ReactS : Advertising Lawyers & Attorneys : Reed Smith Law Firm : Marketing Regulations, Product Placement

Ofcom has today, 28 June, opened two consultations on changes to the Ofcom Broadcasting Code (one for television and one for radio) to allow for product placement in UK television programming. The consultations close on 17 September 2010, and we encourage interested parties to respond.

In the television consultation, Ofcom has made a few sensible suggestions and clarifications to the Regulations that came into force in March (see our separate Ad Guide), including allowing single dramas to carry product placement, prohibiting thematic placement and signalling the placement to viewers by way of a universal neutral logo (both visual and audio).

Furthermore, Ofcom has suggested amending the sponsorship rules, to allow programme sponsor's products or services to be referred to in the programme. In essence, this would allow broadcasters to offer full packages to sponsors, prevents conflicts between sponsorship and placement and makes much commercial sense for both broadcasters and advertisers. Ofcom also states that, as a result of the changes to EU law under the Audio Visual Services DIrective which the Product Placement Regulations implement, there is no need for advertising and editorial to be separated, but only that they are distinct from each other: some changes are therefore proposed to this section of the Broadcasting Code.

Notable by its absence, however, is any clarification of what it meant by "undue prominence": under the Regulations, programmes must not give undue prominence to placed products. However, Ofcom has said it intends to issue Guidance as well, so we hope that these address this crucial element.

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Google is celebrating yet another significant litigation victory today, after a federal judge in New York ruled in favour of Google in the $1 billion claim made against them by Viacom. This follows Google's recent victory in March this year in the case brought by Louis Vuitton about AdWords (see our Ad Guide).

Viacom sued Google in 2006, after its purchase of YouTube, on the basis that Google knowingly allowed copyright protected material, such as Viacom's programmes, to be used on the YouTube website without permission and was thus infringing Viacom's copyright. Viacom claimed Google was liable for "massive intentional copyright infringement" but the judge ruled that Google could not be held liable for having a general awareness that infringing material may be uploaded onto the site. In his decision, he stated that YouTube's "notify and take down" policy allowed Google safe harbour protection under the Digital Millennium Copyright Act 1998, and therefore dismissed Viacom's suit in summary judgment.

These two victories are certainly very useful to Google. The victory against Louis Vuitton allows them to retain their very lucrative AdWords search advertising policy, and this latest success seems to confirm YouTube as the world's pre-eminent video-sharing site, with all the revenue raising possibilities that this entails.

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With the World Cup not yet over eyes have already turned to the Olympics in London in 2012. Only today ,according to the BBC, Which?, the consumer body, criticised LOCOG, the London Organising Committee of the Olympic Games, over its deal with card firm Visa which prevents British sports fans using other credit cards to buy tickets and goods at Olympic venues.

Which? has been quoted as saying it is "outrageous" that British Olympic fans will not be able to pay for tickets by MasterCard or other cards or withdraw cash at any Olympic sites unless they have a card which runs on the Visa payment system. Outrageous is the right description in my view too. The issue of exclusivity deals such as this comes back to my earlier arguments (see blog on Ambush Marketing and the Olympics) about the dangers of overly aggressive enforcement of sponsors' rights generally. It also raises questions over consumer rights, but from a marketing perspective, brands are in danger of damaging their reputation rather than enhancing it.

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Several ASA adjudications in recent months have highlighted the difficulties for advertisers in making any health claims about their products. The ASA have come down hard on those that fall foul of the CAP and BCAP Codes which require that, in relation specifically to health claims, advertisers must have evidentiary substantiation of any health claims made in advertisements, by way of documented scientific trials or otherwise. See our Ad Guide to Making Health Claims in Advertising for more detail.

The adjudications demonstrate that, despite the potential profitability in making health claims about their products, it is most probably not worth doing so if advertisers are unable to substantiate such claims when questioned.

