ACCC bares its teeth for Christmas

by

The Australian Competition and Consumer Commission (‘ACCC’) has celebrated the start of the holiday season with another high-profile win, again reminding advertisers of the risks associated with running misleading advertisements. The ACCC has recently taken on large market players such as Reckitt Benckiser, ANZ Bank and Macquarie Bank, which have been ordered to pay sizeable penalties for contraventions of the Competition and Consumer Act 2010 (‘CCA’) including in relation to consumer law breaches and anti-competitive practices.medications-money-cure-tablets-50997

With a review of the Australian Consumer Law currently underway, ACCC Chairman Rod Sims has made the regulator’s position quite clear, stating that “the ACCC will continue to advocate for higher penalties for breaches of Australia’s consumer laws to ensure that they act as an effective deterrent and are not simply viewed as a cost of doing business”.  

Here is a brief summary of the ACCC’s recent wins:

Nurofen ordered to pay $6million for Specific Pain products

Reckitt Benckiser was found to have engaged in misleading or deceptive conduct by making representations on its website and product packaging that Nurofen Specific Pain products were each formulated to specifically treat a particular type of pain, when this was not the case. The ACCC appealed the initial penalty of $1.7million successfully, with an order of $6million recently handed down by the Federal Court, better reflecting the desired deterrent effect. Justices Jagot, Yates and Bromwich stated in their decision that the objective of this penalty was to “ensure that Reckitt Benckiser and other ‘would-be wrongdoers’ think twice and decide not to act against the strong public interest”.

ACCC wins High Court appeal in Flight Centre price-fixing case

The ACCC brought proceedings against Flight Centre, alleging it engaged in anti-competitive behaviour by attempting to induce three international airlines to enter price-fixing arrangements. After appeals by both parties, the ACCC successfully sought leave to the High Court which determined in favour of ACCC, affirming that Flight Centre was guilty of the alleged anti-competitive conduct. The matter will return to the Full Federal Court for determination of penalty appeal and cross-appeal brought by the parties.

ANZ & Macquarie pay for attempted cartel conduct

Both ANZ Bank and Macquarie Bank, following their own admissions, were found guilty of multiple instances of attempted cartel conduct in their efforts to influence the benchmark rate for the Malaysian ringgit. Accordingly, the Federal Court has imposed penalties of $9 million and $6 million against ANZ and Macquarie respectively. The banks have also been ordered to contribute to the ACCC’s costs.

If you have concerns of misleading or deceptive representations, we recommend any marketing campaigns or advertising be subject to legal clearance. If you require assistance, please do not hesitate to get in touch.

Dulux’s claims about cooling benefits of its paint products found to be misleading

by

Dulux has been ordered to pay a pecuniary penalty of $400,000 for advertising misleading claims that paint products reduced the interior temperature of homes in Australian Competition and Consumer Commission v DuluxGroup (Australia) Pty Limited (No 2) [2016] FCA 1286.dulux

In the final proceedings to the action brought by the ACCC against DuluxGroup (Australia) Pty Limited (Dulux), the Federal Court has ordered that Dulux engaged in misleading or deceptive conduct and made false or misleading representations in relation to two types of paint, InfraCOOL roof paint and Weathershield Heat Reflect exterior wall house paint, when Dulux were unable to substantiate these claims and therefore did not have reasonable grounds to make such claims.

Claims made by Dulux

Dulux made various claims about the cooling performance benefits of these two products on promotional material in-store, on colour cards and on paint tins, on Dulux webpages including their Facebook and website, in major regional newspapers across Australia, and in television and magazine advertisements.

