Welcome to the March 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.
Advertising & marketing
ASA issues report on racial and ethnic stereotyping
The ASA has published the results of a project which looked at the extent to which portrayal of race or ethnicity in UK ads might give rise to harm or serious offence, including by reinforcing adverse stereotypes.
The ASA says that the findings both strengthen the ASA’s understanding of the impact of such portrayals on members of the audience who are represented in the ads, and they should assist advertisers and their agencies to avoid inadvertent harm or offence through their portrayals of race or ethnicity.
The research identified three broad potential harms that could arise from adverse portrayals of race and ethnicity: reinforcement of existing stereotypes, creating new stereotypes and perpetuating or reinforcing racist attitudes and behaviours.
The ASA has now asked CAP and BCAP, the authors of the UK Advertising Codes, to consider its evidence with a view to producing guidance to support advertisers’ compliance with related rules around harm, offence and social responsibility.
For more information, see here.
BCAP issues update on superimposed text
In late 2019, BCAP introduced tighter new guidelines governing the presentation of superimposed text in TV advertising (the “small print” used to communicate additional information on screen), drawing on its own consumer research. Superimposed text should be legible and clear whenever it is used in advertising so that consumers are given all the information they need to avoid being misled by ads.
Two years on, the ASA undertook a review of casework to assess the impact of the new guidance. The results show a significant improvement in the legibility of on-screen text and a reduction in complaints in this area.
For more information, see here.
ASA issues updated cryptoasset advertising guidance
The ASA published an updated guidance note on the thorny issue of crypto-related advertising. The guidance covers the advertising and promotion of cryptocurrencies and other cryptoassets, including utility tokens and NFTs.
The government has announced plans for cryptoassets to be regulated, but until the new regime comes into effect, all advertisements and promotional materials for unregulated cryptoassets will continue to be subject to the advertising codes. It is also expected that, even after the FCA takes on responsibility for regulating most forms of cryptoasset ads, the ASA will continue to retain oversight of issues of responsibility across all forms of cryptoasset advertising.
The ASA says that marketers should make clear that cryptoassets are unregulated by the FCA and not protected by financial compensation schemes. They should not take advantage of consumers' inexperience or credulity and should make clear that capital gains tax may be payable. All material information should be included, and it should be clear that values can go down as well as up and that past performance is not a guide for future performance. If projects or forecasts are mentioned, marketers should state the basis used to calculate those.
For more information, see here.
CAP consults on advertising alternatives to alcohol
CAP has issued guidance on advertising alternatives to alcohol. The alcohol section of the Codes applies to ‘alcoholic drinks’, which are those above 0.5% ABV. Drinks at or below 0.5% are, for the purposes of the Codes, considered to be non-alcoholic. CAP is aware that official government guidance exists on how alcohol content at or below 0.5% should be described, but understands that this guidance is not legally binding. Therefore, the Codes do not require compliance with this guidance. CAP is consulting on new rules and guidance to regulate alcohol alternative products and provide clarity to advertisers. The proposed guidance covers definitions, misleading advertising, responsibility, and targeting and scheduling restrictions.
For more information, see here and here.
CAP issues guidance on depicting older people in ads
CAP has issued guidance on depicting older people in ads. It says that communicating about ageing and older people in a positive way can help to tackle negative perceptions of ageing, and older people, but negative and offensive stereotypes about ageing and older people are still common. Using stereotypes about age in advertising may breach the CAP Code, and the guidance is designed to help advertisers ensure that they do not include offensive depictions of, or references to, age in their advertising.
Rule 4.1 states that particular care must be taken to avoid causing offence on the grounds of particular characteristics, including ‘age’.
The guidance says do not make any offensive generalisations about older people; for example, implying that all people over a certain age are senile, pitiable, or incapable of carrying out certain tasks. Suggesting that certain activities are inappropriate or socially unacceptable for older people is also likely to be considered problematic for causing serious or widespread offence; as demonstrated in an ASA ruling against an ad for electronic cigarettes, which implied that a relationship between an older woman and a younger man was a socially unacceptable and inappropriate ‘taboo’.
Whether or not an advertiser intends to offend, the ASA will consider how viewers are likely to interpret an ad. It says that using humour does not prevent an ad from being offensive, so take care before using humour in ads to ensure that it will not cause serious or widespread offence to consumers – even if it is intended as light-hearted. Avoid making jokes about older people using offensive clichés like ‘dinosaur’ or ‘over the hill’.
For more information, see here.
Regulatory
ICO issues more fines for spam
The ICO has fined and issued an enforcement notice to Money Hive Limited, a pay day loan company. The company sent over 700,000 nuisance marketing texts advertising short-term, high-interest loans. Money Hive Limited believed that customers had given consent to receive marketing. However, to progress their loan application, customers had no choice but to agree to marketing. This did not count as valid consent. The Money Hive Limited were fined £50,000.