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A recent, and somewhat surprising, Australian case has highlighted the risk for advertising agencies when preparing advertising copy. In Budget Eyewear v Specsavers [2010] FCA 507, the Australian Federal Court granted an interlocutory injunction stopping Specsavers from running an ad campaign in which the words used were extremely similar to wording used in a campaign by their competitor, Budget Eyewear, on the basis that there was an arguable case that this amounted to an infringement of Budget Eyewear’s copyright in the advertisement.

By way of example, the Budget Eyewear original advertisement stated “If your Specsavers glasses break – and we’re not saying they will – simply bring them into Budget Eyewear. We’ll replace them with a pair from our own range – free of charge”. Compare that with Specsavers wording “If your OPSM glasses happen to break, and we’re not saying they’re going to, we’ll exchange them with a pair from Specsavers with a 2 year guarantee, for free”.

Judge Bennett decided that this and other similar wording within the advertisements amounted to more than the copying of an idea. She stated that “the way in which a concept is expressed in an advertisement intended to attract customers may involve originality that attracts copyright protection.” She also stated that “Specsavers could have copied the idea but exercised its own imagination to express a novel concept in new and different language rather than using a thesaurus to substitute a synonym”.

It seems a rather odd decision, especially since Specsavers could probably find similar wording in any number of past advertisements, and no doubt they will raise this at trial, but it certainly cuts against the general belief that generic advertising promotional wording is unlikely to be protected by copyright. However it does serve as a reminder that advertising agencies need to ensure that their creative teams are properly creative when copying (or should we say parodying?) competitor’s ideas, and show more originality than merely using synonyms.

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In the battle of the coffee chains, Costa has edged one step ahead of its biggest rival, Starbucks. The ASA has dismissed complaints from Starbucks over a series of press and outdoor ads run by Costa stating that coffee lovers preferred Costa to Starbucks. The ads, featuring body copy such as "Sorry Starbucks: the people have voted" and "Seven out of 10 coffee lovers prefer Costa", were challenged by Starbucks, who said the ads were misleading and the claims were unsubstantiated. The ads carried small print to the body copy stating that in blind taste tests of 174 self-titled coffee lovers comparing Costa’s cappuccino against those of Starbucks and Caffe Nero, 70% of respondents who identified themselves as ‘Coffee Lovers’ preferred Costa cappuccino. Costa was advised by the CAP Copy Advice Team that, although the taste tests were based solely on cappuccino comparisons, it was fine to make the headline a general claim, provided that this was clarified in the bodycopy text to refer only to cappuccino. Somewhat amazingly, the ASA agreed.

The ASA's decision highlights the important of using effective small print in press/outdoor and indeed TV ads to qualify any claims made. At the end of 2009, Ofcom banned a radio sponsorship ident which used the same "7 out of 10 coffee lovers" wording as the press ads, but failed to qualify the claim in the voiceover. Under the Advertising Codes, any claim made in an ad must be capable of substantiation, and the advertiser making the claim must hold documentary evidence on file to prove the claim and send this to the ASA on request.

New versions of the Codes are being launched this year and amongst other things, provide further detail on making claims in ads. Please see our ReACTS Guide on the new advertising codes for more detail.

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Official sponsors of the World Cup call foul as yet another brand owner successfully pulls off an ambush marketing stunt. This week two Dutch women were arrested for organising 36 girls to appear scantily clad in orange to promote the Dutch brewery, Bavaria. Perhaps the brewery were hoping of a repeat of four years ago at the World Cup in Germany when scores of Dutch men were ordered to remove orange lederhosen bearing the name of Bavaria.

This event though is another example in a long list of companies making the most of the tournament's huge marketing appeal. While official sponsors must of course be protected from such blatant ambush marketing, there is a concern that calls for yet more legal restrictions are disproportionate. (See our full Ad Guide on Ambush Marketing ). Existing law means that stunts such as the ones mentioned above can be stopped. The mere fact that 36 women identically dressed in orange managed to enter the stadium is a failure on the part of the organisers and not the law. Over-reacting and arresting the women in this case is also seen by consumers as heavy handed and only draws attention to the ambush marketer. However, being branded as an ambush marketer seeking to exploit rights without contributing to a major event is also not a good result for most reputable brands either.

