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A Handy Guide to UK Advertising and Sales Promotion Law

UK Advertising and Sales Promotion LawKey Contacts

Disputes

Michael Skrein Carolyn Pepper Emma Lenthall Louise Berg Tania Evans Tina Sany Tom Webley

For advice on content and disputes please contact Michael Skrein at [email protected]

Commercial

Jonathan Berger Stephen Edwards Philip Taylor Daniel Barnett Greg Pryor Neil Gillard Sakil Suleman

For advice on commercial agreements, digital and other media please contact Jonathan Berger at [email protected]

Life Sciences

John Wilkinson Alison Dennis George Pickering Nicola Maguire

For advice on life sciences and healthcare please contact John Wilkinson at [email protected]

Data Protection

Cynthia O’Donoghue Jeff Rodwell Bob Stankey

For advice on data protection please contact Cynthia O’Donoghue at [email protected]

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The Reed Smith Advertising Team has represented clients in the advertising, marketing and promotion industries for more than 50 years.

Our UK advertising lawyers have vast experience of advising clients in relation to a wide range of areas including licensing, sponsorship and events, media buying, production agreements, mergers and acquisitions, celebrity endorsements and sales promotions.

This booklet draws on our expertise in advising on clearances, ASA complaints and disputes involving issues such as the use of music and images in advertisements, defamation, trade marks and comparative advertising.

Our clients include brand-name advertisers, advertising agencies, production companies, advertising agency networks, talent payroll companies, media companies, technology companies, publishers, film studios, broadcasters, leading trade associations, authors, musicians and celebrities. We also advise on advertising and sales promotion issues for clients whose mainstream activities are in other fields, such as financial services, IT, insurance, leisure, music, food and drink, sports services, technology, aviation and shipping.

Our specialist life sciences group advises on all legal issues connected with advertising in the biotech, pharma, device and medical technology fields as well as related areas such as cosmetics and functional foods.

This Guide is intended to provide a general introduction to the law of advertising in the UK. It is not intended to provide comprehensive legal advice or guidance (if it did we would be putting ourselves out of a job). We hope it contains sufficient information to ring alarm bells in appropriate circumstances.

We hope that you enjoy using it and will contact us if you need to know more.

Reed Smith

A Handy Guide to UK Advertising and Sales Promotion Law An Introduction

3A Handy Guide to UK Advertising and Sales Promotion LawContents

Contents Page No.

An Introduction 1

The Advertising Standards Authority 5

Non-Broadcast Advertising Regulation 9

Broadcast Advertising Regulation 17

Restrictions on Advertising Food and Drink to Children 23

PhonepayPlus 27

Copyright 31

Design Right 41

Trade marks 45

Passing Off 51

Privacy and Confidence 55

Libel and Malicious Falsehood 61

Contempt of Court 67

Programme Sponsorship 71

Comparative Advertising 75

Using Celebrities in Advertising 83

Sales Promotions 87

Advertising and Selling Online, via E-mail and SMS 93

Misleading Advertisements 97

London Olympics 2012 105

Index 113

Advertising Key Contacts 121

The Advertising Standards Authority5

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The Advertising Standards Authority What is the Advertising Standards Authority?The Advertising Standards Authority (‘ASA’) is an independent body. It was set up by the advertising industry to police non-broadcast advertisements, sales promotions and direct marketing. It is a non-profit making limited company which is independent of both the government and the advertising industry. It is financed by a compulsory levy on the cost of all advertising which comes within its remit.

Before 1st November 2004, Ofcom (the Office of Communications, independent regulator for the UK communications industries) had responsibility for the regulation of broadcast advertisements. Although it still retains overall responsibility, it has contracted out the regulation of broadcast advertising to the ASA. So, the ASA is now a ‘one-stop shop’ for the regulation of advertising, although different regimes apply to broadcast and non-broadcast advertising.

A Handy Guide to UK Advertising and Sales Promotion LawThe Advertising Standards Authority

9Non-broadcast Advertising Regulation

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Non-broadcast Advertising Regulation

What categories of non-broadcast advertising material are regulated by the ASA?A vast amount of non-broadcast advertising material comes within the remit of the ASA, including the following:

• press:national,regional,magazinesandfreenewspapers;

• outdoor:posters,transport,aerialannouncements;

• directmarketing:directmail,leaflets,brochures,catalogues,circulars,insertsandfaxes;

• cinemacommercials;

• salespromotions:on-packpromotions,frontpagepromotions,readeroffers,competitionsand prizedraws;

• internet:advertisementsin“paid-for”space,butnotgenericproductinformationonhomepages. The remit includes:

- banner,pop-upandotheradvertisements;

- commerciale-mails;

- viraladvertisementswhichare“seeded”on“paid-for”websites;

- salespromotionsanywhereonline;

- other electronic media, including advertisements on computer games, videos, viewdata services andCD-Roms;and

- SMS text messages.

The following are outside the ASA’s remit:

• contentontheinternetotherthanthemateriallistedabove;

• premiumratetelecommunicationsservices;

• pressreleasesandotherpublicrelationsmaterial;

• shopdisplays,packages,wrappersandlabels(unlesstheyareshowninanadvertisement);and

• flyposters(mostofwhichareillegal).

With the exception of premium rate telecommunications services which are regulated by PhonepayPlus, these are all unregulated and subject only to the general law.

A Handy Guide to UK Advertising and Sales Promotion LawNon-broadcast Advertising Regulation

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What are the rules applied by the ASA?The rules that the ASA applies to non-broadcast advertising are contained within the British Code of Advertising,SalesPromotionandDirectMarketing(the“CAPCode”).TheCAPCodeispublishedandregularlyreviewedbytheCommitteeofAdvertisingPractice(“CAP”),whichiscomposedofrepresentativesof major trade and professional organisations of the advertising business, each of which must require their own members to observe the CAP Code.

The CAP Code can be found on the ASA’s website at www.asa.org.uk.

What is the status of the CAP Code?The non-broadcast advertising industry is self-regulating and compliance with the CAP Code is voluntary. The ASA does not, for example, have the power to force an advertiser to comply with its requests to withdraw or amend an offending advertisement, although in some circumstances it can refer an advertiser totheOfficeofFairTrading(“OFT”)whichcantakelegalaction.Thegenerallawoutlinedintheothersections of this booklet operates alongside the codes.

What are the penalties for breaching the CAP Code?Although the CAP Code does not have the force of law, there are a number of sanctions that the ASA can apply to those who fail to comply with the CAP Code.

• Refusal of further advertising space The principal way in which the ASA is able to ensure compliance with the CAP Code is by asking publishers and media owners to refuse to carry an advertisement until the offending parts of it have been removed. This is done by way of electronic ‘Ad Alerts’. Publishers and media owners tend to be willing to comply with requests not to carry offending advertisements because showing misleading or offensive advertisements might alienate their readership. A requirement for compliance with the CAP Code is often contained within publishers’ terms and conditions of business.

• Adverse publicity The results of adjudications by the ASA are published weekly and are scrutinised by the media, advertisers, consumer bodies, government departments and lawyers. There is often critical press coverage of adverse adjudications, especially when well-known companies are involved, and this acts as a deterrent to advertisers who might be tempted to break the CAP Code.

• Withdrawal of trading privileges Advertising trade bodies have the ability to withdraw trading privileges and financial discounts (for example, bulk mailing discounts) from advertisers who fail to comply with the CAP Code.


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• Pre-publication vetting If advertisers persistently breach the CAP Code, the ASA can request them to clear all of their proposed advertisements with the CAP Copy Advice team prior to publication. They will be required to do this until such time as the ASA and CAP are satisfied that their future advertisements will comply with the code.

• Ineligibility for awards Advertisements which do not comply with the CAP code will not be eligible for various industry awards.

• Legal proceedings If the ASA rules against an advertisement which is misleading or contains an unfair comparison and the advertiser continues to run it, the ASA can refer the matter to the OFT. The OFT can seek undertakings from those responsible, and if these are not given it can obtain an injunction through the courts to prevent the advertisement from being shown again. Alternatively it can issue an Enforcement Order under the Enterprise Act 2002.

There are no direct financial penalties for breaching the CAP Code.

Complaints will not normally be taken up by the ASA if the point at issue is also the subject of a legal action.

What are the general principals of the CAP Code?All advertisements and sales promotions should be legal, decent, honest and truthful and prepared with a sense of responsibility to consumers and to society. Particular care should be taken to avoid causing offence on the grounds of race, religion, sex, sexual orientation or disability. Advertisements should respect the principles of fair competition generally accepted in business and should not bring advertisements or sales promotions into disrepute. They should contain nothing that is likely to cause serious or widespread offence and should be clearly identified as advertisements or promotions. Compliance with the CAP Code will be judged on the context, medium, audience, product and prevailing standards of decency applying in each case.

Are there rules relating to specific types of advertisement? Yes. As well as containing rules on general matters (such as decency, price, the protection of privacy, etc) the CAP Code contains specific rules in respect of the following categories of advertisement:

• salespromotions;

• directmarketing(rulesondistancesellinganddatabasepractice);

• children(fornewsandfeaturesaboutadvertisingtochildren,pleasevisitwww.kidadlaw.com, ReedSmith’sonlinechildren’sadvertisingandmarketinglawreport);

• motoring;

• environmentalclaims;


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• healthandbeautyproductsandtherapies;

• weightcontrol;

• employmentandbusinessopportunities;

• financialservicesandproducts;

• bettingandgaming;

• cigarettesandtobacco,includingcigarettepapers,filtersandwrapping;and

• alcoholicdrinks.

Where can you go for guidance on the CAP Code?Advertisers who seek advice on the codes can contact the CAP copy advice team. This can be done by phone on +44 (0)20 7492 2210, by fax on +44 (0)20 7404 3404 or by e-mail on [email protected]. Alternatively an online copy advice form can be filled out on the CAP website at www.cap.org.uk.

The CAP website also features ‘AdviceOnline’ (a searchable database of advice on non-broadcast advertisements), help notes and ‘good advertising’ checklists.

The ASA publishes its adjudications on its website. Reviewing the adjudications is an excellent way to gauge how the ASA applies the CAP Code in particular situations, although each investigation will be dealt with on its own facts.

Can you appeal against an unfavourable ASA ruling?No. The judgment of the ASA on interpretation of the codes is final and binding. An ASA ruling can, however, be challenged by way of judicial review.

Do you have to be able to prove the claims made in your advertising or sales promotion?Yes. The CAP Code states that, before submitting an advertisement for publication, advertisers must hold documentary evidence to prove all claims, whether direct or implied, that are capable of objective substantiation. The ASA may request evidence, which should be sent without delay. The adequacy of the evidence will be judged on whether it supports the detailed claims and the overall impression created by the advertisement.

Obvious untruths or exaggerations that are unlikely to mislead (and incidental minor errors and unorthodox spellings) are allowed provided they do not affect the accuracy or perception of the advertisement in any material way.

Your advertisement or sales promotion may express an opinion about any matter, including the quality or desirability of your product, provided it is clear that it is your opinion and not a purported statement of fact.


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If there is a significant division of informed opinion about any claims made in an advertisement, the opinion should not be portrayed as universally agreed.

If the contents of non-fiction books, tapes, videos and the like have not been independently substantiated, advertisements should not exaggerate the value or practical usefulness of their contents.

You should hold signed and dated proof, including a contact address, for any testimonial or endorsement that you use. Testimonials alone do not constitute substantiation and the opinions expressed in them must be supported, where necessary, with independent evidence as to their accuracy. Fictitious endorsements should not be presented as though they are genuine testimonials.

Are there any special rules about sales promotions? Below is a summary of some of the special rules relating to promotions. Reference should be made to the CAP Code for the full rules. The section on sales promotions which appears later in this guide gives further information on sales promotions

• Promotionsshouldbeconductedinawaythatrespectstherightofconsumerstoareasonabledegreeof privacy and freedom from annoyance. They should not cause offence or be socially undesirable to the audience by causing excessive consumption or inappropriate use.

• Give-awayproductsmustnotbeadvertisedunlesspromoterscandemonstratethattheyhavemadeareasonable estimate of likely response and that they were capable of meeting that response. Phrases suchas“subjecttoavailability”maynotrelievethepromoteroftheobligationtotakeallreasonablesteps to avoid disappointing the participants. If promoters are unable to supply demand for a promotional offer, substitute products or refunds should be offered.

• Thefollowingshouldbeclearlyspecified:

- detailsofhowtoparticipate;

- openingandclosingdate;

- proofofpurchaserequirements;

- anygeographical,personalortechnologicalrestrictions;

- minimumnumberandnatureoftheprizes;

- availabilityofpromotionalpacks(ifapplicable);and

- promoter’s full name and business address.


17Broadcast Advertising Regulation

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Broadcast Adverting Regulation

Who regulates broadcast advertising? The regulation of broadcast advertising is overseen by the broadcast arm of the ASA, sometimes referred to as ‘ASA (Broadcast)’ or ‘ASA(B)’.

What are the rules applied by the ASA(B)?The ASA(B) continues to apply the old Ofcom codes, which were inherited from the Independent Television Commission (ITC). The codes are now called the Television Advertising Standards Code (the ‘Television Code’) and the Radio Advertising Standards Code (the ‘Radio Code’). The CAP Code and the old Ofcom codes ought to develop in parallel going forward as a body called BCAP (the Broadcast Committee of Advertising Practice) has been created to review and revise the broadcast codes as necessary. BCAP will work closely with CAP and so there should be greater consistency between the regulation of broadcast and non-broadcast advertising in the future.

To whom do the rules apply?The Television Code applies to all television channels licensed by Ofcom. These include ITV, GMTV, Channel 4, Five, S4C, satellite and cable television services provided by broadcasters within the UK and digital programme services.

The Radio Code applies to all radio stations licensed by Ofcom.

All Ofcom licence holders are responsible for ensuring that any advertising they transmit complies with the Television or Radio Code (as applicable).

What is the status of the Television and Radio Codes?The Television and Radio Codes do not have the force of law. However, Ofcom licence holders are obliged to comply with the codes under the terms of their licences. The general law (outlined elsewhere in this booklet) operates alongside the codes.

