Ads & Brands Law Digest: July 2023

Sit down with a cup of tea or your usual drink and enjoy our discussion of the following topics.

• Advertising and marketing

• Regulatory

• Trade marks

Advertising and marketing

UK government delays restrictions on HFSS promotions - again

The UK government has confirmed delays in England on the restrictions on HFSS promotions – again. Multibuy deals on foods and drinks high in fat, salt, or sugar – including buy one get one free deals (or “BOGOFs”) – will be delayed for another two years, until October 2025.

Banning promotional deals for so-called junk food has been a key point of successive government obesity policies. However, it is a can that has been repeatedly kicked down the road due to Conservative MPs having differing views about intervening in public health. The fact we have had several PMs in a short space of time hasn’t helped.

The delay brings the policy into line with the timing for the planned restrictions on advertising HFSS foods.

For more information, see here.

New restrictions on HFSS products to be introduced in Wales

But as the government delays the restrictions in England, the Welsh government has announced there will be restrictions in Wales.

The new law, which will be introduced in 2024 and will be rolled out across Wales by 2025, will restrict the ways in which foods high in fat, sugar or salt (HFSS) can be promoted.

This will include volume-based promotions, such as multi-buys, and restrictions on where HFSS products can be displayed, such as at the end of aisles. It also plans to include within scope temporary price promotions and meal deals, which were left out of the restrictions for England.

Whilst the legislation will not apply to all HFSS products, it will target food and drinks that contribute most to obesity. The Welsh government hopes that the measures will encourage the food and retail industry to provide more promotions on healthier food or reducing the fat, sugar and salt content of products that would currently fall under the restrictions. It intends to consult on enforcement measures later this year.

We are still waiting for the outcome of the consultation on similar measures in Scotland.

For more information, see here.

ASA announces stricter interpretation of green claims, with greater emphasis on social responsibility

The ASA has issued an updated version of their guidance on misleading environmental claims.

The updated guidance should be seen in the context of the work of the CMA, as well as government policy and the announcement by the UK’s Climate Change Committee that consumer behaviour must change for the UK to meet its net zero targets, particularly in the heating, energy, transport, waste and food sectors. As advertising is a key driver of such consumer behaviour, the ASA believes that it has an important role to play in helping the UK to meet these targets.

The most significant new guidance comes in the section headed “Claims about initiatives designed to reduce environmental impact”. This provides the rationale for several of the recent decisions which have found advertisers to be misleading by omission, by talking about their positive environmental initiatives, without touching on their negative impacts as well.

Another key aspect of the guidance is that it stresses the application of the CAP and BCAP Rules concerning social responsibility are also relevant in the context of reducing environmental harm.

For more information, see here.

CAP and BCAP issue guidance on mid-contract price rises in the telecoms sector

Price rise clauses in telecoms contracts have been on the radar of both Ofcom, which is currently investigating them, and CAP and BCAP, which consulted on guidance to deal with advertising telecoms contracts. CAP and BCAP have now published the final guidance, which will take effect from 15 December 2023 to give advertisers a chance to update their materials.

The new guidance includes several principles to help advertisers ensure that their advertising is not misleading. CAP and BCAP consider that by conforming with the principles outlined, marketers are less likely to be in breach of the rules and that approaches where the information about mid-contract price information is not in line with these principles carry a greater risk of breaching the rules.

For more information, see here.

Regulatory

Ofcom issues update about age assurance on adult video-sharing platforms

The Video Sharing Platform regime requires providers to take measures to protect people using their sites and apps from harmful videos. These include requirements to implement age assurance (age-gating) measures where appropriate. Similar obligations have also been proposed for platforms under the Online Safety Bill. As such, even if you’re not a VSP operating in the adult industry, Ofcom’s recent update on its enforcement programme (regarding age assurance measures in the adult VSP sector which it began in January 2023) sheds some useful light on these requirements.

In general, Ofcom says that it is engaging with adult platforms to understand age assurance measures in use across the adult VSP sector. This has helped it to understand what challenges platforms face when considering implementing any age assurance measures and the respective merits of different methods available to them. Ofcom will use these learnings both under the VSP regime and then under the Online Safety Regime when the new legislation comes into force.

Ofcom intends to continue the current programme of monitoring and enforcement for a further three months.

For more information, see here.

Consumer groups call for action on generative AI

Consumer groups from 13 European countries have called on their national regulators to launch urgent investigations into the risks of generative AI, such as ChatGPT, and to enforce existing legislation to protect consumers.

