Welcome to the August 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 CMA's investigation into certain fashion retailers for possible greenwashing, Ofcom's call for evidence on advertisement scheduling, the failed court challenge to the HFSS food promotion restrictions, the delay to the Online Safety Bill, the introduction to the UK parliament of the Data Protection and Digital Information Bill, and the ASA and CMA's responses to the DCMS Select Committee report on influencer culture. We also look at two trade mark developments, one concerning EU guidance on registering virtual goods and NFTs as trade marks and the other one concerning a UK case about registering colours as trade marks.
In this issue:
- Advertising and marketing
- Trade marks
Advertising & marketing
CMA investigates certain fashion retailers for green claims
The CMA has announced that it is scrutinising eco-friendly and sustainability claims made by various retailers about their fashion products, including clothing, footwear and accessories. This is part of the CMA's investigation into potential greenwashing in breach of consumer protection law.
Specifically, the CMA is considering if the retailers are:
- using statements and language that are too broad and vague and may create the impression that their eco ranges of clothing are more environmentally sustainable than they actually are.
- using environmental criteria to select products for their eco ranges that are lower than consumers might reasonably expect, given their descriptions and overall presentation. For example, some products may contain as little as 20% recycled fabric.
- adding some items to their eco ranges which do not actually meet their environmental criteria.
- giving consumers inadequate information about products in their eco ranges, for example by not stating what the fabric is made from.
- making misleading statements about fabric accreditation schemes and standards, for example by not being sufficiently clear about whether the accreditation applies to particular products or to the firm's wider practices.
The CMA has emphasised that it is at the initial stage of its investigation, and so it should not be assumed that any business under investigation has broken consumer protection law.
Ofcom calls for evidence on advertisement scheduling
Ofcom has published a call for evidence on the quantity and scheduling of advertising that is permitted under its Code on the Scheduling of Television Advertising (COSTA) on public service broadcasting (PSB) channels. The PSB channels include ITV, STV, Channel 4, Channel 5 and S4C and the advertising scheduling rules are more restrictive for PSB channels than for non-PSB channels.
Ofcom recognises a need to review obligations in this area considering the expansion of non-PSB channels and the introduction of on-demand television and online streaming services. Advertising regulation is an important area affecting the financial sustainability of the PSBs.
Ofcom is therefore asking if the TV advertising rules for public service broadcasters remain effective and proportionate. Further, it is asking if this regulatory burden is still necessary, and how its removal would affect audiences, broadcasters, advertisers and the process of competition. The call for evidence ends on 7 October.
Challenge to HFSS rules for cereals fails
The High Court has rejected a judicial review application brought by Kellogg's regarding new regulations about how products which are high in fat, salt and sugar (HFSS) can be marketed. Under the Food (Promotion and Placement) (England) Regulations 2021 the locations in which HFSS products can be promoted are restricted from 1 October 2022. (The government has delayed restrictions on volume price promotions of such products until at least 1 October 2023).
Kellogg's have indicated that they will not appeal. This means that the locations aspects of the regulations come into force as planned in October 2022. It remains to be seen if the delayed aspects including price and volume promotions will come into force in October 2023, or be further delayed.
It is also worth noting that both the Welsh and Scottish governments are planning similar (but not identical) rules around HFSS promotions. It looks like there may be some divergence in restrictions across the UK, which will not be helpful for businesses (and may be confusing for consumers). However, such divergence already exists in relation to alcohol promotions, for example. Both governments say they are mindful of the importance of consistency but do not want to prejudice the impact of the restrictions in their respective jurisdictions.
Online Safety Bill delayed
The UK government presented its Online Safety Bill (OSB) to Parliament on 17 March 2022. Ofcom has published a roadmap setting out plans for its implementation of the Online Safety Bill and a call for evidence on matters to be included in a consultation on its proposed code of practice on illegal content. However, in July, the UK government said that the parliamentary process would be delayed until September when a new Prime Minister is chosen.
Data Protection and Digital Information Bill introduced to parliament
The Data Protection and Digital Information Bill was introduced to the UK parliament in July 2022. It reflects the proposals in the UK government's consultation response which we considered in the July edition of our adlaw digest. The Bill covers all aspects of data protection law, but the two key areas for marketers to consider are cookies and direct marketing rules.
In general, a website user must provide consent for a cookie to be used (and the user must be provided with clear and comprehensive information about the purposes of the processing), subject to certain exceptions, eg if a cookie is "strictly necessary" to provide a service. The Bill introduces new exceptions where there is a low risk to people's privacy, eg if cookies are used to collect information for statistical purposes aimed at improving the service. However, a user will still have to have the chance to object or opt out.
In terms of direct marketing, under the Privacy and Electronic Communications (EC Directive) Regulations 2003, businesses can contact individuals with whom they have previously been in contact for a sale or transaction with further marketing material about similar or related products, as long as the individual was able to opt-out of such contact when they initially provided their details (the 'soft opt-in'). The Bill will now extend this to non-commercial organisations like charities.
Organisations should track the Bill's progress to plan for changes that need to be made so that they can carry on complying with UK data protection law.
ASA and CMA responses to DCMS Committee report on influencers published
The DCMS Committee has published the responses it has received from the ASA and the CMA to its report on influencer culture.