What are the penalties for breaching the Television or Radio Codes?Ofcom has contracted out some of its enforcement powers to the ASA(B). The ASA(B) has the following powers in respect of breaches of the Television and Radio Codes:

• toissueadirectionrequiringalicenceholdertoexcludeanadvertisementfromitsservices,ortoexcludeitincertaincircumstances;

• toissueadirectionrequiringalicenceholdertoexcludecertaindescriptionsofadvertisementsor methods of advertising (in the case of misleading advertisements, impermissible comparative advertisementsorimpermissiblemedicaladvertisementsonly);and

A Handy Guide to UK Advertising and Sales Promotion LawBroadcast Advertising Regulation

• torequireanypersonresponsibleforanadvertisementtoprovideevidenceastothefactualaccuracyofany claim.

Ofcom retains the following powers in respect of breaches of the Television and Radio Codes:

• todirectthebroadcastofacorrectionorastatementoffindings;

• toimposeafinancialpenalty;

• toshortenalicence;and

• torevokealicence.

Apart from the requirement to provide evidence, the powers that Ofcom and the ASA(B) have are directed against the broadcasters who carry the advertisements (i.e. the Ofcom licence holders), and not the advertisers themselves. However, the powers which the ASA(B) and Ofcom have against the broadcasters have an obvious deterrent effect for advertisers as they will not want to upset broadcasters by causing them to incur penalties. Advertisers generally warrant to broadcasters that their advertisements will comply withtherelevantcodes;accordingly,theyoftengiveindemnitiestobroadcastersinrespectofanybreachof such codes. The adverse publicity generated by an adverse ruling by the ASA(B) also deters advertisers from breaching the codes.

What rules do the Television and Radio Codes contain?A full consideration of all of the rules contained within the Television Code and the Radio Code is outside the scope of this guide. The rules contain guidance on specific topics and the appropriate sections should be read carefully. The codes can be found on the ASA’s website.

TogiveaflavouroftherequirementsoftherulescontainedwithintheTelevisionCodeandtheRadioCode,we set out below some general principles that should be observed:

• advertisementsmustcomplywiththegenerallaw;

• advertisementsmustbeclearlydistinguishableandrecognisablyseparatefromprogrammes;

• advertisementsshouldnotbemisleading.Noadvertisementmaydirectlyorbyimplicationmisleadaboutanymaterialfactorcharacteristicofaproductorservice,andcomparisonsmaynotbemisleading;

• claimsinadvertisementsshouldbecapableofbeingsubstantiated;

• advertisementsshouldnotbeoffensiveorcausefearanddistresswithoutgoodreason;

• advertisementsshouldnotbesociallyirresponsible;

• advertisementsmustnotprejudicerespectforhumandignityorhumiliate,stigmatiseorunderminethestandingofidentifiablegroupsofpeople;and

• advertisementsshouldnotcontainmaterialthatcouldharmchildrenortakeadvantageoftheirvulnerability and lack of experience. Timing restrictions should be applied where appropriate.

A Handy Guide to UK Advertising and Sales Promotion LawBroadcast Advertising Regulation20

As well as containing general rules along the lines of those set out above, the Television Code and the Radio Code set out detailed standards relating to a wide range of specific issues including:

• medicines;

• food;

• slimming;

• financialproducts;

• alcoholicdrinks;

• premiumratetelephoneservices;

• introductionanddatingservices;and

• charities.

The Television Code and the Radio Code also set out a number of categories of products or services for which advertising is not permitted at all, either because there is a statutory prohibition or because advertising such products or services on television has the potential to cause harm. The categories include the following:

• tobaccoproducts;

• firearms;and

• pornography.

Where can you look for guidance on the Television Code and the Radio Code?Clearcast (formerly known as the Broadcast Advertising Clearance Centre or ‘BACC’) and the Radio Advertising Clearance Centre (‘RACC’) are bodies funded by the television and radio industries respectively and their task is to clear advertisements for broadcast. They are not regulatory bodies as such.

If a broadcaster airs an advertisement that does not comply with the Ofcom codes it would be in breach of its licence. Clearcast and the RACC provide a central clearing service so that the broadcasters who subscribe to their services do not have to check the advertisements themselves. Clearance by Clearcast or the RACC is not, however, a guarantee that an advertisement is not in breach of the codes.

Clearcast and the RACC both publish guidelines to help advertisers to produce advertisements that do not breach the codes.

Further information on both of these bodies can be found on their websites:

www.clearcast.co.uk www.racc.co.uk.

A Handy Guide to UK Advertising and Sales Promotion LawBroadcast Advertising Regulation 21

23Restrictions on Advertising Food and Drink to Children

Restrictions on Advertising Food and Drink to Children

What restrictions are in place?The BCAP rules on the scheduling of television advertisements prevent any advertisements for food and drinkproductswhicharehighinfat,saltandsugar(“HFSS”)frombeingshowninoraroundchildren’sprogramming, on dedicated children’s channels or in or around programmes that are likely to be of particular appeal to viewers under the age of 16.

The ban applies to programmes made for children under 16 and programmes that are principally directed at or likely to be of particular appeal to children under 16.

Children’s channels will be allowed a phase-in period, with full implementation required by 1 January 2009.

What determines whether food and drink is HFSS?Food and drink products are assessed according to the Food Standards Agency’s nutrient profiling scheme. Any food and drink which does not attain the required score under this scheme will be deemed to be ‘HFSS’ and subject to the rules. For more details on nutrient profiling see:

http://www.food.gov.uk/healthiereating/advertisingtochildren/nutlab/nutprofmod

How can you tell whether a programme is ‘of particular appeal’ to a given age group?A statistical approach called ‘indexing’ is used. Assessing a programme’s index requires two steps of analysis:

• eachprogrammeisgivenaweightingaccordingtotheaudienceprofileforthatprogrammeorgenre.For example, a late night discussion programme attracts a different mixture of viewers when compared toalateafternoongeneralentertainmentquizshow.Theweightingincludesanassessmentoftheproportion of the programme’s audience which consists of a particular age group (in this case the under-16s);and

• thisweightingisthencomparedwiththeproportionofthatagegrouppresentintheUKpopulationasawhole;inthiscase,againstthepercentageofallpeopleintheUKwhoareundertheageof16.Theoutcome is a figure – the index – which demonstrates, in statistical terms, the extent to which the under-16s are attracted to a particular programme.

A Handy Guide to UK Advertising and Sales Promotion LawRestrictions on Advertising Food and Drink to Children 25

Once programme weighting is taken into account, if the proportion of the audience under 16 is more than 20% higher than the proportion of under-16s in the UK population as a whole, the programme is defined as one which attracts a significantly higher than average proportion of viewers in that age group.

Can HFSS food and drink products sponsor children’s programmes?The scheduling restrictions apply to sponsorship as well as advertising. So, if an advertisement for an HFSS product would not be permitted in or around a particular programme, the programme could not be sponsored by that product either.

Are there any rules governing the content of food and drink advertisements for children?Yes. The Television Code contains rules governing the content of television advertisements for all food and drink products. For example, advertisements must not encourage poor nutritional habits or unhealthy lifestyles in children.

The CAP code contains similar rules governing non-broadcast advertisements for food and drink products.

Are there any restrictions on the use of celebrities and cartoon characters?Celebrities who are popular with children and third party licensed characters such as cartoon characters must be used with a due sense of responsibility. They cannot be used in television advertisements for HFSS foods which are targeted directly at pre-school or primary school children. However, advertisers are not prevented from using their own branded characters.

Celebrities or third party licensed characters may not be used in any non-broadcast advertisements aimed at pre-school or primary school children. This restriction applies to any food or soft drink product (except fresh fruit or vegetables).

A Handy Guide to UK Advertising and Sales Promotion LawRestrictions on Advertising Food and Drink to Children26

27PhonepayPlus

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PhonepayPlus (formerly The Independent Committee for the Supervision of Standards of Telephone Information Services (“ICSTIS”))

What is PhonepayPlus?PhonepayPlus is the supervisory body for the premium rate telecommunications services industry. It is financed by the industry and has drawn up a code of practice (the ‘PhonepayPlus Code’).

What is a premium rate service?Premium rate services offer information or entertainment that is charged to a customer’s phone bill. They can include landline, mobile, fax or PC services.

What is the PhonepayPlus Code and what does it do?It is a code regulating all premium rate telecommunications services.

It applies to network operators, service providers and information providers involved in the supply of premium rate services.

The PhonepayPlus Code can be found at www.phonepayplus.org.uk..

How does the PhonepayPlus Code apply to advertising?Advertisements for premium rate telecommunications services must comply with the PhonepayPlus Code.

Material which promotes services must be lawful and must not cause harm or be offensive. It must not mislead or take advantage of any vulnerability in consumers.

The Code contains specific provisions on pricing information, which must be clear. It also contains rules governing the use of the word ‘free’, promotions with long shelf-lives, promotion by non-premium rate services and service identification.

Promotional material must contain the identity, UK contact details and customer service number for the service provider.

A Handy Guide to UK Advertising and Sales Promotion LawPhonepayPlus

Service providers must use all reasonable endeavours to ensure that promotional material does not reach people who may regard it as harmful or offensive.

What are the sanctions for being in breach of the PhonepayPlus Code?The sanctions include fines of up to £250,000 which can be imposed on the service provider who may also be compelled to withdraw the service for a defined period depending on the seriousness of the breach.

Do I need permission to include a premium rate service in a television or radio programme?At the time of writing prior permission would only be required for services charged at more than £1.50 per minute, and services charged at more than £1 per minute where the total cost of the call can exceed £30. In May 2007 ICSTIS issued a consultation on a new licensing scheme for premium rate services when promoted in television and radio services. This followed a review which was conducted as a result of a series of misuses of premium rate services in the broadcast arena. A licensing scheme may well be one of the measures implemented to improve standards in this area.

A Handy Guide to UK Advertising and Sales Promotion LawPhonepayPlus30

31Copyright

Copyright

What is copyright?Copyright is an automatic right that comes into existence when a piece of original work is created. It does not have to be registered in the UK.

What is protected by copyright? The types of work that can have copyright protection are as follows:

Literary works Novels, scripts, letters, reports, computer programs.

Dramatic works Stage or radio plays, film scripts, cartoons, dance or mime.

Musical works Music of all kinds and arrangements of existing music, including the music in advertising jingles.

Artistic works Paintings, drawings, buildings, sculptures, photographs, graphic works. Drawings used in adverts would constitute an artistic work.

Sound Recordings Sounds embodied in recordings, such as CDs, tapes and computer produced samples.

Films Television adverts, feature films, newsreels, video cassettes and discs, television programmes on video tape, moving holograms, bubble memory recordings of moving images and film soundtracks, cartoons. There is no copyright protection at present for the style or technique used in making a film.

Broadcasts A broadcast is protected in its own right (even if what is being broadcast is a non-copyright film or sound recording).

Published editions Thetypographicalarrangementandlayoutofabookormagazine.

It is important to remember that a work can have more than one copyright. So, for example, the copyright in the words of a song is separate from the copyright in the music and the musical arrangement and all of these are separate from the copyright in any recording of the song. Each copyright element can, and often does, have a different owner. The owner of each copyright has entirely separate rights in the work.

A Handy Guide to UK Advertising and Sales Promotion LawCopyright 33

Can copyright protect an idea? Copyright protects works that are in a tangible form. It does not exist in an idea but can exist in the organisation of ideas and the way they are presented. So, there is unlikely to be copyright protection for the idea for an advertisement but there will be, for example, protection for illustrations, storyboards and the advertisement itself.

It is also worth being aware that the law of confidence (described in more detail later in this booklet) can sometimes be used to protect ideas.

Does the work have to be original to be protected?Yes. The work must be original in that it must not be a copy of something else. It does not have to be ground breaking or inventive, and its artistic merit is irrelevant, but it must have taken a degree of skill and labour to create it for it to be protected.

Who owns copyright?The first owner of the copyright will be the author i.e. the person who created the work. This principle is subject to a number of exceptions, the most important being that copyright in a work created by an employee generally belongs to the employer (unless there is agreement to the contrary).

Where a work is created jointly, copyright can be owned jointly. Joint copyright owners own as ‘tenants in common’, which means that on the death of one of the joint owners, his share will pass to his personal representatives as part of his estate.

There are special provisions relating to the ownership of certain types of work:

• theauthorofasoundrecordingisthepersonwhoputsintoplacethenecessaryarrangementsforthe making of the recording. This is usually the record company. It may also be the producer although record companies usually ensure that anyone acting as record producer assigns the copyright in their contributionstotherecordcompany;

• theauthorofafilmisthepersonwhoputsintoplacethenecessaryarrangementsforthemakingofthe film. This is usually the production company. Film production companies usually ensure that anyone acting as producer assigns to it the copyright in their contributions so that there will be no doubt about ownership. In relation to films made after 1st December 1996, the authors are the producer and the principal director of the film and the film is treated as a work of joint authorship unless the producer and principaldirectorarethesamepeople;

• theauthorofabroadcastisboththepersontransmittingtheprogrammewithoverallresponsibilityforitscontent (i.e. the broadcaster), and the person who has actually provided the programme and made the necessaryarrangementsforitstransmission;

A Handy Guide to UK Advertising and Sales Promotion LawCopyright34

• theauthorofatypographicalarrangementofapublishededitionisthepublisher;and

• whereaworkhasbeencreatedbyafreelancerorsub-contractororhasbeencommissioned,ownership of copyright will usually depend upon what has been agreed by those involved in the creation of the work. If there is no express agreement, the courts will decide who owns the copyright.

The owners of copyright are entitled to assign copyright to others provided that the assignment is in writing. It is very common to find that the current owner of the copyright is not the person who first created the work.

What rights do copyright owners have?The owner of copyright in a work has the exclusive right to do or to authorise others to do the following “restricted”acts:

• copyit;

• issuecopiesofittothepublic;

• perform,showorplaytheworkinpublic;

• communicateittothepublicbyelectronictransmission(includingbybroadcastingitormakingitavailableforaccessatatimeandplaceindividuallychosenbymembersofthepublic);

• rentorlendcopiesoftheworktothepublic;and

• makeanadaptationordoanyoftheaboveinrelationtoanadaptation.