This coincides with the publication of a new report by Forbrukerrådet, (a Norwegian consumer organisation), which sets out what it perceives to be the many risks of generative AI, about the existing rules which can protect consumers and on which rules still need to be developed.
The report covers risks of AI such as bias when targeting advertising, and proposed EU legislation, such as the AI Act, the revised Product Liability Directive and the AI Liability Directive. It also mentions industry codes of conduct but does not believe that these are sufficient on their own, due to usually catering to the lowest common denominator.

The report also covers the environmental impact - training the datasets and running the models is very energy intensive and has a major impact on the carbon footprint.

For more information, see here.

CMA calls on Emma Sleep to change its online sales practices - GOV.UK (www.gov.uk)

In November 2022, as part of its work on Online Choice Architecture, the CMA launched an investigation following concerns about Emma Sleep’s online selling practices – including whether its ‘urgency claims’, such as countdown timers and ‘discounts’, were misleading consumers.

As a result of its investigation, the CMA has found evidence that discount claims made by Emma Sleep did not stack up against the actual savings made by customers. The CMA also has concerns that the firm’s use of countdown timers and claims of high demand for certain products could mislead consumers, and therefore breach consumer protection law.

The CMA has written to Emma Sleep detailing its concerns and outlining the ways in which it can address these, which include stopping the use of misleading countdown timers and discount offers. Emma Sleep now has the opportunity to respond to the CMA’s concerns and avoid court action by signing undertakings to change its online sales tactics.

For more information, see here.

Ofcom issues statement on regulation of broadcast, on demand and online advertising of less healthy food and drink

Following a consultation, Ofcom is setting out how it will implement the long-awaited restrictions on advertising and sponsorship for less healthy food and drink products on TV, on demand, and online.

The new restrictions were introduced by the UK government through the Health and Care Act 2022, and will take effect from 1 October 2025.

From that date, TV services and on-demand programme services (ODPS) will be prohibited from including advertising and sponsorship for less healthy food and drink products between 5.30am and 9pm. Paid-for online advertisements for these products aimed at UK users will be prohibited at any time.

Ofcom is confirming that it is designating the ASA as a co-regulator for the new prohibition on online advertising for less healthy food and drink products.

The existing co-regulatory arrangements between Ofcom and the ASA for TV and ODPS extend to the new restrictions in these media. To reflect the new restrictions, it will amend the BCAP Code (for TV advertising) and the Broadcasting Code (for sponsorship on TV).

For more information, see here.

Ofcom investigates Virgin Media's compliance with contract termination and complaints handling rules

Ofcom has opened an investigation into Virgin Media’s compliance with its contract termination and complaints handling/facilitating appropriate access to ADR obligations during 2022/23, following complaints received from consumers. Its rules require that Virgin Media must ensure that conditions or procedures for contract termination do not act as disincentives for customers against changing their communications provider.

Ofcom rules also require that Virgin Media have and comply with procedures for the handling of customer complaints that conform with General Condition C4 and the Ofcom Approved Complaints code.

Ofcom takes these obligations very seriously. Customers need to be able to make the right decision for them, which includes switching away from their provider without experiencing difficulties in cancelling. It is particularly important that customers can express their dissatisfaction and have their complaint handled appropriately, in accordance with Ofcom rules. Ofcom’s investigation will examine whether there are reasonable grounds for believing that Virgin Media has failed to comply with these obligations.

Subscriptions and termination rights are a big issue at the moment and there is also CAP guidance on how to advertise subscriptions.

For more information, see here.

Trade marks

EU General Court agrees that mark should be revoked for non-use as it was registered for the wrong class of goods

When an application is made to register a trade mark, the applicant must specify the goods and/or services in respect of which protection is sought. (The idea is that proprietors of trade marks should only have registered protection in the field of business in which they are active, leaving the field clear for others to use the same or similar marks for products or services that are clearly different.) The Nice clasification system is used by trade mark registries around the world, including the UK IPO and the EUIPO, to provide a structure within which applicants can choose the right class or classes of goods and/or services for their trade mark application. In general one has to pay an additional fee for each additional class in which protection is sought.

