Ads & Brands Law Digest: September 2022

In this edition we report on new CAP guidance on testimonials and endorsements, CAP guidance about swearing in ads, CAP guidance about using QR codes in ads, FCA guidance for buy now pay later ads, an ICO fine for unwanted marketing emails, a CMA consultation on advertising airtime and a CAP consultation on price advertising in telecoms advertisements. In addition, we look at a court decision about whether the design of a rowing machine could be covered by copyright.

In this edition:

• Advertising & marketing

• Regulatory

• Copyright for product designs

Advertising & marketing

CAP provides guidance on testimonials and endorsements

CAP has issued guidance on testimonials and endorsements. It confirms that testimonials and endorsements are a popular, effective – and perfectly legitimate - method of promoting products or services. However, marketers should take care to make sure that such claims, whether made by celebrities or members of the public, are accurate, capable of substantiation and unlikely to mislead. CAP has provided seven key tips to help marketers ensure that the quotes from their customers comply with the CAP Code:

• Demonstrate they are genuine.

• Obtain permission.

• Make sure they are relevant.

• Use #ad.

• Avoid providing incentives for positive endorsements.

• Be aware of restricted categories – eg neither health professionals nor celebrities should be used to endorse medicines.

• Ensure that they comply with the CAP Code more generally -you can’t use endorsements to make claims that would otherwise breach the Code.

For more information, see here.

CAP issues guidance on swearing in ads

Swearing or allusions to swearing in advertising often attracts attention (and complaints!). Over the years many advertisers have argued that their humorous intentions were not in breach of the Code.

CAP has issued guidance about offensive language in ads and how to avoid the ASA upholding complaints about swearing. Ofcom has issued research on swearing, which the ASA often uses to inform decisions on whether a particular word or phrase is likely to offend on a serious or widespread scale.

The CAP guidance also says that replacing letters or even the whole word with asterisks won’t necessarily get you off the hook – it’s all about the content and the context.

For more information, see here.

CAP issues guidance on using QR codes in ads

CAP has issued guidance on using QR codes in ads. They can be used as a direct response mechanism. The guidance says that this is legitimate but there are some potential compliance issues that marketers need to be aware of. They could be used in ways likely to mislead consumers or to promote unacceptable products or those inappropriate for younger audiences.

Use of QR codes in ads must not mislead. Marketers must avoid scenarios where a consumer could be misled into enquiring further by scanning a QR code, if the ad does not appropriately set consumer expectations over what they are accessing. This may be through the omission of material information or giving a misleading impression about the content a QR code links to. For example, ads should not suggest a product variant is available when it is not and make clear the extent of financial commitments such as non-optional charges.

Another risk is that QR codes might breach CAP or BCAP’s sensitive product category rules such as alcohol or gambling. The ASA will consider the wider context in which an ad appears, including where any links within an ad lead to. A brand ad without specific product references that links via QR code to a sensitive category product will be banned, if it is placed in media covered by these rules.

As with sensitive product categories, QR codes should not be used to take younger viewers to content that is scary, sexualised or otherwise inappropriate, such as a film or game.

For more information, see here.

Regulatory

Buy Now Pay Later firms advised to consider their advertising carefully

The Financial Conduct Authority has warned "Buy Now, Pay Later" (BNPL) firms to be take care when they advertise their services. The FCA emphasises that although some agreements are unregulated, the financial promotions of all BNPL products must comply with the financial promotion rules.

This includes requirements for their BNPL financial promotions to be clear, fair and not misleading. They must also make sure that the appropriate risk warnings are given such as:

• the risk of taking on debt that customers cannot afford to repay;

• the consequences of missed payments;

• any other adverse consequences such as the impact on the customer's credit file; and

• information about when charges become payable.

For more information, see here.

Halfords fined for sending nearly 500,000 unwanted marketing emails

The Information Commissioner’s Office has fined Halfords Limited £30,000 for sending 498,179 unsolicited marketing emails to people without their consent.