How long does copyright last? Copyright is not a permanent right and, depending on the work, will expire after a certain period of years.

Copyright in literary, dramatic, musical and artistic works lasts for 70 years after the end of the year in which the author dies.

Copyright in films lasts for a period of 70 years from the end of the calendar year in which the last of the following persons die:

• theprincipaldirector;

• theauthorofthescreenplay;

• theauthorofthedialogue;or

• thecomposerofmusicspeciallycreatedforandusedinthefilm.

Copyright in a sound recording or broadcast lasts for a period of 50 years after the end of the year in which it is first released or transmitted. If a recording has not been released, the relevant period is 50 years from


the end of the year in which it was made.

There are some complexities in relation to duration of copyright works created before 1st January 1996, so it is worth seeking legal advice in relation to older works.

Once copyright has expired, there is nothing to prevent others from exercising the exclusive rights originally reserved for copyright owners.

What is the ‘author’s/director’s right to equitable renumeration’?Where an author of a literary, dramatic, musical or artistic work or the principal director of a film assigns his rental right concerning a film or sound recording to a producer, the author or director retains the right to equitable remuneration for the rental. This right cannot be waived or assigned (except to a collecting society for the purposes of enforcing the right on behalf of the author or director). It is, however, transmissible by testamentary disposition or operation of law.

What is a collecting society and what does it do? Licensingschemes,setupbybodiessuchasthePerformingRightSociety(“PRS”)andtheMechanicalCopyrightProtectionSociety(“MCPS”),eithertakeassignmentsorlicencesofcopyrightfromcomposers,lyricists and other copyright owners or act as agents for copyright owners. These bodies are usually referred toas“collectingsocieties”.Theypublishtariffsorschemesunderwhichlicencesonthesametermsforthe same uses will be granted. These licences allow copyright users (such as broadcasters) to obtain a single licence covering huge numbers of copyright works - it would be impractical for large scale users of copyright to negotiate individual licences for each work.

How is copyright infringed? Copyright is infringed by copying a work, issuing copies of the work to the public, performing, showing or playing the work in public, broadcasting the work, making the work available to the public by electronic transmission in such a way that members of the public may access it from a place and at a time individually chosen by them, making an adaptation of the work or doing any of the above in relation to an adaptation or renting or lending copies of the work without permission of the copyright owner. It is an infringement to import, possess, deal with or distribute an infringing copy of a work for business purposes. Copyright can also be infringed by authorising someone else to infringe copyright.


In most circumstances it is irrelevant whether or not you intended to infringe copyright. Unintentional reproductionofsomeoneelse’scopyrightworkisstillaninfringement.However,flagrantinfringementcangive rise to additional damages.

Copyrightinfringementonlyoccurswhena“substantial”partoftheworkiscopied.Whatamountsto“substantial”maybeverylittleintermsofthenumberofwordsorthedurationofaclip.Thisisbecausethetest is a qualitative rather than a quantitative test. Copyright infringement can sometimes be a criminal offence.

What defences are available? If the use is only incidental or for background purposes, it may be that there has not been an infringement of copyright, although this does not apply to the use of music, where permission is still required for use if the work has been deliberately used.

It is a defence to show that permission to use the work has been obtained from the copyright owner, exclusive licensee or from a third party (e.g. a collecting society) entitled to grant permission on the copyright owner’s behalf. It is important to note that, where there is more than one copyright in the work or the work was created by joint authors (who cannot use the work themselves or authorise others to do so without the consent of all authors), permission must be obtained from each owner to avoid infringement.

If the use of the work is considered to be in the public interest, there will be no infringement. What is in the public interest will depend on the facts of each case. Commercial advertising and sales promotions are unlikely to be perceived as being in the public interest in this sense, but public service announcements could be.

There may be defences in some circumstances where the work has been used for private research and study, for the purposes of criticism and review or for the purposes of news reporting (the ‘fair dealing’ defences). However, these defences are limited and it is not advisable to rely on them without seeking legal advice first.


What are moral rights? These are rights which are personal to the author of a literary, dramatic, musical or artistic work or to the director of a film or television programme. They are separate from copyright and are owned by the creator of the work regardless of who currently owns the copyright. They cannot be assigned or licensed. They can, however, be waived.

Moral rights are:

• therighttobeidentifiedasauthorordirector The author of a copyright work has the right to be identified as its author, provided he is known to have assertedthatright.Thisrightincludestherightofanauthortobeidentifiedunderapseudonym;

• the right to object to derogatory treatment of a work “Treatment”meansanyadditionto,deletionfromoralterationto,oradaptationofthework.Treatmentwill be derogatory if it is a distortion or mutilation of the work or is otherwise prejudicial to the honour or reputationoftheauthorordirector;

• the right not to have a work falsely attributed to you as author or director;and

• therighttoprivacyinrespectofcertainphotographsandfilmscommissionedforprivateordomestic purposes.

The rights to be identified as author, to object to derogatory treatment of a work and to privacy last for as long as the copyright in the work in question. The right against false attribution, however, lasts for only 20 years after a person’s death.

When considering commissioning work from an author or director or buying copyright in an existing work, it is wise to seek a formal waiver of moral rights from the author as a pre-condition of concluding the main copyright transaction.

What are performers’ rights?Performers such as actors and musicians are granted protection, equivalent in most respects to copyright, to prevent unauthorised exploitation of their performances. These rights are as follows:

• rightstopreventreproduction,distribution,rentalandlendingofrecordingsoftheirperformances.Theseapply to bootleg recordings as well as to legitimate recordings which are then copied illegitimately. These rightsareproprietaryinnatureandsoarefullytransferable;

• rightstopreventtheinitialfixation(i.e.recording)andlivebroadcastofaperformancewithouttheirconsent, the public performance or broadcast of a recording of a performance made without their consent, and illicit dealings in the recordings. These rights are non-proprietary. They cannot be assigned, althoughtheyaretransmissibleondeath;and


39

• arighttoequitableremunerationincertaincircumstances.Theserightsmaynotbeassignedtoanyoneother than a collecting society, but are transmissible on death.

Such rights last until 50 years from the end of the calendar year in which the performance takes place or, if a recording of the relevant performance is released before the end of that period, then 50 years from the end of the calendar year in which it is released.

Performersalsohaveprotectionunderthecriminallaw;itisanoffenceforapersontomakeordealwitharecording which he knows or believes to be illicit, or to cause a recording of a performance made without “sufficientconsent”(atermdefinedinthelegislation)tobeshownorplayedinpublicorbroadcastorincluded in a cable programme service if he knows or has reason to believe that the performer’s rights will thereby be infringed.

What are the remedies for infringement of copyright? The Court has a number of remedies that it can award where copyright has been infringed. These include:

• damagesoranaccountofprofits(atthechoiceoftheclaimant);

• additionaldamages,iftheinfringementisdeliberate;

• injunction(temporaryorfinal);

• deliveryupofinfringingarticlesanditemsusedtomakethem;and

• costs.

A Handy Guide to UK Advertising and Sales Promotion LawCopyright

41Design Right

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Design RightWhat is unregistered design right? UK unregistered design right is a statutory right which protects original designs of three dimensional functional articles. It arises automatically when an article is made to a design or where a design is drawn, and it prevents unauthorised reproduction of the design.

The right covers aspects of shape or configuration but not surface decoration. It can be asserted over the whole or any part of a product. In the case of a teapot, for example, design right vests in the teapot as a whole or in parts such as the spout, handle or lid or even part of the lid. The design must be original and not commonplace to warrant protection.

UK unregistered design right lasts for the lesser of 15 years from the creation of the design document or article or 10 years from the date on which articles made to the design were first placed on the market anywhere in the world. In the last five years of the design right term, licences of right are available which in default of agreement are settled by the UK Intellectual Property Office.

A similar regime for the protection of unregistered designs exists under EU legislation. EU unregistered design right comes into existence automatically when a design is first made available to the public in the EU, and lasts for three years.

What is registered design right? Some designs (whether or not they qualify for protection under unregistered design right) may be registered under regimes which exist in the UK and the EU. The UK and EU registered design right regimes are very similar. In order to be registrable, a design must be new and original in character. The right covers the outward appearance of the product, resulting particularly from the feature of lines, contours, colours, shape, texture and materials of a product or its ornamentation. It covers both two-dimensional and three-dimensional designs.

Registration must be paid for, but once a design is registered it will be protected for up to 25 years (provided that the registration is renewed).

Through one simple application it is possible to obtain protection not only in the EU but also in countries which are members of the Geneva Act of the Hague Convention.

A Handy Guide to UK Advertising and Sales Promotion LawDesign Right

45Trade M

arks

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Trade Marks

What is a registered trade mark?A registered trade mark is a mark which has been accepted onto the registers of the authority responsible for trade marks in a particular jurisdiction (for example, the Trade Marks Registry in the UK or the Office for HarmonizationintheInternalMarket(“OHIM”)intheEU).

In order to be accepted for registration in the UK or the EU, a trade mark must be something which can be represented graphically and be capable of distinguishing the goods or services of one business from those of another. Examples of well known registered trade marks include word marks such as MICROSOFT or SAINSBURYSandlogossuchasthegoldenarchesofMcDonaldsandthewords“CocaCola”writteninthe famous curly script.

What rights does a trade mark owner have?A registered trade mark gives its owner exclusive rights to use the trade mark in the place in which it has been registered – it does not provide exclusivity elsewhere. Registration in the UK Trade Marks Registry gives rights in the UK only. Fewer marks are now registered in the UK Registry alone because of the availability of the Community trade mark. Registering a Community trade mark gives exclusivity to its owner in all of the EU countries.

For those who may now, or in the future, want to use their trade mark outside of the EU (or want to prevent others from using their trade mark outside of the EU), there is an international registration system under the Madrid Protocol. This allows you to make one application and obtain protection in a large number of EU and non-EU countries. However, an additional fee is charged for each country for which protection is requested.

Registration gives the owner of the trade mark the exclusive right in the course of business to use the trade mark for the goods or services for which it is registered. However, the law does allow others to use the mark in certain specified and limited circumstances e.g. for comparative advertising, provided certain rules are adhered to. Registration also gives the owner some rights to prevent the use of the mark in relation to other goods or services (see the section on infringement).

Initial registrations last for ten years and can be renewed indefinitely (for ten years at a time).

When applying to register a trade mark, the applicant must state in which classes of goods and services protection is required. An additional fee is charged for each class in which you register. Applicants should only register in classes in which they intend to or may use the mark, as registration in a class can be revoked if a mark is not used for 5 years in that class.

A Handy Guide to UK Advertising and Sales Promotion LawTrade Marks

The Trade Marks Register is open to public inspection. There are also online searching facilities available at www.ipo.gov.uk/tm (for UK marks and for limited details of Community marks) and www.oami.europa.eu (for Community marks).

What can be registered as a trade mark?As mentioned above, anything that is capable of graphic representation can be registered as a trade mark. This includes smells and sounds, which means that advertising jingles can be registered. ICI have registered the“soundofadogbarking”whenusedinconnectionwithpaint.Shapescanalsoberegistered-thedistinctive Coca Cola bottle is registered as a trade mark - as can colours and combinations of colours, although the test for registration is quite strict. Individuals’ names can be registered too – David Beckham and Catherine Zeta Jones are examples of celebrities whose names have been registered.

How are registered trade marks infringed?Subject to certain limited exceptions, you will infringe a registered trade mark if (without consent) you use in the course of your business:

• amarkwhichisidenticaltothattrademark,inrelationtogoodsorserviceswhichareidenticaltothoseforwhichitisregistered;

• amarkwhichisidenticaltothattrademark,inrelationtogoodsorserviceswhicharesimilartothoseforwhichitisregistered,sothatthereisalikelihoodofconfusionorassociationonthepartofthepublic;

• amarkwhichissimilartothattrademark,inrelationtogoodsorserviceswhichareidenticalorsimilarto those for which it is registered, so that there is a likelihood of confusion or association on the part of thepublic;or

• amarkwhichisidenticalorsimilartothattrademarkwheretheregisteredtrademarkhasareputationin the United Kingdom and the use of the sign, without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.

Use of a mark includes:

• usingitongoodsorpackaging;

• offeringgoodsforsaleorputtingthemonthemarketusingthemark,orstockinggoodsunderthemarkforthepurposesofsale;

• offeringorsupplyingservicesusingthemark;

• usingthemarkinadvertisingoronheadednotepaper(thisincludesuseonwebsites);and

• importingorexportinggoodsusingthemark.

A Handy Guide to UK Advertising and Sales Promotion LawTrade Marks48

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“Use”extendstowritten,graphicandaudibleuse.So,trademarkscanbeinfringedinavoice-overorinajingle as well as in visual material.

Both advertising agencies and their clients can be held liable for an infringing advertisement.

How can you avoid infringing a registered trade mark?If you are worried that you might be infringing a registered trade mark in the UK or EU, you should carry out searches through the online searching facilities referred to above and seek legal advice if you think there may be a problem – there are a number of defences available which may apply and a lawyer can talk you through these. It is also often possible to get permission from the owner of the trade mark to use it although in most cases you will have to pay for that permission.

What should you do if you think someone is infringing your rights?If you think that someone may be infringing any trade mark owned by you, it is important to take legal advice before accusing them of doing so. This is because in some circumstances, those who have been the subject of an unjustified threat to issue legal proceedings can sue you for making the threat. The courts may decide that the wording of a letter that you have sent accusing someone of infringing your rights is an unjustifiable threat even where you have not expressly threatened to sue.

What are the penalties for infringement?Penalties include:

• damagesorpaymentoftheprofitsmadefromusingthemark;

• aninjunction(temporaryorfinal)preventingfurtheruseofthemark;

• havingtogivetheinfringingarticlesandanyequipmentusedtomakethemtothetrademarkowner;and

• paymentoflegalcosts.