This case is a cautionary tale as to the importance of choosing the correct class(es) when making your application, and not being blown off course by the examination process. A Germany company (Company G) had applied to register an EU trade mark for the word MOULDPRO, and in its application had specified coverage of “rapid-release couplings for hoses, hose connection couplings” within Nice class 7 and “hose couplings of plastic… hoses” within class 17. The EUIPO examiner persuaded Company G that the description of goods that it had proposed under class 7 should in fact more properly be moved to class 17, and so G ended up just with a registration for MOULDPRO in class 17.

After an initial period of 5 years (designed to allow businesses to find their feet), a trade mark proprietor must be able to show that it is making genuine use of its mark within the specified class – otherwise it can be challenged by a competitor and potentially invalidated. This is precisely what happened to Company G: some 7 years after its original application, another company (called Mouldpro ApS) filed an application for revocation of G’s mark on the basis of non-use. The Cancellation Division, and on appeal the EUIPO Board of Appeal and the EU General Court, all ruled against company G and for Mouldpro ApS because it turned out that class 17 wasn’t the right one for Company G to have registered its MOULDPRO mark in after all. Class 17 only applied to products made of plastic, whereas Company G’s various couplings and hoses were all made of metal, and so it could not demonstrate that it had made genuine use of the MOULDPRO mark in respect of class 17 (i.e. in respect of plastic couplings and hoses). Thus, Company G’s mark was invalidated.

Given that it was the EUIPO itself that apparently persuaded Company G to put all of its eggs in the class 17 basket it seems rather unfair that it should lose its registration as a result, but the General Court ruled that this was not a relevant consideration. As this case demonstrates, the choice of appropriate class or classes is often not straightforward, and advice from a specialist trade mark attorney is always advisable.

For more information, see here.

EU General Court rules that an assessment of whether a mark was applied for in bad faith should be made across the full range of classes originally applied for

This second recent ruling from the EU General Court again illustrates the importance of an understanding of how the trade mark classification system works. Our discussion here focuses upon the aspects relating to classification rather than going into detail on other legal aspects, which were also important.

Broadly speaking the factual scenario was that an American company Coinbase Inc (well known in the crypto-currency exchange field) had registered an earlier EU word mark COINBASE, while a few years later a Japanese company called Bitflyer had been able to register a pretty much identical EU mark. Coinbase Inc had registered in classes 9, 36 and 42 in respect of digital currencies, electronic trading and related activities, whereas Bitflyer’s later registration covered a larger number of classes (9, 35, 36, 38 and 42) and in respect of cash machines, computer games and e-commerce. While the spheres of activity of the two companies seems to have been a little different, one can perhaps understand that Coinbase Inc was unhappy to discover that another company had been able to register an identical mark in the same three classes for which it had an earlier registration. It therefore launched proceedings against Bitflyer to have the later registrations all invalidated, based both upon their earlier mark already being in existence and Bitflyer’s application being made in bad faith.

Although the EUIPO Cancellation Division did rule in favour of Coinbase Inc based on it having the earlier registration of the COINBASE mark, it only did so in respect of uses of the mark by Bitflyer that it considered to be too close to the digital currencies, electronic trading and related activities for which Coinbase Inc had registered. Thus, it did not provide the complete invalidation of Bitflyer’s mark that Coinbase Inc had no doubt hoped for. Bitflyer was still left with its own COINBASE mark on the register, and across all of the five classes, but cut down so as not to overlap too directly with the earlier registration. (The argument of bad faith was rejected.)

This is an important reminder, therefore, that an earlier registration of a mark in a particular class does not necessarily rule out the same or a similar mark being registered by another business in that same class – classes are quite broad and so it depends upon how the two businesses have specified their goods or services within the relevant class as to whether the registrations will be considered potentially “too close”, and thus potentially misleading. Potentially only those aspects that the EUIPO deems to be “too close” will be denied registration in the first place, or cancelled in later invalidity proceedings.

Coinbase Inc appealed to the EUIPO Board of Appeal and then to the EU General Court on its argument that Bitflyer had applied in bad faith, and its hopes are still alive on that score. The General Court found that the Board of Appeal had assessed Bitflyer’s bad faith only in respect of the parts of its registration that had survived the Cancellation Division’s ruling, whereas established case-law required that the Board take into account “all relevant factors” at the time of the impugned application. That assessment should have included Bitflyer’s motivations across the full range of goods and services originally applied for – including those that the Cancellation Division had found too close to those of the earlier Coinbase Inc mark. So the case has been remitted back to the EUIPO Board of Appeal to think again on the bad faith arguments.

For more information, see here.