The products were claimed by Dulux to differ to standard roof paint and standard exterior paint as the standard paints did not include pigments which reflected infrared radiation. The specific cooling performance representations claimed were:

  • That the Dulux InfraCOOL paint could and would:
    • reduce the interior temperature of the living zones of a house by 10°C;
    • significantly reduce the energy consumption costs associated with a house; and
    • significantly reduce the carbon footprint, or environmental effect, associated with a house by reducing energy consumption costs associated with a house.
  • That the Dulux Weathershield Heat Reflect paint could and would:
    • reduce the surface temperature of the external walls of a house by up to 15°C;
    • significantly reduce the interior temperature of a house; and
    • significantly reduce the energy consumption costs associated with a house.

Australian Consumer Law

Section 18 of the Australian Consumer Law, found at Schedule 2 to the Competition and Consumer Act 2010 (Cth), (ACL) provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Section 29(1)(i) of the ACL provides that a person must not, in trade or commerce, in connection with the supply or promotion of goods or services, make a false or misleading representation that goods or services have performance characteristics, accessories, uses or benefits.

In order to ensure that a business does not breach section 18 or 29, any claims in advertisements need to be substantiated through evidence. Evidence must be recent, robust, relevant, objective, proximate (i.e. recent), must directly support the claims and take-outs, and originate from a reputable source with a degree of independence to ensure that the claims can be substantiated. If this is not achieved, then a false impression may be created, false or inaccurate claims may be made, important information may be omitted, and consumers may be lead to a wrong conclusion which may amount to a breach of sections 18 and 29 of the ACL.

Evidence relied on

Dulux were unable to prove that they had reasonable grounds to make the representation regarding the cooling performance characteristics of their products. During the proceedings, Dulux admitted that it did not have reasonable grounds in which to make the claims regarding the InfraCOOL product as, although some tests were conducted, particularly tests on the exterior surface temperature and work area beneath the roof, it did not conduct or obtain any studies or tests on the effect of the InfraCOOL product on interior temperatures. In relation to the Weathershield Heat Reflect exterior wall house paint, whilst some tests were conducted which assessed the performance characteristics of the paint, and academic articles regarding heat reflective paint were consulted, Dulux did not carry out any tests which could show that use of the Dulux product actually reduced room temperature when compared to standard paint.

Remedies

The Federal Court found that Dulux’s conduct amounted to the “lower to middling range of seriousness“.  In addition to Dulux being ordered to pay a pecuniary penalty of $400,000 and contribute to ACCC’s costs, the Court ordered publication orders that Dulux correct the misleading advertising on their website and in The Australian newspaper. Dulux also gave the following undertakings to the Court that for three years, whether by itself, its servants or agents, that it would represent, in trade or commerce, that:

(A) applying heat reflective paint to the roof of a house can reduce the interior temperature of the living zones of that house by up to 10 degrees Celsius;

(B) applying heat reflective paint to the exterior walls of a house can and will reduce the surface temperature of those walls by up to 15 degrees Celsius; or

(C) applying heat reflective paint to the exterior walls of a house can and will significantly reduce the interior temperature of that house;

unless it:

(D) has reasonable grounds for making the particular representation; and

(E) clearly and prominently explains the environmental, structural and other factors that may reduce the effect of applying heat reflective paint to a normal house in realistic conditions.

Implications for advertisers and brands

Agencies and brands need to ensure that any claims made in advertising can be substantiated through appropriate evidence. Such evidence must be recent, robust, relevant, objective, must directly support the claims and take-outs, and, depending on the nature of the claims, originate from a reputable source to ensure that the claims can reasonably be substantiated. Consumer law compliance can often be assisted through disclosures made in the advertising itself, including by way of carefully prepared elucidators that appropriately inform consumers.

Update to trade mark fees

by

IP Australia has made changes to fees for the trade mark application process. Before 10 October 2016, it cost $200 per class per trade mark to file a trade mark application, and if the trade mark was accepted, $300 per class per trade mark for registration.copyright-1345867_1920

From 10 October 2016, under the new fee structure only one fee is payable and the trade mark application process is as follows:

  1. applicants pay a fee when they submit a trade mark application (per class per trade mark);
  2. the pending trade mark will then be examined by IP Australia;
  3. if the pending trade mark complies with all requirements of the Trade Marks Act and Regulations, the trade mark will be advertised and accepted;
  4. if no opposition is filed in the 2 month opposition period, or if opposition is decided in favour of the applicant, the trade mark will then be automatically registered.