Can use of a trade mark on a website be an infringement? Use of a trade mark on a website can be an infringement. In fact, problems are often caused in this way because websites can generally be accessed freely on a global basis but trade marks are registered territorially (although blocking is available, it is often not possible to prevent leakage completely). An example of a potential problem is where a US company uses its US registered trade mark on a website that is also accessible in the UK, although the company has no intention of selling its goods in the UK. If a UK company happens to have registered an identical trade mark in the UK, can the UK company claim infringement of its trade mark in the UK? The approach of the UK courts so far is that, if the advertiser has no fixed intention of trading in other jurisdictions, this should not be trade mark infringement, but these can be difficult cases.


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To reduce the risk of a trade mark infringement action, it can be helpful for the advertiser to publish a disclaimer on its website clearly stating the territories in which it wants to do business.

Can use of a trade mark as a domain name be an infringement? There have been many cases of people attempting to register a well-known trade mark belonging to another organisation as a domain name in order to capitalise on its value. This is known as cybersquatting. The courts treat this as an infringement of an existing trade mark in the usual way. There are, however, often cheaper and quicker ways of dealing with cybersquatters than by using the courts.

The Internet Corporation for Assigned Names and Numbers (ICANN) operates a dispute resolution policy to deal with disputes in relation to the registration and use of internet domain names for many of the globaldomainse.g.the.comand.bizdomains.Complaintscanbemadeunderthedisputeresolutionpolicy where:

• someoneelseisusingadomainnamewhichisidenticalorconfusinglysimilartoyourtrademark;and

• theuserofthedomainnamehasnorightsorlegitimateinterestsinthedomainname;and

• thedomainnamehasbeenregisteredandisbeingusedinbadfaith(thismayincludeattemptstosellthe domain name for a sum in excess of the costs of registering and maintaining it).

Further information on the dispute resolution policy can be found on ICANN’s web site at www.icann.org.

Most other domain name registries have dispute resolution policies of their own – for instance Nominet, the UK registry, operates its own policy, details of which can be found at www.nominet.org.uk. The policies usually enable trade mark owners to retrieve infringing domain names.


51Passing Off

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Passing Off

What is passing off?Passing off occurs where a consumer is misled by someone who is making use of someone else’s reputation.

It can take two forms:

• directpassingoff,whereanindividualfalselystatesthathisgoodsorservicesarethoseofsomeoneelse;or

• indirectpassingoff,wheresomeoneispromotingorpresentingaproductorserviceasimpliedlyassociated with, or approved by, someone else when that is not the case.

Examples of passing off include imitating the colouring, packaging or shape of an item so that it misleads consumersintothinkingthattheyaredealingwith“thegenuinearticle”.Anotherexamplewouldbemounting an advertising campaign that is very similar to a competitor’s campaign and is likely to cause the public to become confused. Using a celebrity in an advertisement without their permission has been held to be a passing off in some circumstances, and the use of celebrity look-alikes and sound-alikes may also be a passing off.

What are the consequences of being liable for passing off?Penalties include:

• damagesorrepaymentoftheprofitsyouhavemadefromusingthemark;

• aninjunction(temporaryorfinal)preventingfurtheruseofthemark;

• handingovertheinfringingarticlesandanyequipmentusedtomakethemtothetrademarkowner;and


A Handy Guide to UK Advertising and Sales Promotion LawPassing Off

55Privacy and Confidence

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Privacy and Confidence

Can you sue for a breach of privacy rights?English law has not historically recognised a general right of personal privacy. The incorporation of the EuropeanConventiononHumanRightsintoUKlawandtheDataProtectionAct1998(“DPA”)have,however, had a profound effect on privacy law.

Article 8 of the Convention provides that everyone has a right to respect for his private and family life, his home and his correspondence. This must be balanced against Article 10 of the Convention, which provides that everyone has the right to freedom of expression.

The courts do not allow an action against a private entity to proceed purely on the basis of a breach of a convention right such as privacy. Instead, when proceeding against a non-state body, the claimant must find an existing cause of action against the alleged infringer under domestic laws before any human rights considerations can be brought into play. The English courts have developed the existing law of breach of confidence in order to address privacy concerns.

The DPA requires those who handle personal information to comply with principles governing use, access and disclosure of that information and expressly provides the right to individuals to prevent information about themselves or their conduct being used for direct marketing purposes. The DPA also affects a company’s ability to both sell and buy customer databases.

The DPA allows an individual to bring a claim against any company who fails to comply with a notice to a company from an individual to either stop that company’s direct marketing activities or to not process that individual’s information. The court has the power to order compliance or to award compensation.

What is a breach of confidence?A breach of confidence action can be brought where confidential information has been used or disclosed in circumstances that impose an obligation of confidence and there is subsequently an unauthorised use or disclosure(a“misuse”)oftheinformation.

Information cannot be confidential if it is already within the public domain or if it is public knowledge.

Can I use photographs of individuals or imply endorsements of products by individuals without asking for their permission?Advertisers should avoid using photographs of individuals without their permission, especially when they are in private places or engaging in private acts. It is well established that the law of confidence can operate to prevent publication of photographs taken in breach of an obligation of confidence.

A Handy Guide to UK Advertising and Sales Promotion LawPrivacy and Confidence

58 A Handy Guide to UK Advertising and Sales Promotion LawPrivacy and Confidence

The law of passing off can also be used in some circumstances to prevent endorsements where permission has not been obtained. Where individuals have registered their names as trade marks, a trade mark infringement action may also be available.

Non-broadcastadvertisersshouldheedtheCommitteeofAdvertisingPractice(“CAP”)Code(dealtwithseparately) which provides that marketers should not unfairly portray or refer to people in an adverse or offensive way. It also urges marketers to obtain written permission from the relevant individual before referring to or portraying members of the public or their identifiable possessions, referring to people with a public profile or implying any personal approval of the advertised product.

The Radio and Television Codes similarly direct that no endorsement should be implied where none exists and urge advertisers to obtain written permission before portraying, referring or alluding to living individuals in any advertisement. An exception is made in the Television Code in relation to advertisements for specific publications (books, films, particular editions of radio or television programmes, newspapers and magazines,etc.)whichfeaturethepersonreferredtointheadvertisement.Theexceptionapplieswherethereference or portrayal is neither offensive nor defamatory.

There is even a risk with using deceased celebrities where:

• thecelebritydiedrecently;

• thecelebrityhadareputationatthetimeofdeaththatsurvivestheirdeath;or

• thesurvivinggoodwillofthedeceased’sestatecouldbedamaged.

See the section on celebrities in advertising for guidance on the use of look-alikes and sound-alikes.

Can breach of confidence actions protect ideas and other information?If an idea is disclosed to someone on an expressly or impliedly confidential basis and the person to whom the idea is disclosed uses the idea or discloses it without permission, an action for breach of confidence can be brought.

In this way, material such as ideas for advertisements can be protected, even though they may not be in a sufficiently tangible form to attract copyright protection.

Other confidential information will also be protected by the law of confidence and so care must be taken in relation to the use in an advertisement of any information that appears to have been illicitly or surreptitiously obtained or which contains sensitive personal or commercial data.

59A Handy Guide to UK Advertising and Sales Promotion LawPrivacy and Confidence

The possible remedies for breach of confidence are:

• damagesorrepaymentoftheprofitsmadefromusingtheconfidentialinformation;

• aninjunction(temporaryorfinal)preventingfurtheruseoftheinformation(thiswillnotbeavailableiftheinformationisnowinthepublicdomain);

• surrenderoftheconfidentialinformationandanythingthatcontainsit;and


Can I buy or sell customer databases?Yes, as long as the seller has informed customers of how their information will be used. That requires the seller to have informed its customers at the time their information was gathered that it could be passed on to other organisations. The buyer of the customer database is restricted to using the customer information only for the purpose for which it was collected. If the buyer wants to use the information for a new purpose, such as marketing, then it will need each individual customer’s consent. Unsolicited marketing can be sent to such customers where they agreed or where the receipt of marketing materials is part of their reasonable expectations, including whether the marketing material may be sent only through a particular medium, such as by post. In addition, the buyer of a customer database may only market products or services similar to that of the seller.

61Libel and M

alicious Falsehood

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Libel and Malicious Falsehood

What is defamation?Defamation occurs where a person or a company publishes to a third person a statement that has a detrimental effect on the reputation of another person or company.

Libel is a defamatory statement made in a permanent form. Libel can be written, contained in a film, television or radio broadcast (including an advertisement) or published in some other way, including on a website. It can also take the form of a pictorial or graphic representation.

Slander is a defamatory statement spoken or published in some other transient way.

Can someone sue for libel even if they have not been named expressly?Yes. It is sufficient if an informed reader/viewer/listener would understand the material to refer to a particular person. It is also possible to defame a whole class or group of people. This may occur if a publication criticises a group of people and could reasonably be understood to be about each individual member of that group, although the larger the group is, the more difficult it will be for any individual in the group to bring an action.

What happens if someone is libelled by accident?An advertiser will be liable even if there was no intention to refer to a particular person, if a jury concludes that the particular person was in fact referred to. So, an advertiser must be careful to check that fictitious names will not be understood to refer to a living person.

What if the statement made is implied, not express?As well as the natural and ordinary meaning, an advertiser must consider any implied meaning or innuendo conveyed, even if it is only understood by some viewers or readers. An advertiser should also consider the context of a statement. It could be libellous in the context of the whole advertisement even if it is not libellous if viewed or read alone.

Is it a defence that someone else published it first? No, the fact that someone else has made the same statement will not provide a defence.

A Handy Guide to UK Advertising and Sales Promotion LawLibel and Malicious Falsehood

What defences are available?• Justification - If you can prove that what you said or wrote is true then that is an absolute defence.

• Fair Comment on a Matter of Public Interest - If what you said was comment rather than fact, was based upon a true set of facts and was related to a matter of public interest and it was your honest belief, you will have a defence. It does not matter how unreasonable your belief was, provided it was your honest belief. The defence of fair comment will fail, however, if the comments are made by someone who did not care whether what they said was true or was motivated by ill will or some other ulterior purpose.

• Consent - It is a defence to show that the person about whom the defamatory statement was made consented to it being published.

• Absolute Privilege - Statements made in certain circumstances, including statements made in the course of legal proceedings, statements made in parliamentary proceedings and papers and reports of court proceedings, attract absolute privilege. This is a complete defence.

• QualifiedPrivilege - This applies in circumstances where the statement in question is made by a person who has a duty or interest (moral, legal or social) in making the statement and the recipient has a corresponding duty or interest in receiving it. In the absence of ulterior motive on the part of the person making the statement, he is entitled to rely on this defence. It is more difficult, however, for the media to rely on this defence and there are additional criteria which they must fulfil in order to do so.

• Reply to Demand or Attack - Where a person receives a letter making a demand he is entitled to state his reasons for refusing to comply with the demand, and his reply will be privileged provided the statementsitcontainsaremadeingoodfaithandare“relevant”.Similarlyapersonwhosecharacterorconduct has been attacked is entitled to answer the attack. Any defamatory statements he may make about the person who attacked him will be privileged provided they are published in good faith and are reasonably relevant to the accusations made.

• Innocent Dissemination - This defence is available to those who have published defamatory material but who are not primarily responsible for its content: for instance, book sellers, libraries and newsagents. It can also be used by broadcasters in respect of live broadcasts where it can be shown that reasonable care was taken in relation to the publication and that they did not know and had no reason to believe that what they had done caused or contributed to the publication of the statement. The defence also provides some protection to service providers on the internet. It will only apply if, having taken all reasonable care, the disseminator had no reason to suspect that the material was defamatory. Once a publisher has been notified about a libel, it must be removed (if possible) to avoid losing the defence that they were an innocent party.

A Handy Guide to UK Advertising and Sales Promotion LawLibel and Malicious Falsehood64

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• Offer of Amends - This defence applies where, following publication of an innocent defamatory statement, an offer is made by the publisher to make amends for the defamation. The offer must be:

- tomakeasuitablecorrectionandasufficientapology;

- to publish the correction and apology in a way that is reasonable and practicable in the circumstances;and

- to pay the aggrieved party such compensation (if any) and such costs as may be agreed between the parties or determined by the court.

If the offer is refused, it will still be a defence unless it can be shown that the defamation was not innocent.

• TheE-CommerceRegulations- These provide specific defences for providers of ‘Information Society Services’.

Who can sue for libel?

• livingpeople-alibelactioncannotbebroughttoprotectthereputationofadeadperson;

• companies;

• tradingcorporations;and

• partnerships,inthenameofthefirmasawhole.

Unincorporated associations, political parties and public authorities cannot sue for defamation.

What if you disparage a company’s products/services?It is not necessarily defamatory to criticise products or services, as long as the criticism cannot be construed as an attack on the trader or the way in which he conducts his business. However, it may be a malicious falsehood (see below).

What are the consequences of losing a libel action?• damages;

• aninjunction(temporaryorfinal)preventingrepetitionofthedefamatorystatement;and


Who can be sued for libel? Subject to the defence of innocent dissemination (mentioned above), everyone who participates in the publication of a libel is potentially liable and can be sued – whether it is the advertiser, the agency, the promoter, the company which puts up bill board posters, the newspaper in which the advertisement is printed, or the television channel on which it is broadcast. It is crucial to remember that every time a libel is repeated, the claimant can choose to bring a further action.


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How long does someone who has been libelled have to bring an action? A claimant has only one year from the date of publication to sue. The courts have a discretion to extend this one year period in certain circumstances. The clock will start running again with each new publication. So, each time an advertisement is re-run, the one year period in which an action can be brought starts again.

Can an advertising agency get an indemnity for libel from its client?This is difficult. Indemnities for libel claims are unlawful (and therefore unenforceable) if, at the time of publication, the agency knew that the material was defamatory and did not reasonably believe there was a good defence.

What is malicious falsehood?Malicious falsehood is a false statement, made maliciously, which causes financial damage. Malicious falsehoodissometimesknownas“tradelibel”.

There are some exceptional circumstances where no financial damage is required in order to bring an action, but as a rule some economic loss (or likelihood of it) must be shown.

What is malice?Knowledge that a statement is false, or indifference as to whether it is true or false, should be sufficient to show that it was made maliciously. A disparaging comment about a competitor’s product is likely to be viewed as malicious unless there is evidence to support what has been said.

