Quicker, Cheaper and Effective: Proceedings Before the Advertising Standards Authority
These words are music to the ears of all plaintiffs and their attorneys in litigious matters. High Court Litigation has attracted the unfavourable reputation of being extremely expensive, unnecessarily lengthy and more than often not culminating in a satisfactory result for the plaintiff.
Advertising is the essential vehicle through which a trade mark proprietor promotes a brand and aims to increase awareness of the brand in the minds of the public. In the same vein it is frequently through advertising that an infringer aims to exploit and take advantage of the goodwill and reputation which a trade mark proprietor has acquired in a brand.
There is, however, some light at the end of the tunnel for trade mark proprietors whose rights are being infringed. Such a proprietor can lodge a complaint before the Advertising Standards Authority ("the ASA"). The ASA is a voluntary self regulating body in the advertising industry that ensures all advertisements conform to agreed upon and acceptable criteria, which are set forth in the Code of Advertising Practice ("the Code"). The Code is based on the International Code of Advertising Practice as prepared by the International Chamber of Commerce thus ensuring that the Code is in line with international advertising principles.
The ambit of the Code is broad in that it applies to all types of advertising including print advertisements in the form of packaging and labels as well as broadcast and aural advertisements. Although the Code does not make specific reference to registered trade marks per se, there are several guidelines, which if contravened, can be relied upon by a trade mark proprietor in a complaint before the ASA.
While the Code sets forth extensive criteria and conditions to which an advertisement must comply, the contravention of the following criteria frequently forms the basis of a complaint:
Truthful presentation -
The content of the advertisement must be a truthful presentation of the factual situation vis-a-vis the product/services advertised. The advertiser must ensure that it is in a position to provide substantiation for all objective claims made by it, at the time that the advertisement flighted. The underlying premise is that an advertiser cannot make a claim which is capable of objective substantiation without being in a position to provide evidence confirming its entitlement to make such a claim, failing which the public will be misled.
If an advertisement contains a value judgment, a matter of opinion or a subjective assessment then such a claim will be acceptable provided that it is clear that same is being expressed as an opinion and that there is no likelihood of the opinion or the way it is expressed, misleading consumers about any aspect of the product or services. The guiding principle here is that "puffery" is acceptable when an expression of opinion but objectionable when viewed as an expression of fact. The dividing line between the two is more than often not overtly clear and consideration must be given to the context in which the claim is made.
Advertisements must not take advantage of the advertising goodwill relating to a trade name or symbol of the product or service of another, or advertising goodwill relating to another party's advertising campaign or advertising property, unless the prior written permission of the proprietor of the advertising goodwill has been obtained. Proprietors are at liberty to and frequently do base their complaint on the contravention of this guideline. Frequently trade mark infringers use in their advertisements, a trade mark which is the same or similar to that of the trade mark proprietor or adopt packaging for their product bearing a getup which is the same or similar to that used by a proprietor, undoubtedly with the intention of unjustly reaping the benefits of another's justly earned reputation.
The test in assessing whether or not there has been a contravention of the Code in this regard is, inter alia, whether there is the likelihood of confusion and/or deception arising amongst members of the public who see or hear the advertisement as well as whether there has been a diminution of advertising goodwill. Not only can a proprietor who has a registered trade mark or symbol which has been copied by a competitor lodge a complaint alleging contravention of this guideline, but so too can a proprietor who while not having a registered trade mark has acquired through both use and time a reputation and goodwill in a trade mark, symbol or getup at common law. In both instances and while a proprietor will have to provide evidence of such a reputation, the quantum of evidence provided and the onus of proving such reputation and goodwill is generally lighter than if such a proprietor proceeded in the High Court and sued for passing off.
An advertiser must not copy an existing advertisement, local or international or any part thereof in a manner that is recognisable or clearly evokes the existing concept of that advertisement and which may result in the likely loss of potential advertising value. Here the Code seeks to punish the copying of original intellectual thought. Once again this is a common ground of complaint used by proprietors particularly where another imitates the getup of their packaging and/or labels affixed to their products.
There can be a finding of imitation irrespective of the existence of a likelihood of confusion and/or deception and even if the existing concept which is being imitated has not been generally exposed to the public. In assessing such a complaint the ASA will have regard as to how the advertiser came to the concept or idea used by it in the advertisement complained of.
