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Ads & Brands Law Digest: February 2022

11 February 2022

Welcome to the February 2022 edition of our Digest, covering legal and regulatory developments from the last few weeks relevant to advertising, marketing and brand-owning businesses. As usual, for each item we provide a succinct summary accompanied by a link to the full text of the relevant official source or our own report.

In this edition we report on the fact that the ASA has escalated sanctions against influencers who repeatedly break advertising rules; the ASA has also upheld complaints about a choking hazard, it has considered claims of 100% recycled, the Advertising Codes have been amended to encourage switching to low alcohol drinks, the UK government and FCA are consulting on new rules for advertising cryptoassets and the ICO has issued another fine for spam emails. On the designs and trade marks front, damages of £450k have been awarded for infringement of unregistered rights in dress designs and the High Court has ruled that pan-EU remedies are still available in “ongoing” EUTM or Community Design litigation before the UK courts.

Advertising & marketing

ASA escalates sanctions against influencers who repeatedly break the rules

We have previously reported that the ASA has been losing patience with the inability of influencers to comply with advertising rules. The CAP Code rules are clear: it must be obvious to consumers before they read or interact with a social media post if what they are engaging with is advertising.

In June 2021, the ASA set up a webpage that named influencers who despite warnings either repeatedly failed to disclose when their social media posts were, in fact, ads or failed to provide assurances that they would do so in future. The influencers on the webpage are subject to enhanced monitoring and remain on there for a minimum of three months.

Francesca Allen, Jess Gale, Eve Gale, Belle Hassan, Jodie Marsh and Anna Vakili have all previously been named as not flagging ads in their posts, Stories or Reels. Since going on the webpage, they have failed to abide by the advertising rules and improve disclosure. The ASA is now taking out ads against these influencers on Instagram, alerting consumers to their failure to follow the rules.

The ads the ASA are taking out are an escalation of sanctions, and it is considering further sanctions if needed. This includes working with social media platforms to have the content of non-compliant influencers removed, or to refer influencers to statutory bodies such as trading standards for consideration of court action which could lead to fines.
In most cases, the use of #ad (or similar) in an upfront and prominent manner is the clearest way of communicating the commercial nature of social media content. Alternatively, a platform’s own disclosure tools, such as Instagram’s Paid Partnership tool, can also help to distinguish advertising from other content. 

For more information, see here.

ASA upholds complaints about choking hazard in Dairylea ads

A video on demand (VOD) ad for Dairylea, seen on ITV Hub, All 4 and My 5 in August 2021, featured two girls hanging upside down from a 5-a-side football goal post and having a conversation about where food went when you hang upside down. One of the girls opened a Dairylea Cheese Triangle and proceeded to eat it, whilst hanging upside down.

Fourteen complainants challenged whether the ad condoned or encouraged unsafe behaviour that could be dangerous for children to emulate.
The ASA upheld the complaint and said that the ad must not appear again in the form complained of. It told the advertiser to ensure that future advertising did not condone or encourage unsafe practises.

For more information, see here.

ASA considers claims of 100% recycled

A poster featured headline text which stated “DELICIOUSLY REFRESHING, 100% RECYCLED*”. The asterisk linked to small text at the bottom of the poster that stated “Bottle made from recycled plastic, excludes cap and label”. The ad included pack shots of two Lipton Ice Tea bottles, with a recycling logo and the text “I’M 100% RECYCLED PLASTIC” visible.

One person challenged whether the claim “100% RECYCLED” misleadingly implied that all of the Lipton bottle was made from 100% recycled plastic. 

The ASA considered consumers would understand the claim “100% RECYCLED*” alongside images of the bottle with the label and cap to mean that all components of the Lipton Ice Tea bottle (that is, the bottle, cap and label) were made entirely from recycled materials. It acknowledged the ad included the disclaimer “Bottle made from recycled plastic, excludes cap and label”. However, it considered that wording appeared in very small text in the left-hand bottom corner of the ad, and therefore it could be overlooked.

In addition, the ASA said that the overall impression of the ad was that all components of the bottle were made entirely from recycled materials when that was not the case, so it concluded that the claim “100% RECYCLED*” was misleading".

A separate ruling against Aqua Pura was published on the same day, and followed many of the same themes (and was also upheld).

Advertisers and companies making bold environmental claims, including on their adverts, websites, social media content and on-pack, should revisit their claims to ensure that the overall impression given by the claim is not misleading, and that it complies with all the latest guidance on environmental claims issued by the ASA and the CMA.

For more information, see here and here
Advertising Codes amended to encourage switch to low alcohol drinks 

Following a public consultation, CAP and BCAP are introducing changes to the rule in the advertising codes that limits the advertising of “low alcohol” drinks, being those above 0.5% ABV, up to and including 1.2% ABV.