What’s the difference between malicious falsehood and libel?The main difference is that it is a malicious falsehood if the statement is false - it does not have to damage reputation. So, for example, to say that a musician has an injury and so can no longer perform when that is not true may not damage their reputation and therefore may not be libellous, but it is false and so could be a malicious falsehood even if it is not a libel.

What are the consequences of being sued for malicious falsehood? • Damages;

• aninjunction(temporaryorfinal)preventingrepetitionofthedefamatorystatement;and



67Contem

pt of Court

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Contempt of Court

Can an advertisement be a contempt of court?Contempt of court can apply to advertising and sales promotions.

You will commit contempt of court if your advertising campaign contains material that creates a substantial risk that the course of justice will be seriously impeded or prejudiced. It is clearly a contempt of court to prejudice proceedings deliberately. Deliberate contempt of court can be committed at any time, even when proceedings are not active. Where there are active proceedings, you can be in contempt of court even if you had no intention of interfering with the course of justice.

What are “active” proceedings?Civil proceedings will be active if there has been a hearing or arrangements have been made for a hearing. Criminal proceedings are active from the initial step, which may be when a person has been arrested, or an arrest warrant has been issued.

If you did not know at the time of publication, and had no reason to suspect that the relevant proceedings were active, you may escape liability.

What happens if an advertisement breaches a court order/injunction? It is a contempt of court to disobey the terms of a court order, such as an injunction, which has been taken out against you.

It is important to remember that, if a court order had been made restraining publication of a particular allegation, this stops all third parties who had notice of the order from publishing that allegation, even if they were not party to the original proceedings and had no chance to argue against the order. Those with notice of the order who contravene its terms will be in contempt of court.

What are the consequences of being in contempt of court?A party in contempt of court will be liable to pay substantial fines and/or imprisonment.

Acompanycanhaveitsassetsfrozenorseizedbythecourt.

A Handy Guide to UK Advertising and Sales Promotion LawContempt of Court

71Program

me Sponsorship

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Programme Sponsorship

What is programme sponsorship?A programme that has had some or all of its costs met by a sponsor with a view to promoting its or another’s name, trade mark, image, activities, services, products or any other direct or indirect interest is a sponsored programme.

Can any TV programme be sponsored?The following cannot be sponsored:

(a) newsbulletinsandnewspresentationsonradio;and

(b) news and current affairs programmes on television.

Can anyone sponsor a TV programme or series?An advertiser that is not allowed to advertise its goods on television (e.g. providers of tobacco products, firearms and pornography) cannot sponsor a programme.

There are special provisions relating to the sponsorship of programmes for children and young people. For example, programmes aimed at or likely to appeal to people under 18 may not be sponsored by producers of alcoholic drinks, slimming products or religious organisations. Programmes aimed at or likely to appeal to children under 16 may not be sponsored by lottery or pool providers or producers of ‘HFSS’ food and drink products. HFSS products are products deemed to be high in fat, salt or sugar according to the Food Standards Agency’s nutritional profiling scheme.

What are the requirements for programme sponsorship?Rules on programme sponsorship are set out in section 9 of the Ofcom Broadcasting Code. Sponsorship must comply with advertising and content rules that apply to that medium.

Thesponsormustnotinfluencethecontentand/orschedulingofaprogrammeinsuchawayastoimpairthe responsibility and editorial independence of the broadcaster. There must be no promotional reference to the sponsor, its name, trade mark, image, activities, services, or products and no promotional generic reference. Promotional references include, without limitation, references that encourage, or are intended to encourage, the purchase or rental of a product or service.

Sponsored programmes must be clearly identified as such by reference to the name or logo of the sponsor at the beginning or end of the programme.

A Handy Guide to UK Advertising and Sales Promotion LawProgramme Sponsorship

The relationship between the sponsor and the sponsored programme must be transparent.

Radio In longer sponsored outputs, credits must be broadcast as appropriate to create the degree of transparency required. Credits must be short branding statements, but may contain legitimate advertising messages.

Credits must be cleared for broadcast in the same way as advertisements.

Programme trails are treated as programmes and the same sponsorship rules apply.

Television Sponsorship credits must be clearly separated from programmes by temporal or spatial means.

Sponsorship must be clearly separated from advertising. Sponsor credits must not contain advertising messages or calls to action.

If a programme trail contains a reference to the sponsor, the sponsor reference must be brief and secondary.

Is product placement allowed? Product placement is prohibited. Product placement is the inclusion of, or reference to, a product or service within the programme in return for payment or other valuable consideration to the programme maker/broadcaster.

The following are not product placement:

• referencestoproducts/servicesacquiredatno,orlessthanfull,costwhereinclusioniseditoriallyjustified.Theproductcanbeidentifiedbrieflyinthecreditswhereitisnotclearfromtheprogrammewhattheproductis;and

• inrelationtotelevision,theinclusionofproductsorservicesinaprogrammeacquiredoutsidetheUKor a film made for cinema provided that no broadcaster who is regulated by Ofcom and involved in the broadcast of that programme or film directly benefits from the arrangement.

A new European directive is now in force which has relaxed the rules on product placement. The directive gives member states the option of permitting product placement in most genres of commercial television with the exception of news, current affairs, sport and children’s programming. Member states will have 2 years to implement it. In the UK, new rules may be put in place well before the 2-year deadline as all that will be required is a new set of Ofcom rules.

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75Com

parative Advertising

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Comparative Advertising

What is comparative advertising?Comparativeadvertising,sometimesknownas“knockingcopy”,isadvertisingwhichexplicitlyorbyimplication adversely comments on a competitor or on its goods or services.

In the UK comparative advertising is not illegal as such. The practice is permissible in the UK so long as, in producing an advertisement with a comparative aspect, the advertiser does not infringe anyone else’s legal rights or fail to comply with any relevant regulations.

Comparative advertising is one of the most contentious areas of advertising - a lot can go wrong and litigation is rife. It is advisable, therefore, to clear comparative advertisements carefully before releasing them.

How is comparative advertising regulated?Care should be taken to ensure that advertisements do not infringe a competitor’s copyright works or registered trade marks, do not amount to a passing off and are not a malicious falsehood. Furthermore, advertisements will have to comply with the provisions of the Consolidated Directive on Misleading and Comparative Advertising and the Unfair Commercial Practices Directive (both due to be implemented in the UK in May 2008, see below). Advertisers should ensure that their advertisements distinguish their goods from those that they are being compared with in order to remove the possibility of public confusion about the origin of the goods. If this is done in a comparative advertisement there will be no passing off.

There is no infringement of a registered trade mark if the mark is referred to for the purpose of identifying the compared goods and services as those of the owner of the mark, provided the use is in accordance with honest practices in industrial or commercial matters. In order to establish that the use of a competitor’s trade mark in a comparative advertisement is in accordance with honest practices, it is likely that an advertiser will have to show that its advertisement complies with the provisions of the Consolidated Directive on Misleading and Comparative Advertising (see below).

Use of a competitor’s logo for the purposes of drawing a comparison could result in a claim for copyright infringement.

It is important to remember the possibility of an action for malicious falsehood or a complaint about a breach of the advertising codes in the case of untrue claims made in a comparative advertisement.

An action for malicious falsehood can arise in the context of comparative advertising where there has been a false statement in relation to the goods of a competitor that has been made maliciously and that has caused damage. Remember in this context that malice means only having some ulterior or improper motive.

A Handy Guide to UK Advertising and Sales Promotion LawComparative Advertising

The sections of this booklet on passing off, trade marks, copyright and malicious falsehood give more detail on the claims referred to above.

What is the Consolidated Directive on Misleading and Comparative Advertising and what restrictions does it impose?The various member states of the EU have traditionally adopted very different approaches to comparative advertising, the UK being located at the more liberal end of the spectrum. In order to permit and harmonise comparative advertising across the EU, various directives have been issued..

TheConsolidatedDirectiveonMisleadingandComparativeAdvertising(“CDMCA”)laysdowntheconditions under which comparative advertising will be permitted and requires member states to ensure that these conditions can be adequately enforced in the interests of traders and competitors. Consumers who are misled or confused by comparative advertising are protected by another piece of EU legislation, the Unfair Commercial Practices Directive (see below).

The CDMCA permits comparative advertising provided that:

• itisnotmisleading(eitherundertheprovisionsrelatingtomisleadingadvertisingsetoutintheCDMCAitselfortheUnfairCommercialPracticesDirective);

• itcomparesgoodsorservicesmeetingthesameneedsorintendedforthesamepurpose;

• itobjectivelycomparesoneormorematerial,relevant,verifiableandrepresentativefeatureofthosegoodsandservices,whichmayincludeprice;

• itdoesnotdiscreditordenigratethetrademarks,tradenames,otherdistinguishingmarks,goods,services,activitiesorcircumstancesofacompetitor;

• forproductswithadesignationoforigin,itrelatesineachcasetoproductswiththesamedesignation;

• itdoesnottakeunfairadvantageofthereputationofatrademark,tradenameorotherdistinguishingmarksofacompetitororofthedesignationoforiginofcompetingproducts;

• itdoesnotpresentgoodsorservicesasimitationsorreplicasofgoodsorservicesbearingaprotectedtrademarkortradename;and

• itdoesnotcreateconfusionamongtraders,betweentheadvertiserandacompetitororbetween the advertiser’s trade marks, trade names, other distinguishing marks, goods or services and those ofacompetitor;

Advertisingis“misleading”undertheCDMCAifitdeceivesorislikelytodeceiveitsaudienceinanyway,including through its presentation and if, by reason of its deceptive nature, it is likely to affect the economic behaviour of its audience or injure a competitor. In determining whether advertising is misleading, account will be taken of all its features, including the characteristics of goods or services, the price and the nature of the advertiser.

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The CDMCA should enable advertisers to mount an EU-wide comparative advertising campaign without having to consider the law on comparative advertising in individual Member States. However, this depends on the Directive being applied consistently in all Member States.

At the time of writing, the CDMCA was due to be implemented in the UK in May 2008 by the Business Protection from Misleading Marketing Regulations.

What does the Unfair Commercial Practices Directive say about Comparative Advertising?TheUnfairCommercialPracticesDirective(“UCPD”)protectsconsumersfromunfairbusiness-to-consumercommercial practices. It contains a general prohibition on treating customers unfairly, and sets out various ‘misleading’ and ‘aggressive’ commercial practices which will automatically be regarded as ‘unfair’ (and so will be prohibited). Comparative advertisements should comply with these general rules as well as the more specific provision in Article 6 of the UCPD. This provides that any marketing of a product, including comparative advertising, which creates confusion with any products, trade marks, trade names or other distinguishing marks of a competitor, will be regarded as misleading (and thus will amount to a prohibited unfair practice).

At the time of writing, the UCPD was due to be implemented in the UK in May 2008 by the Consumer Protection from Unfair Trading Regulations.

What does the CAP Code say about Comparative Advertising?The CAP Code (which applies to non-broadcast advertisements) gives the following guidance in relation to comparative advertisements:

• comparisonswithidentifiedcompetitorsand/ortheirproductsarepermittedintheinterestsofvigorouscompetition, although they should not be misleading. They can be explicit or implicit. The comparisons should be in respect of products with the same needs or intended for the same purpose and they should objectively compare one or more material, relevant, verifiable and representative feature of those products,whichmayincludeprice;

• theelementsofanycomparisonshouldnotcreateconfusionbetweencompetitors,theirproducts,trademarks,namesorotherdistinguishingmarks;

• advertisersshouldnotdiscreditordenigratetheproducts,trademarks,tradenames,otherdistinguishingmarks,activitiesorcircumstancesofcompetitors;

• theyshouldnottakeunfairadvantageofthereputationoftrademarks,tradenamesorotherdistinguishingmarksoforganisationsorofthedesignationoforiginofcompetingproducts;and

A Handy Guide to UK Advertising and Sales Promotion LawComparative Advertising

80 A Handy Guide to UK Advertising and Sales Promotion LawComparative Advertising

• advertisementsmakingcomparisonswithidentifiablecompetitorsand/ortheirproductsshouldnotpresent products as imitations or replicas of products bearing a protected trade mark or trade name.

As in trade mark law, there is much scope for uncertainty, for instance over what amounts to denigration and what amounts to unfair advantage.

Other provisions of the CAP Code could be breached by a comparative advertisement, for example the provisions on truthfulness and price.

What does the BCAP Television Code (The “Television Code”) say about Comparative Advertising?The Television Code applies to all advertisements broadcast by Ofcom licence holders. It states that there must be no realistic likelihood that viewers will be misled as a result of any comparison, whether about the product or service advertised or about that with which it is compared. With regard to pricing, it states that indications of comparative prices must be accurate and must not mislead by omission, undue emphasis or distortion. The Television Code makes it clear that advertisements must not discredit or unfairly attack other products or services, advertisers or advertisements, either directly or by implication.

The notes to the Television Code provide further guidelines, which follow closely the provisions of the CDMCA. While the Regulations define advertisements as comparative only if they explicitly or by implication identify a competitor or its goods or services, the notes also say that for the purposes of the Television Code ‘comparative advertising’ extends beyond that narrow definition and covers comparisons of a more general kind where a competitor is not identified.

What does the BCAP Radio Code say about Comparative Advertising?The BCAP Radio Code applies to all advertisements broadcast on the radio and it contains provisions in respect of comparative advertising similar to those set out in the CAP Code and Television Code.

Are there any other Codes that deal with price comparisons and indications?The Department for Business Enterprise and Regulatory Reform (‘BERR’) has published some guidance in the form of the Code of Practice for Traders on Price Indications. The Code does not have the force of law but it may be taken into account by the courts when deciding whether an offence has been committed under legislation governing misleading price indications (see the section on this elsewhere in this booklet).

The Code provides that price comparisons should only be made if they are accurate and valid. It states that the name of the other trader and price descriptions (including any conditions attached to the offer) must be written clearly, prominently and in full. It is also important to identify the circumstances where the other trader’s price applies, and to make sure that the price comparison is in respect of the same or a substantially similar product.