Comparative Advertising -
The Code permits comparative advertising provided that such advertising conforms to several criteria, one of which it is prudent to highlight, namely, that the advertisement does not infringe the provisions of the Trade Marks Act. In the era prior to the Supreme Court of Appeal decision, Verimark vs BMW AG, a trade mark was infringed even if an advertiser merely made reference in its advertisement to the proprietor's trade mark albeit that same was merely used for comparison purposes. The BMW case has altered this position in that the judgment postulates that the use of another's trade mark purely for descriptive purposes will not create an impression of a material link between the product and the trade mark owner and there is therefore unlikely to be an infringement. Proprietors intent on lodging a complaint based on this section are well advised to ensure that the use of the trade mark in the advertisement does not fall within the ambit of use in the BMW case.
Once a proprietor believes that there has been a contravention of the Code it can itself prepare the complaint, and lodge same with the ASA or can do so with the assistance of an attorney. A distinction is drawn between competitor and consumer complaints which are dealt with by separate bodies at the ASA. It is not mandatory that a letter of demand precede the lodgement of a complaint which complaint can be lodged via fax, post, e-mail or delivery. Consumer complaints are handled free of charge whereas competitor complaints do attract a lodgement fee payable upon lodgement of the complaint. The present lodgement fee in the sum of R7 923,00, is attractive when compared with the cost of preparing founding papers to pursue an application in the High Court. Complaints whether competitor or consumer must be lodged within ninety days of the flighting of the advertisement against which the complaint lies.
Once a complaint is lodged it is considered expeditiously by the Directorate and a complainant can expect a decision in writing within 1-2 months. An aggrieved party has the option of appealing against the decision of the Directorate to the Advertising Industry Tribunal ("the Tribunal") which considers appeals relating to competitor complaints or the Advertising Standards Committee ("the Committee") which considers appeals relating to consumer complaints. The Tribunal/Committee considers the appeal and a date is set for the meeting of such body at which the appeal is considered. The complainant and the respondent as well as their respective advertising agencies are entitled to appear. At this level, however, and while an attorney can assist in preparing the appeal and/or the reply to such an appeal, a corporate entity is not entitled to be represented at the meeting by independent contractors such as advocates and attorneys. Once again the decision of the Tribunal/Committee is received within about 1-2 months. An aggrieved party has the right to finally appeal to the Appeal Committee and at the hearing of this body is entitled to be represented by an attorney or counsel.
The time periods within which an appeal can be lodged are relatively short, namely, ten days from date of receipt of the Directorate's ruling and twenty days from date of receipt of the ruling of the Tribunal or the Committee. This expedites the entire process and a complainant can expect to receive results within a matter of months even if the matter proceeds the entire way to the Appeal Committee. It is noteworthy that unlike in High Court proceedings, the lodgement of an appeal by an aggrieved party does not automatically suspend the operation of the order against which an appeal lies. Specific application must be made to the Appeal Committee requesting suspension of the sanction imposed pending the outcome of the appeal.
All too often a plaintiff obtains a favourable judgment but experiences difficulties in securing fulfilment of the judgment from the other party. Certain of the sanctions imposed by the ASA have noteworthy impact on the activities of the transgressor and include, inter alia:
Withdrawal of the advertisement in its current format. Offending advertising must be withdrawn from every medium in which it appears, even if the complaint did not specifically refer to that particular medium. The Code specifies various timeframes for the withdrawal of different types of advertisements namely.
Newspaper, magazine, radio and television advertisements must be withdrawn immediately as deadlines permit; Outdoor advertisements must be withdrawn within 2 weeks or as determined by the ASA; Pamphlets, posters and leaflets must be withdrawn within the time period as determined by the ASA; Packaging must be withdrawn within 3 months or as determined otherwise by the ASA.
Amendment of the advertisement to an acceptable format and submission to the Association for Communication and Advertising Advisory Service for pre-publication advice.
Where more than one adverse ruling has been made against a transgressor by the ASA within a period of 12 months then such a respondent may be required to submit all future advertisements to the Association for Communication and Advertising Advisory Service at its own cost prior to publication thereof. This has fairly onerous consequences, especially from a cost point of view.
If an advertiser ignores a reasonable request for co-operation with a ruling then the ASA will issue an ad alert to all its members, which include all newspaper, magazine, radio and television media advising of the latter. The media supports the Code and will then not accept advertising against which an ad alert has been issued. The latter impacts on the business of the respondent and is expected to leave the complainant with a feeling of retribution.
Recently the Business Report stated that last year consumer complaints were more prevalent than competitor complaints before the ASA. Proprietors and competitors need to seriously consider proceeding before the ASA where circumstances permit. While the grounds upon which a complainant can institute a complaint are more restrictive than the grounds upon which one can proceed in the High Court, if there have been a breach of the Code then a proprietor would be well advised to proceed before the ASA and benefit from lower costs and achieving a quicker and effective result.