Please note that if your organisation has already filed a trade mark application prior to 10 October 2016 and subsequently the trade mark is registered, you will still be required to pay the former registration fee (per class per trade mark).

Updated trade mark application fees

The majority of trade mark application fees will increase by $130 per class to partially offset the removal of the $300 registration fee.

Description: Former fee: New fee:
TM Headstart (pre-application service) new request – per class $120   $200
TM Headstart (pre-application service) new representation – per class $120   $150
TM Headstart (pre-application service) additional class fee – per class $120   $200
TM Headstart (pre-application service) Part 2 fee – per class $80   $130
Trade mark application – without picklist per class $200   $330
Series trade mark application – without picklist per class $350   $480

 

Updated trade mark renewal fees

Description: Former fee: New fee:
Trade mark renewal (online services fee) – per class $300 $400
Trade mark renewal (fee by other means) – per class                                        $350 $450
Madrid import renewal – per class $300 $400

The TM renewal fee will increase by $100 to partially offset the removal of the $300 registration fee.

 

Updated trade mark extension of time to pay late renewal fees

Former fee: New fee:
$100 per class per month or part thereof from the renewal due date $100 per month or part thereof from the renewal due date

The extension of time to pay late renewal fees will apply per trade mark for each month or part of a month from the renewal date – not per class.

The impact the above changes have is that there will be higher upfront costs, but no costs to pay upon registration. As a result of the changes, agencies and clients alike should be mindful of the above costs for budget purposes for brand protection involving trade mark applications.

Update to unfair contract terms in small business contracts

by

New laws will apply to protect small businesses from unfair contract terms in standard form contracts entered into or renewed on or after 12 November 2016. The laws will apply where:

contract

  • the contract is for the supply of goods or services or the sale or grant of an interest in land; and
  • at the time the contract is entered into, at least one of the parties to the contract is a small business; and
  • the upfront price payable under the contract is no more than $300,000 OR $1 million if the contract is for more than 12 months.

What is small business?

A small business is a business that employs less than 20 people (including casual employees if the casual employee is employed on a regular and systematic basis).

What is a standard form contract?

Although not defined by the new laws, a standard form contract is typically one that has been prepared by a party to the contract that is not subject to negotiation between that party and the other party to the contract. Such contracts are offered on an ‘as-is’ basis. Standard form contracts are most commonly used for the supply of goods and services.

What are unfair contract terms?

Examples of terms that may be unfair include the following:

  • terms that enable one party but not another to avoid/limit their obligations under the contract
  • terms that enable one party but not another to terminate the contract
  • terms that enable one party but not another to vary terms of the contract
  • terms that penalise one party but not another from breaching/terminating the contract

Who decides that a contract term is unfair?

Only a court of tribunal can ultimately decide that a term is unfair.

What is the test for “unfairness”?

The test for unfairness involves three limbs, and states that a term of a contract is unfair if:

  1. it would cause a significant imbalance in the parties’ rights and obligations arising under the contract; and
  2. it is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term; and
  3. it would cause detriment (financial or otherwise) to a party if it were to be applied or relied on.

What happens when a contract term is deemed unfair?

If a court or tribunal finds that a term is unfair, that term will be void and therefore not binding on the parties. The rest of the contract will continue to bind the parties to the extent that the contract is capable of operating without the unfair term(s).

Are any contracts or terms not covered by the unfair contract terms law?