81A Handy Guide to UK Advertising and Sales Promotion LawComparative Advertising

Statements claiming to refund the difference where the product is offered for less by another trader should notbeassertedinrespectof“ownbrand”productswhichothertradersdonotstock,unlesstheofferapplies to equivalent products held by other traders.

Inordertomakea“lowestprice”claim,atradermusthavesuitableevidencetoshowthatthetraderisoffering a lower price than competitors.

If the price comparison becomes misleading, it should be removed as soon as practicable and consumers must be given the correct information before they are committed to purchasing the product.

83Using Celebrities in Advertising

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Using Celebrities in Advertising

Can I use a celebrity in a promotion/advertising without their permission?It is generally not wise to do this. If you use a celebrity’s name or image in connection with your products or services and you do not have their consent, this would be a case of false endorsement and they may be able to claim against you in passing off.

The privacy section of this booklet explains other dangers of using a celebrity’s name or image without their permission.

Can I use look-alikes or sound-alikes? Look-alikes or sound-alikes may be a cheaper alternative to the real thing and depending on how they are used they can be just as effective. To avoid the risk of litigation, however, it must be clear that the advertisement is not trying to mislead the public by inferring that the imitator is the real thing. Even when using caricatures, advertisers must be careful.

Can I use fictional characters in an advertisement? There is nothing wrong with creating your own fictional character to feature in an advertisement. Most existing fictional characters will have their names registered as trade marks, and there will also be copyright in the drawings of cartoon characters. This means that any attempt to mimic or reproduce any fictional character could give rise to claims for trade mark and/or copyright infringement and/or passing off.

Can I digitally manipulate images of celebrities? There are a number of legal issues that need to be considered before doing this. Firstly, this could be an infringement of copyright or of a moral right (see the copyright section) if the permission of the copyright owner/photographer/artist has not been obtained. Depending upon what the effect of the manipulation is, care may need to be taken to ensure that it does not imply a false endorsement and that it is not libellous.

How can I prevent damage to my reputation caused by a celebrity being used to endorse my goods/services? In order to minimise any potential damage to the brand arising out of a celebrity’s conduct, it is advisable to include clauses in contracts to give advertisers the right to terminate in certain circumstances.

Theseclausesareoftenreferredtoas“cleanliving”clauseswhichdefineconductthatwillprejudiceabrand’s image. It is advisable to draft such terms broadly so that all eventualities are covered.

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Are there any restrictions on which celebrities I can use? The Radio Code says that care must be taken when using radio presenters or newsreaders for voiceovers to advertisements, as a proper distinction must be made between an advertisement and programme.

Television advertisements should not feature anyone who regularly presents news or current affairs programmes. This is in order to avoid confusion between programmes and advertisements.

Television advertisements cannot feature a person who is appearing in any current programme which the advertiser would be precluded from sponsoring.

Celebrities who are popular with children cannot be used in television advertisements for ‘HFSS’ food and drink products if those advertisements are targeted directly at pre-school or primary school children. HFSS products are products which are high in fat, salt or sugar, according to the Food Standards Agency’s nutrient profiling scheme.

Celebrities who are popular with children may not be used in certain non-broadcast advertisements aimed at pre-school or primary school children. The restriction applies to any food or soft drink product (except fresh fruit or vegetables).

A Handy Guide to UK Advertising and Sales Promotion LawUsing Celebrities in Advertising

87Sales Prom

otions

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Sales Promotions

Are there any legal restrictions on sales promotions? The legal controls relating to promotions are extensive and must be adhered to in order to avoid disputes with entrants and, perhaps more importantly, negative press for the product, brand and company.

It is important to identify what type of promotion is being run – there are separate restrictions relating to lotteries,freeprizedrawsandprizecompetitions.Thepromotionwillbeunlawfuliftherulesarenot adhered to.

What is a lottery? TheGamblingAct2005(“theGamblingAct”)definestwotypesoflottery–asimplelotteryandacomplexlottery.

A simple lottery is where:

• personsarerequiredtopaytoparticipate;

• oneormoreprizesareallocatedtotheparticipantsinthescheme;and

• prizesareallocatedwhollybychance.

A complex lottery is where:

• personsarerequiredtopaytoparticipate;

• oneormoreprizesareallocatedtotheparticipantsinthescheme;

• theprizesareallocatedbyaseriesofprocesses;and

• thefirstoftheseprocessesrelieswhollyonchance.

Lotteries must either be run in accordance with an operating licence or fall under one of the exemptions in the Gambling Act (for example incidental non-commercial lotteries and small society lotteries) to be lawful. However, the National Lottery is not governed by these provisions and will be permitted by law in accordance with the provisions contained in the National Lottery etc. Act 1993.

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Can I run a prize draw promotion that is free to enter?Yes.Ifentrytothecompetitionisfree,prizescanbeawardedthroughasimpledrawwithoutinvolvinganyelement of skill. This will not amount to an illegal lottery.

The cost of a first or second-class stamp or a standard rate telephone call does not amount to a payment to enter a competition. It is not yet clear whether the ability to enter via the internet will be regarded as a “freeentryroute”inallcircumstances.

Ifthepriceofaproductisartificiallyinflatedtocoverthecostofrunningacompetition,thiswillamounttoapayment.However,wherethepriceofaproductdoesnotincludeanyelementwhichreflectstheopportunity to participate in the promotion, it will not amount to a payment.

This represents a change in the law. Before the Gambling Act came into force, when Imperial Tobacco soldpacketsofcigarettesthatcontainedprizescratchcardsitwasheldthatthiswasanillegallottery;thecost of entering was the cost of purchasing a packet of cigarettes. Such a promotion would not now be anillegallotteryaslongasthepacketofcigarettesisnotchargedatapricethatdoesnotreflectitscostofproduction or the price of comparable products.

Toensurethatentrytoacompetitionisfree,analternativefreemethodofentrycanbeusedalongside“paytoenter”methods.Detailsofthefreemethodmustbeprominentlydisplayedsothatpotentialentrantsareclearly told that they do not have to purchase something in order to enter the competition. It is usual to use thephrase“nopurchasenecessary”.Thismustbedisplayedonallpromotionalmaterialsandintherulesofthecompetition.Itisalsoessentialthatthesystemforallocatingprizesdoesnotdistinguishbetweenthemethods of entry used.

Can I run a pay to enter competition without including any element of skill as part of the competition? No.A“paytoenter”competitionmustinvolveanelementofskilloritmaybeanillegallottery.Itisacriminaloffence to be involved with an illegal lottery.

“Skill”isnotdefinedintheGamblingActandthereforeeachcompetitionmustbejudgedonitsownmerits. The most obvious form of skill, and one that is widely used in competitions, is the requirement of entrants to answer a question. It has been argued, however, that some questions are so simple that they arebeingusedtodisguisewhatisotherwisea“paytoenter”prizedraw,i.e.anillegallottery.TheGamblingActprovidesthataprocesswillstillbetreatedasstillrelying“whollyonchance”ifthesameamountofpeople participate as would have done if there was no skill required at all. In the explanatory notes to the Gambling Act, the Government illustrated the way in which this provision would operate with the example ofaquestioncompetitioninafishingmagazinewherethevastmajorityofitsreaders“mightreasonablybeexpectedtoknowtheanswer”.Thefactthatthemajorityofnon-readerswouldnotbeabletoanswerthe


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question is irrelevant as they would not generally be in a position to enter the competition in the first place. This puts more pressure on promoters to limit or restrict the number of entrants by setting more difficult questions.

A neat way of incorporating skill into a competition is to require contestants to devise a slogan or to state in nomorethan10wordswhytheydeservetowin,andawardingtheprizetothemostoriginalorwittyentry.However, the process by which the winning slogan is chosen must then be fair.

“Paytoenter”competitionsthatinvolveamixtureofskillandchancearelikelytobelegalaslongasthefirststagedoesnotrelywhollyonchance.Forexample,a“paytoenter”competitionwhichrequiresentrantstoansweraseriesofquestionstoprogresstoarandomprizedrawwillbelegal(providedthatthequestionsinvolvetherequiredlevelofskill).Conversely,ifentrantspaytoenteraprizedrawandthentwonamesare drawn out and each person is required to answer a tie-breaker question to determine the winner, the competition is likely to be illegal because this will be a ‘complex lottery’ as defined in the Gambling Act.

Can I run a competition that involves gaming or betting? If a competition amounts to gaming or betting, the promoter must hold an operating licence in accordance with the provisions of the Gambling Act or they will be committing an offence.

Betting involves making or accepting a bet on:

(a)theoutcomeofarace,competitionorothereventorprocess;

(b)thelikelihoodofanythingoccurringornotoccurring;or

(c) whether anything is true or not.

Predictingtheoutcomeofaneventwithfixedoddsisatypicalformofbetting.A“FantasyFootballLeague”promotion would also amount to betting.

Prizesmustnotbeofferedfortheforecastingofafutureeventorapasteventwheretheresultisnotyetknown,asthiswillamountto“Betting”whichisillegalundertheGamblingAct(unlessitislicensedorfallswithin one of the exemptions).

Gamingisdefinedas“playingagameofchanceforaprize”.A“gameofchance”isagamewhich:

• involvesbothanelementofchanceandanelementofskill;

• involvesanelementofchancethatcanbeeliminatedbysuperlativeskill;or

• ispresentedasinvolvinganelementofchance.


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Under the Gambling Act a game of chance is played if a person participates in a game of chance, whether or not there are other participants in the game and whether or not a computer generates images or data taken to represent the actions of other participants in the game. Therefore, gaming no longer requires a number of participants to be playing against each other simultaneously.

A“gameofchance”doesnotincludeasport.

Is there a risk of a breach of contract action when running promotions? A promotion will amount to a contract between the promoter and each individual participant. So, as well as the possibility of committing a criminal offence there is also a risk of civil proceedings for breach of contract if the promotion is not run correctly. It is important to be sure that the terms and conditions of the promotion are carefully drafted and are complied with by the promoter.

Are there any restrictions on what can be done with customer data gathered from promotions?More often than not, the underlying reason for sales promotions is to gather data from potential consumers fordirectmarketingpurposes.TheDataProtectionAct1998(the“DPA”)governstheprocessingofpersonal data. The provisions of the DPA affect any business that holds information about individuals in the UK. The DPA states that data must be processed fairly and lawfully. Failing to tell entrants that their information will be used for direct marketing purposes is unlikely to be regarded as fair. Although it is not mandatory in the UK to obtain consent before processing personal data, it is often the simplest way to justify processing as ‘fair and lawful’. ‘Consent’ is not defined in the DPA but it usually takes the form of setting out the purposes for which the information is to be used where these are not obvious (for example, for use in future direct marketing). It should also state with whom the information will be shared and include“opt-in”boxesforconsenttousetheinformationfordirectmarketingbythecompanyholdingthepromotion or identified third parties. Please also see the section on ‘Advertising and Selling Online, via Email and SMS’ set out below.

Does the CAP Code contain rules on sales promotions?Yes. A summary of those rules can be found above in the section on Non-broadcast Advertising Regulation.


93Advertising and Selling Online, via E-m

ail and SMS

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Advertising and Selling Online, via E-mail and SMS

Are there any regulations that cover online, e-mail and SMS advertising and sales? The general provisions in the CAP Code apply to online, e-mail and SMS marketing: however, there are also specific UK regulations that govern these areas, including:

• ConsumerProtection(DistanceSelling)Regulations2000(“DistanceSellingRegulations”);

• E-Commerce(ECDirective)Regulations2002(“E-CommerceRegulations”);and

• PrivacyandElectronicCommunications(ECDirective)Regulations2003(“PrivacyRegulations”).

What are the requirements for websites?A website should contain information that identifies who you are, by whom your activities are governed (e.g. registration with a professional or trade body) and your contact details, including a geographical address.

The Companies Act 2006 requires companies to include on their website their name, company number, place of registration and registered office. If the company is a limited company this fact should be stated.

If a website allows for transactions to be made, you will need to ensure that you comply with requirements under the E-Commerce Regulations about the ordering process and the requirements for providing information on the website under the Distance Selling Regulations.

The CAP Code only applies to online advertising in ‘paid for’ space and so will not generally apply to a company’s own website.

What are the requirements when advertising or marketing via e-mail?The Privacy Regulations prohibit you from sending unsolicited marketing emails to individuals unless they have previously consented to such emails being sent. However, there is an exception to this rule if:

a) youobtainedanindividual’scontactdetailsduringthecourseofnegotiationsforasale;

b) thedirectmarketingisinrespectofsimilarproductsorservices;and

c) the individual is given a simple and free means of refusing at the time that the details were first collected and at the time of each subsequent communication.

Emails must be clearly identifiable as marketing communications and they must state who they are from. If an email contains details about a competition or special promotion, any qualifying conditions must be clear and easily accessible. The Privacy Regulations also require that emails (and SMS messages) include a simple and free of charge mechanism to allow the recipient to opt out of receiving future marketing.

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The Information Commissioner has the power to enforce the Privacy Regulations. Breaching the regulations may entitle individuals to compensation and may also be a criminal offence. Directors and other officers may be personally liable, as well as their company, to pay a potentially unlimited fine.

For further guidance on data privacy, please refer to the section entitled ‘Privacy and Confidence’.

What are the compliance requirements for marketing via SMS?There are some key matters that you must keep in mind when marketing via SMS. As with emails, you can only send SMS marketing messages if the recipient has given prior consent. Within the SMS you should also include your identity and provide a valid address to which the recipient can send a message so as to unsubscribe from marketing communications.

The UK government’s Department of Trade and Industry offers guidance on its website about how to comply with the information requirements under the E-Commerce Regulations within the constraints of a mobile phone screen.

There are various guides available to help you comply with the requirements in this area, including:

• InstituteofPractitionersinAdvertising-bestpracticeguidelinesformobilecampaigns;

• DirectMarketingAssociation’scodeofpracticeforSMSmarketing;and

• MobileMarketingAssociation’scodeforresponsiblemobilemarketing.

It is also worth noting that PhonepayPlus regulates premium rate SMS under its Code of Practice.

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isleading Advertisements

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Misleading Advertisements

What rules govern inaccurate or misleading information or claims?There are several codes and pieces of legislation which protect consumers against inaccurate and misleading claims in advertisements. Some such claims attract criminal penalties and so particular care should be taken to ensure that advertisements are compliant.

