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

Companies directly marketing to customers must not use the Internet to gather data about children. That's according to a new code of practice published by the Direct Marketing Association (DMA), which says companies must seek parental consent for children under 12 years old, The Register reports. The code must be adhered to by members of the DMA.

"Even if your site is not primarily aimed at young people, if there is a possibility that it would be attractive to them...you have a responsibility," a DMA spokeswoman said.

The revision brings the code into compliance with the new CAP Code, which sets the rules governing advertising in the UK, the report states, and includes a whole new annex containing the rules on marketing to children. The new code has also been updated to take account of changes in legislation including the new Consumer Protection Regulations 2008 and the Gambling Act 2005, and also features a new section on key environmental responsibilities.

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The new coalition government has stated that one of its priorities is the protection of children from excessive commercialisation. This policy aim reflects a general perception in the UK among the governing and chattering classes that advertising is at the root of both this problem and the problem of obesity among children. Eyes are therefore turned to the advertising industry to see what they have done and what they are doing to protect children.

It is helpful therefore that Ofcom have recently released a review showing that since the rules concerning the advertising of foods that are high in fat, sugar and salt (HFSS) came into force in 2007, advertising for HFSS products seen by children had dropped by 37%, and the fall was greater for younger children (a 55% decline).

There are already a number of rules and safeguards in place to protect children, and these are probably set to increase if the proposed extension of the CAP Code into all promotional messages on the internet goes ahead. Our new Ad Guide on advertising to children goes into greater detail on all these areas.

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Earlier this month I reported on the fiasco of the Article 29 Working Party's Opinion which favoured prior opt in before cookies are attached to your PC or laptop to track future on line activity. Now a new system to police privacy abuses by companies that track consumer' on line behaviour for targeted advertising purposes is about to be launched in the US.

The Federal Trade Commission in the US has made in abundantly clear to the advertising industry that, as Peder Magee, senior attorney at the FTC said according to the Wall Street Journal, advertising businesses are sophisticated and complicated and if they can collect, use and monetize data they can find a way to make their practices more transparent to consumers. The same attitude has been adopted by EU and regulators across the world.

In response the Internet Advertising Bureau, IAB, in the US and UK, have been pushing members to adopt best practice guidelines. Now though a new business called the Better Advertising Project is launching technology which tracks the trackers. The software it has developed allows consumers to see which companies are tracking them as they surf the web. 300,000 people have volunteered in the US to use the software so the Better Advertising Project can send information to the Council for Better Business Bureaus and the Direct Marketing Association in the US. Initial reports are that more than 250 companies were tracked collecting and using consumer data.

The idea is that if a company is then found to be violating industry principles and refuse to respond to warnings from self regulatory bodies, their actions will be reported to government bodies with greater powers. While no such proposals have yet surfaced in the UK it is likely the technical innovation will spread across the Atlantic fairly swiftly. Advertisers and their agencies in the EU need to act to be more transparent. The proposal to place a universally agreed icon on websites and advertisements to alert consumers if their activities on a web page are being tracked giving them the option to opt out of such tracking appears the only way forward.

IAB UK is submitting a set of proposals to the EU to demonstrate that self regulation is effective in protecting consumers and that the Art 29 Working Party Opinion is an overly restrictive interpretation of the Privacy and Electronic Communications Directive. According to New Media Age Nick Stringer, IAB head of regulatory affairs said "we are proposing aims to enhance transparency and give users greater control".  AOL, AudienceScience, Crimtan, Google, Microsoft, Specific Media and Yahoo were the first seven digital companies to be independently audited in April pursuant to the IABs behavioral targeting best practice principles. Amongst other things these companies promote the IABs consumer facing website Your On Line Choices which gives further information to consumers about privacy on line and behavioural advertising.

All this matters because companies could well fall foul of legislation and self regulatory codes if active steps to warn consumers about tracking and to protect data are not adhered to. In future monitoring activity of on line advertising companies is clearly going to be easier and best practice needs to be adopted, not only to protect consumers but to protect brand reputation.

