Ads & Brands Law Digest: June 2024

Advertising and regulatory developments

CAP issues update on DMCC Act and its application to the CAP Code

The Digital Markets, Competition and Consumers Act 2024 received Royal Assent at the end of May. Among other things, the Act repealed and replaced the Consumer Protection from Unfair Trading Regulations 2008 (the CPRs).  

The Committee of Advertising Practice has now issued an update saying that the ASA has been monitoring the development of the Act and is now in the process of making any necessary changes to the advertising codes before the Act comes into force (expected to be later this year, following secondary legislation).

Most of the existing rules on misleading advertising, which form most of the ASA’s work, derive from the CPRs. While the restated sections of the DMCC Act regarding consumer protection largely replicate the text of the CPRs, there are several alterations to definitions and some additions to other areas that will need to be reflected across CAP and ASA rules and literature. CAP is in the process of considering any necessary amendments to its Codes and will consult on, and publish, those in due course.  

For more information, see here.

European Commission and EU regulators secure consumer protection commitments from online marketplace Vinted

Following discussions with the European Commission and national consumer protection regulators, Vinted, the online marketplace for the second-hand sale of goods, has improved its pricing information to bring its practices more in line with EU consumer protection law. This followed numerous complaints.

Vinted has now implemented a series of changes to the versions of its website and app that are directed to EU/EEA consumers. However, Vinted did not agree with the regulators’ views on how to inform consumers about delivery fees. 

If Vinted's commitments are not implemented properly or if Vinted fails to address concerns raised by the CPC Network, national consumer authorities may take measures to enforce compliance, including sanctions.

For more information, see here.

European Commission reports on Enforcement and Modernisation Directive compliance

 The European Commission has issued a report about its review of the Enforcement and Modernisation Directive (EMD). The EMD amended various pieces of EU consumer protection legislation to reflect the online world and to strengthen enforcement.

The Commission has considered issues such as fining powers. All member states have introduced the required minimum fines of 4% of global turnover (or EUR2 million if higher) for certain cross-border infringements. Some countries have introduced fines of up to 10%, but fines have not been imposed as yet.

The Commission also considered price reductions.  The law was changed so that sellers of goods who announce a price reduction to also indicate the lowest price applied by the same trader in the last 30 days. The EMD permits member states to derogate from this requirement in specific circumstances (including for perishable goods) and this has led to national differences. The report also says that there has been an increase in traders making price comparisons with the market, rather than with their own previous prices.

The EMD made amendments to require disclosure of ranking parameters used to order online search results. The Commission has found that compliance is low (35% of websites in one study) and enforcement should be improved.

In addition, the report considers the thorny issue of consumer reviews. It discusses compliance difficulties and encourages increased enforcement activity.

The report also considers issues such as "dual quality" marketing, unsolicited doorstep selling and commercial excursions, marketplaces' transparency about contractual parties, personalised pricing, and ticket bots.

The review complements the ongoing fitness check of EU consumer law on digital fairness.  The outcome of the fitness check is due to be published in the second half of 2024. 

For more information, see here.

Council of the EU adopts Green Claims Directive

The Council of the EU has adopted its position on the proposed Green Claims Directive. The Directive sets minimum requirements for the substantiation, communication and verification of explicit environmental claims and controls the use of environmental labels.  The Council has made amendments in the following areas:

Scope. There should be a clearer distinction between explicit environmental claims and environmental labels, to clarify which obligations apply.

Transparency. Environmental claims and labels should be clear and easy to understand with a specific reference to the environmental characteristics they cover (such as durability, recyclability, or biodiversity).

Exemptions from verification. A simplified procedure should permit certain types of explicit environmental claims to be exempt from third-party verification. 

Microenterprises and SMEs. Microenterprises would be subject to the claim verification requirements but would have an extra 14 months to comply. SMEs would be eligible for support measures.

Labelling schemes. New national or regional public labelling schemes would be permitted and they would be exempt from third-party verification, as long as they meet EU standards. EN ISO 14024 type 1 ecolabelling schemes would be exempt from verification if officially recognised in a member state. Recognition by one member state would be sufficient for the whole EU market.

Carbon credits. The Council’s version would require businesses to provide information about the type and quantity of carbon credits they mention in their claims, and whether they are permanent or temporary. For offset claims (carbon credits to balance out a portion of emissions) companies would have to prove a net-zero target and show progress towards decarbonisation, as well as the percentage of total greenhouse gas emissions that have been offset. 

The Council's general approach will form the basis for informal trialogue negotiations with the European Parliament and the Commission now that the parliamentary elections have taken place.

For more information, see here.

IP developments

EU General Court favours distinctiveness of composite mark that incorporates earlier mark with reputation (“Chiquita” for fresh fruit)

When weighing up applications for composite trade marks that incorporate as one element an existing brand with its own reputation already established and owned by the applicant, the EU courts have not traditionally given particular weight to the pre-existing reputation when evaluating the distinctiveness of that “established brand” element of the new mark.  This decision of the EU General Court takes a different approach, and thus provides encouragement for trade mark proprietors looking to extend an established brand by registering a composite mark that incorporates both that existing brand and a new element.

In this case, Chiquita Brands had applied to register a new composite EU Trade Mark “Chiquita Queen” for use in respect of fresh fruits.  A notice of opposition was filed against this application by a company named Jara 2000 SL (“Jara”) which held a pre-existing figurative EU Trade Mark – also for fresh fruits, i.e. the identical category of goods - which prominently incorporated the wording “Red Queen”.  In the Opposition Division and Board of Appeal at the European Intellectual Property Office (EUIPO) the opponent Jara was successful – Chiquita’s application was rejected due to the likelihood of confusion between its proposed “Chiquita Queen” mark and the existing “Red Queen” mark in respect of identical goods.

Chiquita appealed to the EU General Board, which found that the EUIPO Board of Appeal’s ruling should be annulled, based upon several errors in how it had assessed and compared the distinctiveness of the two marks.  First, it considered that the Board had over-estimated the importance of the “Queen” element that appeared in both marks: as the word “Queen” had a laudatory connotation, it would be regarded as more descriptive by the relevant general public, and would be of low distinctiveness.  When comparing the two marks, it was thus the “Red” and “Chiquita” elements that were more likely to be of importance than the fact that they both contained the word “Queen”.  Secondly, the Court found that the EUIPO Board had under-estimated the potential distinctiveness of the word “Chiquita”.  Even in Spanish-speaking jurisdictions, where “Chiquita” means “small”, the established reputation of the “Chiquita” brand in connection with bananas – a category of fresh fruits – would lead the relevant public to read the term “Chiquita” as referring to goods marketed by the applicant.

Importantly, therefore, the EU General Court ruled that the existing reputation of the “Chiquita” element of this new application was relevant in assessing relative grounds of refusal (i.e. likelihood of confusion with an earlier mark).  In particular, it was relevant in deciding how distinctive the different elements of the composite “Chiquita Queen” mark were, their combined contribution to the overall impression produced, and thus the overall similarity to (and potential for confusion with) the earlier “Red Queen” mark.  Comparing the two marks the General Court found low levels of similarity on visual, phonetic and conceptual levels, and felt that overall, there was no likelihood of confusion notwithstanding that the marks were both for “fresh fruit”.  

For more information, see here.