Halfords came to the attention of the ICO following complaints in relation to a direct marketing email about a “Fix Your Bike” government voucher scheme, which was sent on 28 July 2020. The government scheme allowed people to use a voucher worth up to £50 towards the cost of repairing a bicycle in any approved retailers or mechanics in England. However, Halfords’ marketing email encouraged people to book a free bike assessment and to redeem the voucher at their chosen Halfords store. This amounted to marketing its services which would generate income for the company. The ICO investigation found that Halfords’ email message clearly advertised a service provided by the company, and that Halfords could not rely on legitimate interest to send the marketing email, as claimed by the company. Under electronic marketing rules, legitimate interest cannot be used as an alternative to consent when sending electronic marketing messages. However, the soft opt-in exemption allows organisations to send electronic marketing messages to customers whose details have been obtained during the course of a sale or negotiations for similar services, but it must offer a simple way for people to opt out.

The ICO ruled that Halfords could not rely on the soft opt-in exemption for customers that received the email, as they had already not opted in to receive emails from the company.

For more information, see here.

CMA consults on ITV’s proposal to alter advertising airtime

Earlier this year, the CMA consulted on a proposal from ITV to amend a number of its time length factors used as part of the calculation of the cost of advertisements on ITV1. The CMA received one response to its consultation from ISBA. The CMA’s provisional decision is to accept this proposal as it does not consider that this will have an adverse effect on competition or consumers. The CMA consulted on its provisional decision to accept the proposal until 20 September 2022.

For more information, see here.

CAP consults on guidance on price increases in telecoms contracts

Rather than containing a fixed price, many contracts for mobile and broadband services now provide for price increases (usually linked to inflation) during the term of the contract. With the inflation rate as high as it is, this can obviously result in significant price increases.

This has led to CAP and BCAP consulting on guidance that would require information about mid-contract prices to be more prominently stated in telecoms ads across media, to avoid misleading consumers. The guidance sets out principles that must be followed and makes the point that the guidance will also be relevant for other sectors, as well as business to business marketing.

For more information, see here.

Copyright for product designs

UK court considers whether the design for a rowing machine could be protected by copyright

In the UK, the configuration and appearance of products have traditionally received IP protection under the various regimes for registered and unregistered designs. If the product is inventive, protection by patents is also possible, while if the appearance of the product is sufficiently distinctive of its producer, a 3D trade mark might also be available (although these can be difficult to obtain).

In recent years – largely thanks to two key rulings by the EU Court of Justice (CJEU) relating to designs for clothing and folding bicycles – the possibility of copyright protection for product designs has also become more realistic. Although the UK has subsequently left the EU, under the Brexit arrangements those CJEU rulings are still binding in UK law unless and until the UK Court of Appeal or Supreme Court decide that it is appropriate for the UK law to “depart” from EU case-law. This is quite difficult to reconcile with the existing UK copyright legislation and the UK case-law interpreting it, which would not – on the face of it – have afforded copyright protection to such product designs. The closest that the UK gets to offering such protection is to “works of artistic craftsmanship”, and so it is thought possible that if a suitable case about artistic craftsmanship were to reach the Court of Appeal or Supreme Court, we might see those courts asked to consider whether to “depart” from the CJEU rulings, and potentially to reduce the potential for products to be protected by copyright in the UK.

In August, the Intellectual Property & Enterprise Court (IPEC) was asked to consider just such a case, in which the designer of a water-resistance rowing machine (made largely of wood) was claiming that a competitor who copied his design had infringed his copyright. In particular, the designer argued that the rowing machine – called a WaterRower - was a “work of artistic craftsmanship” under UK law, as well as qualifying for copyright protection under the CJEU case-law. An initial hearing has taken place, in which the defendant (the competitor) argued that the case should be struck out on the basis that the rowing machine obviously didn’t qualify for copyright protection under either UK or EU law.

But the judge didn’t agree. He ruled that the case should be allowed to go to a full trial at which evidence would be fully analysed, as the designer had shown that his case had some reasonable chance of succeeding both as to being a work of artistic craftsmanship and under the CJEU test. If the case proceeds to trial rather than settling, we can look forward to some guidance on how the UK rules should be applied to a product such as a rowing machine. And if that ruling were then to be appealed to the Court of Appeal or Supreme Court, we might even get some clarification as to whether UK law will follow the CJEU (offering broader copyright protection to product designs) or alternatively “depart” from CJEU case-law and take a more restrictive approach, arguably more in line with the UK legislation and older case-law.

For more information, see here.