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Failure to comply with regulatory decisions landed DM Digital Television with a £17,500 fine last week. Ofcom

the free-to-air general entertainment channel, which broadcasts mainly in Urdu to the UK Asian community, for its “serious,” “repeated” and “systematic” failure to comply with ASA adjudications.

The ASA referred the broadcaster to Ofcom over three recent adjudications, two of which the ASA considered to be "sufficiently serious and repeated to be considered for a statutory sanction". The most recent ad in question had led one lovelorn viewer to hand over £1,510 in the belief that “spiritual healer” and occasional Cupid, Professor Mohammed Zain, would find her “a prince.” The ASA, fairly obviously, found the ad to be in serious breach of the BCAP code since it was “likely to exploit the hopes and fears of vulnerable viewers.”

The main concern for the regulators was not this one ad, though, but the fact that DM Digital had already been involved in seven other adverse adjudications by the ASA and Ofcom. This included one case where a programme broadcast by DM Digital contained unsubstantiated and potentially harmful claims that the programme sponsor was able to successfully treat medical conditions such as cancer, hepatitis and diabetes. As a result of this previous adjudication in October 2008, DM Digital had already been fined £15,000.

It was this continual disregard, be it misguided or deliberate, for the advertising and broadcasting codes that warranted the fine and a demand from Ofcom that the channel broadcasts a statement of Ofcom’s findings. The relatively modest fine, deemed “extremely excessive” by DM Digital, serves as an important reminder to broadcasters that regulators such as the ASA and Ofcom do have active procedures in place to reprimand compliance violations, and ones that they are very willing to use if the circumstances necessitate them.

Written by Rebecca Jones, summer vacation student.
 

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A recent case from Sweden has highlighted the risks in using images of individuals without their permission.

A Swedish publication, The Local, has reported that a 77 year old Greek man has reached a 2 million kroner (c. £180,000) settlement with a Swedish dairy company, Lindahls, in respect of the use of his image by Lindahls to advertise their Turkish yoghurt. The photograph, seen here, had been used by Lindahls on packaging and advertising for 8 years before Minas Karatzoglis found out.

Karatzoglis had originally sued for 50 million kroner, and his claim form, perhaps not unreasonably, emphasised that he was Greek and not Turkish, and that therefore the advertising was misleading. Lindahls has paid Karatzoglis the agreed settlement figure, and is now seeking damages from its advertising agency.

This small case serves as a reminder to advertisers and their agencies that, unlike in the UK, image rights do exist in Europe, and therefore they should always ensure that the individual featured on packaging and advertising for campaigns in Europe has given their consent to the intended use.  

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It is not good news for advertisers, search engines, digital agencies and affiliates. The European Data privacy regulators have published an Opinion (22^nd June 2010) which states that behavioural advertising, which drives more than 23 billion dollar revenues on the Internet , must change its approach to collecting data on web users and cease delivering advertising to children.

What is clear is that Regulators and Politicians across Europe and internationally are aware of the growing public concern about online data privacy, whether justified or not. Authors of the Opinion state that what is at stake is that many consumers are not aware that their surfing behavior is being monitored and data are being stored for advertising purposes.

The  EC press release states that although online behavioural advertising may bring advantages to online business and users alike, its implications for personal data protection and privacy are significant.

In a strong rebuttal, Europe's media and advertising industry united to reject the Opinion, which the Word Federation of Advertisers , the IAB and EACA and others claim is out of step with the relationships that businesses and consumers are building online and flies in the face of the reality of the Internet.  The authors of the Opinion say that while they do not question the economic benefits that behavioural advertising may bring for stakeholders', such practice must not be carried out at the expense of individuals' rights to privacy and data protection.

The 22 June Opinion also recommends a total ban on behavioural advertising directed at children.

"This opinion takes no account of the support we get from our consumers for interest-based advertising nor of the exchange in value they receive between effective advertising and access to high quality media content for free." said Stephan Loerke, Managing Director, World Federation of Advertisers (WFA).