However, more worrying for freedom of commercial expression and competition, is the alleged claim that FA sponsor, Mars, is threatening to sue Nestle over the current football-themed Kit Kat campaign. It is hard under UK law to see how such a case could succeed, though it is not helpful that Marketing Magazine suggest that Kit Kat has successfully hijacked the World Cup. Nevertheless it is difficult to see how a claim for passing off could be successful in the UK. Kit Kat has not used any of the World Cup logos or protected marks, nor does the campaign claim directly or indirectly that Kit Kat are sponsors. If such a marketing campaign were attempted however in the run up or during the 2012 Olympics, then the London Olympic Association Right  (LOAR) would mean LOCOG could stop the advertisements by virtue of a mere "association" with the event. 

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45% of complaints to the ASA, The Advertising Standards Authority, are about misleading claims.  One latest advertiser to fall foul of the rules, is Louis Vuitton. The ASA upheld complaints that two press ads were misleading. One featured a photograph of a woman stitching the handle of a handbag with the words " A needle, linen thread, beeswax and infinite patience protect each overstitch from humidity and the passage of time. One could say that a Louis Vuitton bag is a collection of details. But with so much attention lavished on every one, should we only call them details?"  

Three complainants complained  the ads misleadingly implied that Louis Vuitton products were made by hand when they are not. The ASA upheld the complaints because there was insufficient evidence to substantiate the implied claims that they were.

Louis Vuitton is one of many advertisers who fail to have prepared  the necessary evidence to prove any implied or explicit claims in advertising.  Why does this matter? Because an adverse ASA adjudication that upholds complaints for misleading can be hugely damaging to brand reputation, and often for fairly small infringements of the advertising codes.

The UK's advertising codes for broadcast and non broadcast advertising are unambiguous:

"Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove all claims, whether direct or implied, that are capable of objective substantiation. Relevant evidence should be sent without delay if requested by the ASA or CAP.  The adequacy of evidence will be judged on whether it supports both the detailed claims and the overall impression created by the marketing communication. " (Clause 3.1 CAP Code)

Often marketers simply get carried away with belief in the brilliance of their products and creatively simplified slogans simply sound better. There is however a genuine risk that exaggerated statements can lead to damaging adverse publicity and with the imminent extension of regulation to promotional messages on the Internet advertisers must think carefully about claims in marketing communications of all types. Other marketers do not take an ASA letter demanding substantiation seriously. This is a mistake as many have discovered. A quiet week in the news means the press will focus on any major brand caught out breaching the Codes. John Reynolds in Campaign, publicises one of many such advertisers in his article about British Gas' efficiency claims. Media Guardian's Mark Sweney will swoop on any important transgressor. Only recently he reported the ASA's decision to ban Eurotunnel email promotion which claimed its service took vehicles to France by train in just 35 minutes and ran "whatever the weather". 

Its not just about brand damage either. Having a press ad or TV commercial banned can mean a massive waste of money. So don't waste a good campaign, an expensive TV commercial or lose pre purchased media space. Know your regulations and have robust evidence to substantiate your claims.

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 In an extraordinarily frank judgment on 21 May 2010, Lord Justice Jacob handed down the Court of Appeal’s (CA) final decision in the case L’Oreal SA v Bellure NV [2010] EWCA Civ 535, following last summer’s response by the European Court of Justice (ECJ) to a number of trademark questions referred to it by the CA. The judgment deals particularly with the issues of comparative advertising and the use of comparison lists for advertising purposes.

What is fascinating about the judgment is Lord Justice Jacob’s strong disagreement with the ECJ’s decision, and he makes it abundantly clear that he is following their decision extremely reluctantly. For the first 21 paragraphs of a 51 paragraph judgment, he criticises the ECJ’s decision, stating that in his view, it is contrary to the principle of freedom of commercial expression and it disadvantages poorer consumers, whilst favouring luxury brand owners, despite the fact that a brand owner’s business is unlikely to be affected to any significant extent by the sale of the legitimate low-cost imitation products.

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