The Committee had suggested that the CAP Code require virtual influencers to be watermarked. In response, the ASA advised that it can only regulate such accounts when they are being used for advertising purposes. It also said that there is no evidence of advertising-related harm from virtual influencers and it can pursue brands and platforms.
The DCMS report suggested including influencer posts within the scope of the CAP Code even if they are not "controlled" by the brand. The ASA said that it did not want to inappropriately regulate editorial or sponsorship content. It also said that it interprets "control" very widely anyway, so it considers almost all complaints about influencer advertising. However, the ASA will look at this further.
It rejected the suggestion that its guidance about enhanced disclosure for adverts targeted at children should form part of the CAP Code. However, it said that it will review its guidance on child brand ambassadors before the end of 2022. It emphasised that child safeguarding concerns are outside its scope.
The CMA considered the DCMS Committee's concerns about the risks of AI-driven monitoring and highlighted the work of the Digital Regulation Cooperation Forum. It also updated about its work with Facebook Ireland and other social media platforms.
For more information, see here.
EU Intellectual Property Office issues guidance on registering trade marks for virtual goods and NFTs
Brand-owning businesses, particularly those with products, services or real estate that might readily feature in a digital form in online games and virtual worlds, are increasingly putting in place specific trade mark strategies to protect and exploit their brands in these new arenas. Rather than just relying upon existing registrations in trade mark classes that relate to the "real world", they are looking additionally to register their marks in classes that might be appropriate when applied to digital/virtual goods or services relating to them. For virtual goods this has typically been in Class 9 (which covers software and computers amongst many other things) and for services relating to virtual goods this is often in Class 41 (which includes entertainment services) or 42 (which includes designing of software).
The EU Intellectual Property Office (EUIPO) has recently issued a newsflash about how it will handle applications for EU Trade Marks relating to virtual goods and non-fungible tokens (NFTs). This confirms that "virtual goods are proper to Class 9 because they are treated as digital content or images", which is good news for those who have already been using Class 9 in this way. But the EUIPO also says that it will be requiring such applications to specify not just "virtual goods" but a more specific indication of the type of goods in question, for example "downloadable virtual goods, namely, virtual clothing".
By extension, when it comes to NFTs the EUIPO's approach is to say that the NFTs themselves are just tokens which "authenticate" digital items that are linked to or attached to the token. The EUIPO will not register marks in Class 9 relating to NFTs unless the type of digital item that it authenticates is specified. This approach is also going to be reflected in the 2023 edition of the Nice Classification (which is the global guide to what each trade mark Class contains) – Class 9 will then expressly include "downloadable digital files authenticated by non-fungible tokens".
When it comes to the classes to use for services relating to virtual goods and NFTs, the EUIPO says these will be "classified in line with the established principles", i.e. it feels that the existing classes already do the job. For services relating to virtual goods in a broadly entertainment, gaming or recreational environment Class 41 seems likely to be appropriate, but other classes may be relevant depending upon the service environment – for example aspects of the "metaverse" relating to workplaces and commerce would presumably need to consider Class 35 which broadly covers services relating to advertising, business, management and office functions.
UK High Court ruling on the registrability of colour marks
Cadbury the chocolate company has for many years been in a running battle with its competitor Nestlé over trade mark protection for the colour purple that Cadbury uses on its Dairy Milk products. Registrations that it had previously gained had to be abandoned after various court rulings that its colour mark had not been represented with sufficient certainty or precision on the register. In particular, the Court of Appeal in 2013 had found unacceptable the mark being described as "The colour purple (Pantone 2685C) as shown on the form of application, applied to the whole visible surface, or being the predominant colour applied to the whole visible surface, of the packaging of the goods." It was felt that this description, and in particular the use of the word "predominant", left open a multitude of forms in which the colour could be used in combination with other unspecified colours and material. This wasn't sufficiently certain or precise, and would be unfair vis-à-vis competitors.
In its most recent attempt to regain UK trade mark protection, Cadbury has tried a three-pronged approach. It once again included the pantone colour – as is necessary – but applied to register three different variants, one saying "applied to the whole visible surface of the packaging of the goods", a second saying "applied to the packaging of the goods", and the third making no reference to the packaging of the goods at all. Nestlé opposed all three applications, its opposition failing on the first of the variants, but succeeding against the other two. The Hearing Officer at the UK Intellectual Property Office concluded that the second and third variants were still insufficiently clear how the colour would be applied, with a continued potential for the "multitude of forms" that the Court of Appeal had objected to.
Cadbury appealed to the UK High Court in respect of Nestlé's successful opposition to the second and third variants. The judge confirmed the non-registrability of variant two, but somewhat surprisingly allowed the appeal in respect of the third variant – for which the description was simply "The colour purple (Pantone 2685C), shown on the form of application." This ruling seems counter-intuitively to prefer for registrability a description that gives less detail rather than more about how the colour is to be applied. The judge based his reasoning upon an EU Court of Justice decision (Libertel, in respect of the colour orange for telecommunications services) which had previously ruled that a colour per se could be registrable. It will be interesting to see whether Nestlé appeal against the ruling.
For more information, see here.
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