The ICO also fined Tempcover Limited, a short-term motor insurance company, £85,000 for sending almost 30 million unsolicited marketing email and text messages to customers without consent or being able to rely on the soft opt-in exemption. Tempcover Limited sent the messages to people who had signed up to receive a quote via their website. They failed to provide customers with an opportunity to opt-out of receiving marketing, and essentially made agreement to marketing a condition of service. Customers were also automatically opted in to receiving marketing via texts and emails, without being given a choice. By not giving customers a way of refusing marketing when they gave their details, Tempcover Limited could also not rely on the soft opt-in exemption for direct marketing.
For more information, see here and here.
Belgian data protection authority finds that IAB Europe's Transparency and Consent Framework (TCF) fails to comply with the GDPR
On 2 February 2022, the Belgian DPA found that IAB Europe's Transparency and Consent Framework (TCF) fails to comply with the GDPR. While this decision will no doubt be a blow to the IAB and to those in the RTB ecosystem, this decision is not unexpected. IAB Europe will be fined €250,000.
IAB Europe now has two months to present an action plan showing how it will implement these corrective measures and a further 4 months to complete them, with a further penalty of €5,000 per day for failure to comply within the timescale.
IAB Europe has indicated that it will appeal the decision.
For more information, see here.
Intellectual Property & Brands
Inconclusive result of Consultation on future UK regime for Exhaustion of IP Rights
Between June and August 2021, the UK Government held a Consultation on various options for a new post-Brexit approach to the exhaustion of IP rights in the UK. It has now announced that “there is not enough data available to understand the economic impact of any of the alternatives… and as a result it has not been possible to make a decision.” Before a decision can be made, the Government says that its “policy framework needs further development” and then the evidence will be reconsidered, but “we do not currently have a timeframe for a decision, but will provide a further update in due course.”
For the time being, therefore, we are left in the position that has applied ever since the end of the Brexit transition period, which is the so-called “UK+” regime. This regime means that the UK (and thus UK IP rights-holders) regard the IP rights in goods – such as trade mark protected branding – as being exhausted (i.e. not further enforceable in the UK) once those goods have been put on the market with the rights-holder’s consent anywhere in the European Economic Area (EEA) or the UK. By contrast, rights-holders in the EEA do not have their IP rights exhausted in respect of goods that have been put on the market in the UK with their consent. Thus goods that have been put on the market in the UK cannot be parallel imported into the EEA – the IP rights still need to be cleared with the EEA rights-holders; whereas goods put on the market in the EEA with the relevant rights-holders’ consent can be freely parallel imported into the UK.
The majority of businesses responding to the Consultation supported keeping the UK+ model described above, on the basis of it being preferable to the alternatives of an “international exhaustion” regime (which would allow parallel imports from anywhere in the world) or a “national exhaustion” regime (which prevents parallel imports but is thought potentially incompatible with the Brexit Northern Ireland Protocol). The Government has said that it wants ultimately to choose the regime “which best serves the UK’s interests” in terms of fostering innovation and trade, but another potential factor is the impact upon pharmaceutical costs to the NHS, which might rise if no parallel imports were possible into the UK. The UK IPO is being asked to conduct further research, and it seems likely that we will be working within the UK+ regime for the foreseeable future.
For more information, see here.
The importance of effective due diligence when acquiring trade marks from a third party
The UK Court of Appeal has recently decided a case concerning very similar UK & EU word and device marks relating to the Beverly Hills Polo Club on the one hand, and the Santa Barbara Polo and Racquet Club on the other. The Claimants acquired their Beverly Hills marks from third parties in 2009 via a series of assignments, and had now launched trade mark infringement proceedings against the owners/licensees of the Santa Barbara polo club brand. The problem for the Claimants was that they had apparently acquired the marks without being aware that a previous owner had settled a similar dispute with the Defendants back in 1997 through signature of a Co-Existence Agreement, which was governed by Californian law and provided that any future disputes relating to the marks should be settled by way of arbitration under the American Arbitration Association Rules.
Although the Claimants had not been a party to the Co-Existence Agreement signed by the previous owners of the Beverly Hills Polo Club marks, and had not been aware of it when taking the assignment of their marks, the Court of Appeal held that they were still bound by its provisions, including the agreement to settle all disputes by way of arbitration. The Court therefore stayed their UK infringement claim in favour of arbitration under the AAA Rules. A salutary warning that – when acquiring trade marks from a third party – it is vital to conduct thorough due diligence to check whether the previous owners have done anything to affect the value or enforceability of the marks.
The Court of Appeal decided in this case that the Californian law of the Co-Existence Agreement should be applied to determine the question of whether the arbitration agreement was binding upon an assignee of the Beverly Hills trade marks, and thus whether the UK proceedings should be stayed. But in fact, one of the judges felt that it should have been the law of the trade marks (i.e. UK and EU law) that applied to decide this point – so it is just possible that there could be a further appeal on this question to the Supreme Court.
For more information, see here.