Until now, preference claims for low alcohol products were prohibited in ads that also promoted standard alcoholic drinks. Unfortunately, this prevented advertisers from simply encouraging consumers to switch from a standard alcoholic drink to the low alcohol version to reduce alcohol intake. Such messages would have to refer to a standard drink while making the low ABV a selling point, which contravened the rule. 

The consultation explored the proposal to remove this restriction to help advertisers promote the benefits of reducing alcohol consumption. Following analysis of the responses received, all of which agreed with the proposed changes, they are now being adopted in both the broadcast and non-broadcast advertising codes. The amended rules will be subject to review after 12 months. The changes take effect immediately.

For more information, see here and here


Government to strengthen rules on misleading cryptocurrency adverts
The Treasury has announced the launch of its consultation into the regulation of crypto ads in the UK. HM Treasury confirmed that it intends to extend the scope of the Financial Promotions Order to include qualifying cryptoassets. This would mean that the promotion of qualifying cryptoassets will be subject to Financial Conduct Authority rules in line with the same high standards to which other financial promotions for products such as stocks, shares, and insurance products are held.

The FCA has issued its linked consultation. The FCA is proposing changes to:
  • the classification of high-risk investments
  • the consumer journey into high-risk investments
  • strengthen the role of firms approving and communicating financial promotions
  • apply the FCA's financial promotion rules to qualifying cryptoassets.

For more information, see here and here.

ICO issues fine about unsolicited direct marketing calls 

The ICO has fined Energy Suite £2000 for making over 1,000 unsolicited direct marketing calls to subscribers who were registered with the TPS and who had not notified Energy Suite that they were willing to receive such calls. Three complaints being made as a result. The ICO found that Energy Suite contravened regulation 21 of the Privacy Electronic and Communications Regulations 2003.

For more information, see here.

Design and trade marks

Damages of £450k awarded for infringement of unregistered rights in dress designs 

Once a court has ruled that a party is liable for design infringement, it is fairly rare for the amount of damages to be paid also to be fully litigated – the parties generally come to an agreement out of court as to how much should be paid by the infringer. This recent example of an “inquiry as to damages” is thus of particular interest as the court helpfully reviewed the principles applicable to calculating the appropriate amount (“quantum”), and also looked at the circumstances in which an award of “additional damages” can be made because of the behaviour of the defendants.

The High Court had already ruled in February 2021 that the defendants in this case were liable for infringing the unregistered designs of the claimants in certain bandage- and bodycon-style dresses. As the parties could not agree what damages should be paid, a separate inquiry as to damages was then heard before the court, with judgment being given in December 2021. The judge awarded: a) £75k to the claimants for “lost profits”, i.e. sales that the claimant would have made of its own dresses if the defendant hadn’t been selling its infringing dresses; b) another £75k to the claimants as a “reasonable royalty” on additional sales that the defendants made on top of those covered by “lost profits” – based upon a royalty rate that the parties would have arrived at if negotiating reasonably given the commercial context; and c) a further £300k of “additional royalties” to take account of the scale and flagrancy of the defendants’ infringement. Such additional damages awards are particularly rare, but when made can be intended (unlike normal damages, which are purely compensatory) to have a punitive and/or deterrent effect. So in this case the judge flagged up that the result of the combined damages awards was to wipe out all of the defendants’ profits and leave it “out of pocket”, as a demonstration that infringement does not pa

A cautionary note should be sounded, however: such inquiries as to damages can involve very lengthy and complex arguments and hearings – if the victorious party is not careful, for example if it refuses a reasonable offer from the defendant, the damages awarded can be wiped out by the costs of the inquiry.

For more information, see here.

High Court rules that pan-EU remedies are still available in “ongoing” EUTM or Community Design litigation before the UK courts

The Chancellor of the High Court handed down a judgment in December 2021 which confirmed that UK courts can still award pan-EU remedies (including pan-EU injunctions) in proceedings relating to EU trade marks and Community designs (registered or unregistered) that were “ongoing”, i.e. already under way at the end of the Brexit transition period on 31st December 2020. This will only affect a relatively small number of cases, therefore – it does not apply to new proceedings launched since 1st January 2021.

The clarification is important, as the UK IPO had previously stated in its Brexit guidance, and in the Explanatory Memorandum to a related statutory instrument, that UK courts would only be able to grant remedies in the UK and in respect of UK rights (including the new UK comparable rights) in such cases.

The Chancellor’s reasoning in the case is based upon the wording of Article 67 of the Withdrawal Agreement between the UK and the EU, which takes priority over any other domestic rules. In principle the same reasoning should also apply in reverse, i.e. EU domestic courts seized of “ongoing” proceedings relating to EUTMs or Community designs should be able to grant remedies including injunctions that also cover the UK, presumably including the new UK comparable rights.

For more information, see here.


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