You may also be sued for negligence, misrepresentation or deceit by a member of the public who can show that they relied on your advertisement and consequently suffered loss. You may be ordered to pay damages and your opponent’s legal costs, as well as your own.

What do the Codes say about misleading advertisements? As mentioned earlier in this booklet, the CAP Code (which applies to non-broadcast advertising), the Television Code and the Radio Code all state that advertisements (and sales promotions) should not mislead. The codes also provide that supporting evidence to substantiate claims or endorsements must be available. In the case of advertisements broadcast on television or radio, the television and radio stations are obliged to ensure that claims or endorsements can be verified before advertisements are broadcast. If the evidence is not available, the advertisement will be deemed to be in breach of these codes.

The sanctions for breaches of these codes are described earlier in this booklet. Essentially, your advertisement must be withdrawn if it is in breach.

Are there any other Codes which apply regarding misleading prices?Yes. The governmental Code of Practice for Traders on Price Indications referred to in the comparative advertising section of this booklet gives guidance on misleading price indications.

What pieces of legislation govern misleading advertisements? ProtectionforTraders:TheConsolidatedDirectiveonMisleadingandComparativeAdvertising(‘CDMCA’)

The CDMCA protects traders against misleading advertisments and the unfair consequences thereof. UnderthetermsoftheCDMCA,advertisingis“misleading”ifitdeceives,orislikelytodeceive,thepersonsto whom it is addressed (or whom it reaches) and which, by reason of its deceptive nature, is likely to affect their economic behaviour. Advertising will also be misleading if it injures or is likely to injure a competitor. In determining whether advertising is misleading, all its features should be taken into account, and in particular any information concerning the characteristics of goods or services advertised, the price or the manner in which the price is calculated and the nature, attributes and rights of the advertiser.

A Handy Guide to UK Advertising and Sales Promotion LawMisleading Advertisements

At the time of writing the CDMCA was due to be implemented in the UK by the adoption of the Business Protection from Misleading Marketing Regulations in May 2008. These Regulations will replace the Control of Misleading Advertisements Regulations 1988 (which implemented previous Directives on misleading and comparative advertising).

Under the draft Business Protection from Misleading Marketing Regulations the OFT and local authority Trading Standards Services are given powers to investigate whether there has been a breach and to take proceedings for an injunction to secure compliance. The court may also order the person in breach to publish a corrective statement. Complaints about misleading broadcast advertisements can also be referred to Ofcom. As a penalty Ofcom can exercise the powers conferred on it in the terms of the relevant broadcaster’s licence.

The Regulations also make it a strict liability criminal offence for a trader to publish misleading advertising with a penalty of a fine and/or a two year prison term. They also provide for defences including due diligence and the innocent publication of advertisements.

Protection for Consumers: The Unfair Commercial Practices Directive (‘UCPD’)The UCPD protects consumers against unfair commercial practices which harm their economic interests. It prohibits a range of unfair commercial practices including ‘misleading commercial practices’. The definition of ‘commerical practices’ covers commercial communications (including advertising and marketing).

A commercial practice will be deemed misleading if:

• itcontainsfalseinformationandisthereforeuntruthful;

• itdeceivesorislikelytodeceivetheaverageconsumerinrelationtooneormoreofanumberoflistedelements (including the nature of the product, its characteristics or price, or the consumer’s rights), even iftheinformationintheadvertisementisfactuallycorrect;

• itconcernsanymarketingofaproduct(includingcomparativeadvertising)whichcreatesconfusionwithanyproducts,trademarks,tradenamesorotherdistinguishingmarksofacompetitor;or

• itconcernsanyfailurebyatradertocomplywithacommitmentcontainedinacodeofconductwhichthe trader has undertaken to comply with.

As well as satisfying one of the above four tests, an advertisement must also be shown to have caused the average consumer to take a transactional decision he would not otherwise have taken if it is to be regarded as misleading.

Omitting certain information may also be regarded as a misleading commercial practice.

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101

At the time of writing the UCPD was due to be implemented in the UK by the adoption of the Consumer Protection from Unfair Trading Regulations in May 2008. The draft Regulations provide for defences including due diligence and the innocent publication of advertisements. The offences carry a maximum penalty of a fine and/or a two year prison term.

Other Legislation The Trade Descriptions Act 1968 (‘TDA’), Consumer Protection Act 1987 (‘CPA’) and the Consumer Credit Act 1974 (‘CCA’) all contain provisions relating to misleading advertisments. However, at the time of writing, it is unclear exactly how these provisions will be affected by the implementation of the Consumer Protection from Unfair Trading Regulations (see above).

Whilst it appears that the section on false and misleading advertisements in the CCA will cease to have effect upon the implementation of the Regulations, it not clear whether the provisions in the TDA and CPA will be wholly repealed or just amended to account for the change in the law. Reference should be made to the final version of the Regulations once they are implemented, but for completeness we set out below the current relevant provisions in the TDA, CCA and CPA.

TheTradeDescriptionsAct1968(‘TDA’)

• Goods - The TDA makes it a criminal offence to apply a false trade description to goods or to supply or offer to supply goods to which a false trade description is applied. For the purposes of the TDA misleading descriptions are deemed to be false descriptions. The offence extends to advertisements and includes not only descriptions of the goods themselves but also any markings placed on packaging or anything in which the goods are supplied or displayed, such as vending machines, display stands and point-of-sale advertising material. The offence also covers oral statements about the goods as well as any other statement likely to be takenasreferringtothegoods;

• Services - It is a criminal offence for any person in the course of any trade or business to make a statement that he knows to be false or recklessly make a statement which is false as to the provision of, the nature of, the time at which, the manner in which or the persons by whom services, accommodation or facilities are provided. “Recklessly”meanswithouthavingregardtothetruthorfalsityofthestatement.

In any proceedings for an offence relating to the publication of an advertisement for goods or services, the defendant will be free from liability if he can prove that:

• theadvertisementwasreceivedandpublishedinthecourseofabusinessinvolvingsuchpublication;and

• hedidnotknowandhadnoreasontosuspectthatthepublicationwouldamounttoanoffenceunder the TDA.


102

This defence protects publishers and also those who arrange for the publication of advertisements. There are other general defences, namely that the offence was due to the fault of another person, or due to a mistake and all reasonable precautions and all due diligence had been exercised to prevent the offence.

The maximum penalty in the Crown Court is two years’ imprisonment and/or an unlimited fine. The maximum penalty in the Magistrates’ Court is a fine not exceeding £5,000 in respect of each offence.

Consumer Protection Act 1987 (CPA) (as amended)This Act makes it an offence to apply misleading price indications to goods, services, accommodation or facilities.

If the price indication was not misleading at the time it was given but later becomes misleading, the person who gave the indication will be guilty of an offence if:

• consumersmightreasonablybeexpectedtorelyontheindicationatatimeafterithasbecomemisleading;and

• thegiveroftheindicationfailstotakeallsuchstepsasarereasonabletopreventthoseconsumersfromrelying on the indication.

A price is misleading if a consumer might reasonably be expected to infer any of the following from it:

• thepriceislessthaninfactitis;

• thepriceisunconditionalwhereasinfactitisconditional(forexampletheadvertisedpriceisonlyapplicabletoonecolour);

• thepricecoversmattersinrespectofwhichanundisclosedextrachargeismade(forexampleachargeforVAT);

• thepriceistobeincreasedorreducedormaintainedwhenthepersongivingtheindicationhasnosuchexpectatione.g.“Pricesreducedby10%,hurryandbuynowbeforepricesreturntonormal”.Thiswillbeaninfringementifpricesarenotexpectedtorise;and

• thefactsbywhichconsumerswouldjudgeacomparisonarenotwhatinfacttheyare.

There is a defence of innocent publication where the price indication is published in an advertisement. A publisher or a person who arranges for the publication of advertisements, and who receives the advertisements for publication in the ordinary course of business, will escape liability if he can show that at the time of publication he did not know and had no grounds for suspecting that the publication would involve the commission of an offence.

There is also protection for the media in respect of editorial comments. Where the price indication is in a book, newspaper, film or broadcast there is no offence, i.e. provided the indication was not in an advertisement.


There is a general defence that all due diligence has been exercised and all reasonable steps taken.

The sanctions are fines. They can be of an unlimited amount if the case is dealt with by a Crown Court but will not exceed the statutory maximum (currently £5,000) in the Magistrates’ Court.

Consumer Credit Act 1974 (CCA) (as amended)The CCA established a new system of licensing and other controls over traders concerned with the provision of credit or the supply of goods on hire or hire-purchase for the protection of consumers.

An advertiser commits an offence if:

• anadvertisementconveysinformationwhichisfalseormisleadinginamaterialrespect;or

• theadvertisersuppliesfalseinformationinthatitstatesorimpliesanintentionthattheadvertiserdoesnot have.

There is a defence under the CCA if the person charged proves that his act or omission was due to a mistake, or to reliance on information supplied to him, or to an act or omission of another person, or to an accident or some other cause beyond his control and that he took all reasonable precautions and exercised due diligence to avoid such an act or omission by himself or a person under his control.

The maximum penalty in the Crown Court is two years’ imprisonment and/or an unlimited fine. The Magistrates’ Court may impose a fine not exceeding £5,000.

Are there special rules for food and pharmaceuticals?Yes. The legislation applicable to the labelling and advertising of food and pharmaceuticals is highly complex. For example, the Food Safety Act 1990 makes it an offence to describe falsely any food or to mislead as to its nature, substance or quality, including its nutritional or dietary value. There are also specific lawscontrollingtheuseofcertaingeographicalnamesinrelationtofoodstuffs-thus“NewcastleBrownAle”canonlybeusedinrespectofalebrewedintheNewcastlearea.

Great care needs to be taken when advertising medicines as well as other products that may be treated as medicines. Health claims for any product require very close scrutiny to ensure that they do not unintentionally fall within the definition of a medicine. This may happen where a product is presented as having properties for treating or preventing disease in human beings even though it is not of a type conventionally regarded as a medicine. Examples include food supplements that claim to strengthen the immune system and a sun block that claims to reduce the risk of skin cancer.

Where a product is treated as a medicine, it must be licensed by the Medicines and Healthcare Products Regulatory Agency (MHRA) and the extent to which it can be advertised and promoted at all will depend on whether it is a prescription only medicine (POM) or a non-prescription medicine, also known as an over-the-

A Handy Guide to UK Advertising and Sales Promotion LawMisleading Advertisements 103

counter (OTC) medicine. This is determined by the MHRA when the product licence is granted. Advertising and promotion of both POMs and OTC medicines is covered by a combination of statutory framework – in particular the Medicines (Advertising) Regulations 1994, SI No.1932 and the Medicines (Monitoring of Advertising) Regulations 1994, SI No.1933 – and self-regulation. This is summarised in the MHRA’s Blue Guide – Advertising and Promotion of Medicines in the UK.

A POM may only be advertised to registered medicinal practitioners and certain other healthcare professionals. The principal instrument of self-regulation for this category is the ABPI Code of Practice for the Pharmaceutical Industry, which is overseen by the Prescription Medicines Code of Practice Authority. OTC products may be advertised to the general public. The main trade association in this area, the Proprietary Association of Great Britain (PAGB), is primarily concerned with this type of product and publishes its Codes of Practice for Advertising Over-The-Counter Medicines. The PAGB operates a pre-publication approval system for member companies’ consumer advertising. It is a condition of membership that all advertising aimed at consumers must be submitted to PAGB for screening and PAGB approval must have been given prior to its release into the public domain. It is the responsibility of each member company to seek fresh approvals when this is necessary. These codes of practice operate in addition to the framework described elsewhere in this guide. Note that an unlicensed medicine may not be advertised and promoted at all.

Great care needs to be taken when advertising medicines. Health claims for any product require very close scrutiny to ensure that they do not mislead consumers. For example, advertisements must not refer to claims of recovery in a misleading way.

Disputes

Disputes

Michael Skrein Carolyn Pepper Emma Lenthall Louise Berg Tania Evans Tina Sany


Commercial


For advice on commercial agreements, digital and othere media please contact Jonathan Berger at [email protected]

Life Sciences



Data Protection

105London Olym

pics 2012

London Olympics 2012

Are there any special restrictions relating to advertising at the London Olympics?As a result of the successful bid for London to host the 2012 Olympics, the Government has enacted legislation that it claims is necessary to comply with its obligations to the International Olympic Committee (the“IOC”).ThisisinadditiontotheexistinglegislationgoverningtheOlympics:TheOlympicSymboletc.(Protection)Act1995(the“1995Act”).TheLondonOlympicandParalympicGamesAct2006(the“2006Act”)aimstopreventunofficialsponsorsfromengagingin“ambushmarketing”,i.e.usinginventiveadvertising campaigns to associate themselves with the Olympics without paying the multi-million dollar pricetagthatcomeswiththegrantof“official”sponsorstatus.

What restrictions were in place before the 2006 Act?The1995Actcovered,andstillcovers,theOlympicAssociationRight(the“OAR”).TheOARisaquasi-trademarkrightwhichconfersontheBritishOlympicAssociation(the“BOA”)exclusiverightstousetheOlympicsymbol,theOlympicandParalympicmottos(“Citius,altius,fortius”and“SpiritinMotion”)andcertain protected words (namely Olympiad(s), Olympian(s), Olympic(s), Paralympiad(s), Paralympian(s) and Paralympic(s)).

A person infringes the OAR if he uses, in the course of trade and without authorisation by the BOA, a “controlledrepresentation”.Thisisdefinedbytheactas:

• arepresentationoftheOlympicSymbol,theOlympicmottooraprotectedword;or

• arepresentationofsomethingsosimilartotheOlympicsymbolortheOlympicmottoastobelikelytocreate in the public mind an association with it, or a word so similar to a protected word as to be likely to create in the public mind an association with the Olympic Games or the Olympic movement.

The concept of association is widely defined to include any contractual or commercial relationship, corporate or structural connection or any kind of financial or other support in connection with the Olympic games or Olympic movement.

