for evidence on risks of harms to children online

Ofcom is seeking evidence on risks of harms to children online and how they can be mitigated, as it prepares to develop codes of practice in its forthcoming role as online safety regulator under the Online Safety Bill. Among other things, the Bill will regulate fraudulent advertising.

Ofcom is calling for evidence including: child access assessments; child risk assessments; preventing children accessing pornography; and protecting children from harmful content.

The call for evidence is open until 21 March 2023.

For more information, see here.

Five businesses fined a total of £435,000 for making nearly half a million unlawful marketing calls

The Information Commissioner’s Office has fined five companies a total of £435,000 for making nearly half a million unlawful marketing calls to people registered with the Telephone Preference Service.

Readers will be aware that it is unlawful to make a live marketing call to anyone who is registered with the TPS, unless they have told the specific organisation that they do not object to receiving calls from them.

The five companies collectively made nearly half a million unlawful marketing calls, some of which appeared to be directed at elderly vulnerable people who had taken action to block the calls by registering with the TPS.

The companies were calling people attempting to make them sign up for white goods insurance, such as washing machine, kitchen appliance or boiler cover. In most instances, the callers already had or did not need the service.

The ICO investigation also found, in some cases, the companies were deliberately targeting a specific demographic: including homeowners, over 60, with a landline. During the calls, there is evidence that some of the companies used apparent pressure tactics with a view to obtaining payment details.

For more information, see here.

Trade marks

EU Court of Justice rules on liability of Amazon for third-party selling of infringing Louboutin shoes on its site

The EU Court of Justice has ruled that an online marketplace operator (such as Amazon) which uses it site both to sell goods itself and also to facilitate third-party sellers to advertise and sell goods (and in Amazon’s case, also to provide marketing, storage and fulfilment services to such third-party sellers) can be found directly liable for trade mark infringement where infringing goods (such as counterfeit Louboutin shoes) are advertised on its site by those third-party sellers. The court was particularly influenced by the fact that offers for sale by Amazon itself and by third-party sellers are presented and handled side-by-side in a uniform manner and under the overall Amazon site branding in a way that does not distinguish clearly between the two. Direct trade mark liability comes into play because in such circumstances the user of the site may well gain the impression that Amazon itself is marketing – in its own name and for its own benefit – the infringing goods that are actually being sold by a third-party seller.

This looks like being good news for Christian Louboutin, who had brought two sets of proceedings against Amazon in Luxembourg for trade mark infringement in respect of his famous red-soled shoes: the Luxembourg court will now have to apply the EU Court of Justice’s reasoning to the particular facts of the case. In practical terms, in future it seems likely that – to avoid such direct liability for trade mark infringement - Amazon and operators of similar marketplace sites will have to do more to ensure that users can clearly differentiate between offers/goods from Amazon on the one hand and from third-party sellers on the other.

For more information, see here.

EUIPO Enlarged Board of Appeal confirms that Iceland supermarket’s EU trade marks are invalid

The supermarket chain Iceland had registered both an EU word mark for ICELAND and a figurative mark containing the word “Iceland” in various classes relating to their business, but 6 years ago both marks were subject to challenge by the Icelandic government (supported by various business and touristic organisations of that country). The Cancellation Division of the EU Intellectual Property Office subsequently held that the two marks should be invalidated, but the supermarket appealed those decisions and given the important policy questions involved the appeals became the first case to be heard by the EUIPO’s Englarged Board of Appeal.

The outcome of that appeal was published just before Christmas, confirming that both of the supermarket’s Iceland marks should indeed be cancelled as invalid under Article 7(1)(c) of the EU Trade Mark Regulation and the related case-law of the EU Court of Justice and General Court. The basic underlying problem with the registrations was that they would potentially prevent others in the EU from making legitimate trade uses of the word Iceland (for example in describing the source or quality of goods or services), in particular businesses or organisations with links to the country of Iceland. It would be contrary to the public interest to allow an individual organisation to monopolise the use of such a well-known and well-regarded geographical term. Under Article 7(1)(c) of the Regulation it was problematic that - rather than being seen as an indicator of commercial origin – the Iceland marks might be read by consumers as descriptive of the country of origin, or by association as embodying favourable characteristics that could influence purchasing decisions.

The supermarket attempted to argue in its defence that the Iceland marks had acquired distinctiveness through use. Although the Enlarged Board acknowledged such distinctiveness was present in the UK and Ireland, the evidence adduced was not capable of establishing such distinctiveness across the EU as a whole (as required for an EU trade mark) and thus this defence failed. Businesses should thus be cautious about using well-known geographical elements in their trade marks. As the Board itself noted, the better known the relevant geographical location or feature in the EU market place (in particular European country names), the more likely it is for an EU trade mark embodying it to be successfully challenged.

For more information, see here.