Why does this Opinion matter? It could of course impact on how national governments interpret the ePrivacy Directive and implement national law making opt in a requirement. In practical terms, in the worse case scenario for marketers and consumers, such a requirement would mean that Internet users would have to confirm every single cookie placed on their PCs! 

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The global legal gambling market was worth $335 billion in 2009, of which $25 billion came from online gambling. As a result of legislation dating from the early 1960s, UK gambling operators had been prevented from advertising their services, and thus prevented from getting a fair share of this substantial pie, until the Gambling Act 2005 (the Act) came into force in 2007. Gambling operators in the UK are now permitted to advertise relatively freely, subject to the provisions of the CAP and BCAP Codes and the gambling industry's own code (click here for our Ad Guide on the new law).

Recent ASA adjudications have shown that gambling advertisers are embracing the freedom granted under the Act, but are also trying to test its boundaries. Interestingly, significantly fewer complaints about broadcast gambling commercials have been upheld by the ASA than about non-broadcasting gambling ads. It appears that Clearcast has adapted to the requirements of the new rules very efficiently.  

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Following the ruling of the European Court of Justice (ECJ) on Google's Adwords policy in the Louis Vuitton case, which we wrote about in March, a new decision dealing with the problems associated with AdWords was handed down yesterday in the case Portakabin Ltd v Primakabin BV, Case C-558/08.

Portakabin build and supply mobile buildings and own the trademark for "Portakabin" in that market sector in the Benelux countries. Primakabin, a seller and lessor of new and second-hand mobile buildings, including legitimate second-hand Portakabin buildings, used the word "Portakabin" and some similar misspelled variants as keywords on Google's AdWords. Portakabin sued for trademark infringement and, after passing through the Dutch courts, a number of questions were subsequently referred to the ECJ.

The judgment reiterates one of the main decisions in the Louis Vuitton case: that advertisers who use competitor's trademarks as "keywords", must make it clear in the advertisement that there is no commercial connection between the advertiser and the proprietor of the trademark. This case goes on state that, unless this is done, there is no defence under Article 6 of the Trademark Directive (which in essence allows third parties to use trademarks to indicate the origin of products provided that such use is in accordance with honest commercial practices).  

However this latest decision also makes clear that re-sellers of second-hand products can use third party trademarks as keywords, provided that it is clear from their website that they only sell "used" or "second-hand" products manufactured by the trademark owner and providing that the manner by which he sells those products does not risks seriously damaging the reputation of the trademark owner or his mark.

This latest decision also confirms that misspellings of trademark names constitute signs which are similar to the trademark, and therefore the usual rules of analysis apply: notably, is there a likelihood of confusion?

All very helpful, and we now await the ECJ's ruling in the Marks & Spencer v Interflora case which will analyse issues on dilution and the free-riding on the distinctive character of the trademark.

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The new Health Secretary under the coalition government, Andrew Lansley, has recently announced the axing of the previous government's £75 million advertising campaign to promote healthy living, which was introduced in an attempt to reduce the record levels of obesity in the UK. As Mark Sweney from the Guardian notes, the new administration is instead encouraging the food and drinks industry to get behind a social media campaign.

The Government has a huge deficit to cut, and it was always known that their marketing budget would be at the forefront of these cuts, but it is interesting that the government is highlighting the important effects of social media as a (inevitably cheaper) resource to combat obesity, rather than relying on traditional media, such as poster and television campaigns. Lansley says this will be "less a government campaign, more a social movement" and he encourages charities, local authorities and the commercial sector to all get involved. In return, he hinted that the Government would not seek stricter regulation of food and drink advertising.

This latter comment will no doubt be the cause of some great delight to the beleaguered food and drink industry which has been vilified by so-called consumer groups, and indeed by the previous administration, for, in their words, promoting unhealthy food and drinks, in particular to children, and thus in effect for causing the obesity crisis engulfing the country. As a result of this vilification, the industry has seen substantial and significant advertising content and scheduling restrictions imposed upon them. Any suggestion from the present government that this view now no longer holds sway will cause the food and drinks industry to breathe a sign of relief, although it will no doubt anger the health lobbies, and we can expect to see some criticism from them in the coming days and weeks.

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