Who can bring an action for infringement?An infringement is actionable by the BOA as the owner of the OAR, and it is entitled to all such relief as is available in English law for the infringement of a property right - including the right to seek injunctions.

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108

Are there any defences to infringement?A person does not infringe the OAR by using the symbol, motto or words in accordance with honest commercial or industrial practices, and in a context that is not likely to suggest an association between a person, product or service and the Olympic games or the Olympic movement.

The following actions are specifically excluded from infringement:

• publishingorbroadcastingareportofaneventformingpartoftheOlympicgames;

• publishingorbroadcastinginformationabouttheOlympicgames;

• incidentalinclusionofthesymbol,mottoorwordinaliteraryorartisticwork,soundrecording, filmorbroadcast;and

• inclusionofthesymbol,mottoorwordinthecourseofadvertisingeitherofthefirstorsecond bullets above.

These exceptions do not apply to advertising material that is published or broadcast at the same time as, or in connection with, a report or information broadcast.

Are there any criminal offences under the 1995 Act?It is a criminal offence for an individual to carry out various marketing and commercial acts using a “controlledrepresentation”withaviewtopersonalgain,orwithintenttocauseharmorlosstoanother,without the consent of the BOA. These offences include:

• applyingacontrolledrepresentationtogoodsorpackaging,orselling,distributing,lettingforhireoroffering for sale or hire goods bearing a controlled representation (possession of such goods with a view tocarryingoutanysuchactsisalsoanoffence);

• applyingacontrolledrepresentationtomaterialintendedtobeusedforlabellingorpackaginggoods,asa business paper in relation to such goods, or for advertising goods or using such material in the course ofbusiness(possessionofsuchmaterialwithaviewtocommissioninganysuchactisalsoanoffence);and

• makingorpossessinginthecourseofbusinessanarticlespecificallydesignedoradaptedformakingcopies of controlled representations if the defendant knew, or had reason to believe, that the article had been, or was going to be, used either to produce goods or material for labelling or packaging goods, used as business papers in relation to goods or used for advertising goods.

The penalty for commission of an offence under the 1995 Act is a fine.

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What does the 2006 Act add to the existing legislation?The 2006 Act relates specifically to the London Olympics in 2012. It creates a new statutory body that is responsible for the operation of the 2012 Games: the London Organising Committee of the Olympic GamesandParalympicGames(“LOCOG”).IncludedwithinitsremitistheadministrationofthenewlycreatedLondonOlympicsAssociationRight(the“LOAR”),whichisaneventspecificrightdesignedtoprevent marketers ambushing the 2012 Olympics by using specific words or symbols that are protected under the 2006 Act.

The right created by the 2006 Act is a statutory right that derives from trade mark law and the tort of passing off but is, in practical effect, substantially wider in its scope than both of these. It is intended to afford a very broad and exclusive right for LOCOG to sell to the official Olympic sponsors.

The LOAR confers on those authorised the exclusive right to associate themselves with the London Olympics.

How does an advertiser infringe the right?A person infringes the LOAR by using, in the course of trade and in relation to goods or services, a representation of any kind in a manner likely to suggest that there is an association between the London Olympics and goods or services, or a person who provides those goods or services.

The concept of association is the same as that for the 1995 Act, so it is widely defined to include any contractual or commercial relationship, any corporate or structural connection, or any kind of financial or other support in connection with the London Olympics.

How wide is the right?The explanatory guidance to the 2006 Act suggests that this is far wider than existing trade mark law. Underexistingtrademarklaw,“likelihoodofassociation”isinterpretedbythecourtssoastorequirethepublic to think that the goods or services have the same or an associated origin (and calling the registered trademarktomindisinsufficienttoamountto“association”).Thelistofexpressionsdeemedunderthe2006 Act to give rise to the presumption of infringement of the LOAR suggests that merely calling the London Olympics to the mind of the public in relation to the goods or services would be sufficient to infringe the right. Therefore, all that is necessary for the presumption of infringement is to create a general association with the London Olympics.

Does the legislation provide any examples?The 2006 Act sets out what may be considered an infringement of the LOAR by reference to particular expressions that carry a presumption of infringement.

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Combinations of any of the below will infringe the LOAR:

• anytwoof“Games”,“TwoThousandandTwelve”,“2012”,and“twentytwelve”;or

• anyoftheabovewithanyof“Gold”,“Silver”,“Bronze”,“London”,“medals”,“sponsor”and“summer”.

Are there any defences?A person will not be regarded as suggesting an association between a person, a good or a service and the London Olympics by making a statement that accords with honest practices in industrial and commercial matters, where the representation is incorporated in a context to which the London Olympics are substantially irrelevant.

The use of a registered trade mark in relation to goods or services for which it is registered will not infringe the LOAR. Interestingly, trade marks that are validly registered after the commencement of the 2006 Act in the run-up to the games will also enable this defence to be relied on. Therefore, were a company successfully to register a mark that used a combination of the protected words or visually represented an association with the London Olympics, it could take advantage of the defence when using the mark in the lead up to the games.

The other traditional trade mark defences apply here. In summary these are use of own name and address, use of indications concerning the characteristics of goods or services (such as kind or quality), or use of a representation to indicate the intended purpose of the product or services.

The defences which apply to the OAR also apply (see above).

The“exhaustionofrights”defencecanalsoapply(adiscussionofthisdefenceisoutsidethescopeof this guide).

The burden of proof lies on the alleged infringer to rebut the presumption of an association, or to avail itself of one of the defences.

What is LOCOG’S role?It is for LOCOG to grant the requisite authorisation for the use of the LOAR, and to determine the charges levied for that authorisation. It also falls to LOCOG to manage the enforcement of the legislation. This effectively gives LOCOG the ability to negotiate with potential licensees to use the marks and emblems. The sponsors of the Olympics are licensed directly by the IOC.

Whilstitappearsthatthelegislationisverywidelydrafted,LOCOGhassaidthatitwilltakea“common-sense”attitudetowardstheenforcementoftheLOAR.Todate,noproceedingshavebeencommencedunder either of the Acts, so time will tell what type of infringements LOCOG will choose to enforce.

A Handy Guide to UK Advertising and Sales Promotion LawwLondon Olympics 2012

LOCOG has available to it the civil law remedies that accompany the infringement of a property right (including injunctions).

There are no criminal sanctions, unlike the 1995 Act.

Will this be all of the legislation relating expressly to advertising at the Olympics?Not necessarily. The 2006 Act gives the Secretary of State for Culture, Media and Sport the power to add to the list of what would be deemed to create the necessary association for the presumption of infringement.

Also, the Secretary of State has a broad discretion to enact further regulations relating to advertising and street trading in the run-up to the Games. It is believed that these will be enacted, but closer to 2012 in order to take into account any changes in IOC policy and the location(s) of the various Olympic events.

What existing Olympic trade marks are there?TheBritishOlympicandParalympicTeamLogos,togetherwiththeterms“London2012”and“TeamGB”(as well as a London 2012 logo) have been registered by the BOA as UK or Community Trade Marks. LOCOGhasregisteredtheofficialLondon2012Olympiclogo.Othermarks,suchas“OlympicSpirit”and“Olympiad”havebeenregisteredbytheIOC.Itisexpectedthatthelistofregistrationswillgrowintherun-up to the Olympics, and the usual rules on infringement of trademarks will apply.

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113Index

115A Handy Guide to UK Advertising and Sales Promotion LawIndex

Advertising Standards Authority 7Appeals 14Penalties 12-13References to OFT 13Rules applied 12Scope of regulation 11

Alcohol CAP Code 14Programme sponsorship 73Television and Radio Codes 21

APBI Code of Practice for the Pharmaceutical Industry 104

ASA See Advertising Standards Authority

ASA (B) See ASA (Broadcast)

ASA (Broadcast) 19BACC See Clearcast

BCAP See Broadcast Committee of Advertising Practice

Betting See gaming

BERR See Department for Business Enterprise and Regulatory Reform

BOA See British Olympic Association

Blue Guide 104

Breach of confidence 57-59

British Olympic Association 107-111

Broadcast advertising 19-21

Broadcast Advertising Clearance Centre See Clearcast

Broadcast Committee of Advertising Practice 19

Business Protection from Misleading Marketing Regulations 79,100

CAP 12CAP Copy Advice Team 14

CAP Code 12-15Guidance 14

Cartoon characters 26,85

CCASee Consumer Credit Act 1974

Celebrities 83-86Advertisements and children 26See also, endorsements

ChildrenFood and drink advertising 25-26Sponsorship 73

Clearcast 21

Codes of Practice for Advertising Over-the-Counter Medicines 104 Code of Practice for Traders on Price Indications 80,99

Collecting society 36

Committee of Advertising PracticeSee CAP

Community Trade Mark 47

Comparative advertising 77-81

Consolidated Directive on Misleading and Comparative Advertising 77-79, 99-100

Competitions 87-92

Confidential informationSee breach of confidence

Consumer Credit Act 1974 103

Consumer Protection Act 1987 102-103

Index

116 A Handy Guide to UK Advertising and Sales Promotion LawIndex

Consumer Protection from Unfair Trading Regulations 79,101

Consumer Protection (Distance Selling) Regulations 2000 95

Contempt of court 69

Control of Misleading Advertisements Regulations 1988 100

Copyright 31-39Defences 37Duration 35Employees 34Infringement 36Ownership 34Protection of ideas 34Works protected 33

CPA See Consumer Protection Act 1987

Cybersquatting 50

Databases 59

Data protection 57,92,95

Data Protection Act 1998 57, 92

Defamation 61-66

Department of Trade and IndustrySee Department for Business Enterprise and Regulatory Reform

Design right 41-43

Distance Selling RegulationsSee Consumer Protection (Distance Selling) Regulations 2000

DPASee Data Protection Act 1998

DTISee Department for Business Enterprise and Regulatory Reform

E-Commerce RegulationsSee E-Commerce (EC Directive) Regulations 2002

E-Commerce (EC Directive) Regulations 2002 65,93-96

E-mail 93-96

Endorsements 15,85

Equitable remuneration 36

European Convention on Human Rights 57

Food and drinkAdvertisements and children 23-26Advertising generally 103Food Safety Act 1990 103Sponsorship of programmes 26

Gambling Act 2005 89-92

Gaming 91

ICANNSee Internet Corporation for Assigned Names and Numbers

ICSTISSee PhonepayPlus

IdeasBreach of confidence 58Copyright 34

Independent Committee for the Supervision of Standards of Telephone Information ServicesSee PhonepayPlus

Internet Corporation for Assigned Names and Numbers 50

ITCSee Independent Television Commission

Knocking copy See comparative advertising

Libel 61-66

LOARSee London Olympics Association Right

LOCOGSee London Organising Committee of the Olympics Games and Paralympic Games

London Olympic and Paralympic Games Act 2006 107-111

London Olympics 2012 105-111

London Olympics Association Right 109-110

London Organising Committee of the Olympics Games and Paralympic Games 109-111

117A Handy Guide to UK Advertising and Sales Promotion LawIndex

Look-a-likesSee celebrities

Lotteries 89-91

Madrid Protocol 47

Malicious Falsehood 66

MCPSSee Mechanical Copyright Protection Society

Mechanical Copyright Protection Society 36

Medicines 103-104

Medicines (Advertising) Regulations 1994 104

Medicines and Healthcare Regulatory Agency 104Blue Guide - Advertising and Promotion of Medicines in the UK 104

Medicines (Monitoring of Advertising) Regulations 1994 104

MHRASee Medicines and Healthcare Regulatory Agency

Misleading advertisements 97-104

Moral rights 38

National Lottery etc. Act 1993 89

No purchase necessary 90

OARSee Olympic Association Right

OFCOM 7Licence holders 19Misleading broadcast advertisements 100

Office of Fair Trading 12,100

Office for Harmonization in the Internal Market 47

OHIMSee Office for Harmonization in the Internal Market

Olympic Association Right 107-108

Olympicssee London Olympics 2012

Olympic Symbol etc. (Protection) Act 1995 107

PAGB

See Proprietary Association of Great Britain

Passing off 53

Performers’ rights 38

Performing Right Society 36

PhonepayPlus 27-30

PhonepayPlus Code 29-30Penalties 30

Premium rate services 29-30

Prescription Medicines Code of Practice Authority 104

Price indicationsSee misleading advertisements

Prize draws 90

Privacy 55-59

Privacy RegulationsSee Privacy and Electronic Communications (EC Directive) Regulations 2003

Privacy and Electronic Communications (EC Directive) Regulations 2003 95

Product placement 74

Proprietary Association of Great Britain 104

PRSSee Performing Right Society

RACCSee Radio Advertising Clearance Centre

Radio Advertising Standards Code 19-21Guidance 21Penalties 19-20

Radio Advertising Clearance Centre 21

Radio CodeSee the Radio Advertising Standards Code

Radio regulation 19-21Sales promotions 15,87-92Slander 63

118

SMS 93-96Sponsorship 71-74Subject to availability 15TDASee Trade Descriptions Act 1968

Television Advertising Standards Code 19-21

guidance 21penalties 19-20

Television CodeSee the Television Advertising Standards Code

Testimonials 15

Text messagesSee SMS

Trade Descriptions Act 1968 101-102

Trade libel 66

Trade marks 45-50classes 47domain names 50duration 47geographical restrictions 47infringement 48penalties 49websites 49-50

Trade Marks Registry 47

Unfair Commercial Practices Directive 79,100-101

Websites 49,95

A Handy Guide to UK Advertising and Sales Promotion LawIndex

119A Handy Guide to UK Advertising and Sales Promotion LawNotes

120 A Handy Guide to UK Advertising and Sales Promotion LawNotes

UK Advertising and Sales Promotion LawKey Contacts

Disputes

Michael Skrein Carolyn Pepper Emma Lenthall Louise Berg Tania Evans Tina Sany Tom Webley


Commercial


For advice on commercial agreements, digital and other media please contact Jonathan Berger at [email protected]

Life Sciences



Data Protection

Cynthia O’Donoghue Jeff Rodwell Bob Stankey

For advice on data protection please contact Cynthia O’Donoghue at [email protected]

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Reed Smith Richards Butler is regulated by the Law Society.

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