Excluded contracts:

  • Contracts entered into before 12 November 2016 (unless the entire contract is renewed on/after this date OR a term of the contract is varied on/after this date [the laws apply to the varied term])
  • Shipping contracts
  • Constitutions of companies, managed investment schemes or other kinds of bodies
  • Certain insurance contracts (e.g. car insurance)

Excluded terms:

  • Terms that define the main subject matter of the contract
  • Terms that set the upfront price payable
  • Terms that are required or expressly permitted by a law of the Commonwealth, state or territory (e.g. permitted under the Franchising Code or another prescribed industry code)

How may this impact your business?

  • If your business is contracting with a small business, it is important to ensure that your standard form contracts for the supply of goods or services do not contain any unfair terms. The ACCC has confirmed that from 12 November 2016, they will have the option to take enforcement action if necessary relating to unfair contract terms protections in relation to goods and services (excluding financial products and services).
  • If you are a small business and feel that a standard form contract that has been provided to you contains unfair terms, contact us for further advice as to its unfairness and options as a small business.

The ACCC have confirmed that the following industries will be subject to their initial compliance activities with the new laws: franchising, retail leasing, advertising services, telecommunications services and independent contracting. As such, contact us if you have any queries relating to contracts and unfair terms.

ASB considers William Hill advertisement for breach of the AANA Wagering Code

by

Wagering and sportsbetting is a large industry in Australia; however, irresponsible gambling can have damaging effects. As such, the Australian Association of National Advertisers (‘AANA’) has implemented the AANA Wagering Advertising & Marketing Communication Code (‘the Code’) to ensure that advertisers and marketers uphold a “high sense of social responsibility” when advertising wagering products and services in Australia. The Code was implemented on 1 July 2016 to add to the existing AANA codes, which includes the overarching Code of Ethics. pexels-photo-158976More recently, the Advertising Standards Board (‘ASB’) considered its first complaint under the Code with a William Hill television advertisement in question.

The Code

The Code applies to all licensed operators of wagering products or services, and covers advertising and marketing communications for betting on horse races, harness races, greyhound races or sporting events; as well as betting on a series of races or events. It also covers betting on fantasy sport teams, odds compilation, and tipping services. However, it does not include gaming, such as casino or electronic gaming machines, keno, lotto and lottery products, or trade promotions.

Similarly to other AANA codes, the Code applies equally to print, digital, television and other forms of media. The Code outlines 9 restrictive provisions including prohibiting advertising or marketing communications that are targeted to minors or feature minors, and communications that link wagering with alcohol. Among these provisions includes Section 2.5 of the Code which provides that communications “must not state or imply a promise of winning”; this was the key issue in the ASB’s determination of the William Hill complaint.

ASB Determination

The television advertisement promoted William Hill’s special ‘money back offer’ and featured visuals of racing and sporting events. The complaint was that the advertisement conveyed the message that you cannot lose from gambling “giving vulnerable individuals the idea that when you bet you pretty much can’t lose”. The ASB identified that this may be in breach of Section 2.5.

In its determination, the Board noted that the advertisement does not claim that you will win, but rather, that you will get money back if you lose. Furthermore, the Board considered that the offer to get your money back does not amount to ‘winning’ as there are conditions attached to the offer. The Board also considered the advertisement served a purpose to compare the difference between other ‘special offers’ and William Hill’s special ‘money back offer’ which refunds cash rather than betting credits.

Ultimately, the Board determined that the advertisement did not state or imply a promise of winning and thus did not breach Section 2.5 of the Code. As such, the complaint was dismissed.

Take Outs

Agencies and marketers that are looking to promote wagering products or services in Australia need to be mindful of the Code given that the ASB has the power to seek to remove, or modify, anything that is not in accordance with the specified requirements.

Telstra’s ‘Go To Rio’ campaign cleared by the Federal Court

by

With the 2016 Rio Olympic Games underway, many have been caught up in the hype and excitement of the world’s biggest sporting event. However, Telstra’s Olympic fever landed them in Federal Court with the Australian Olympic Committee (‘AOC’), which alleged Telstra had engaged in ambush marketing in its recent ‘Go To Rio’ campaign and associated promotions.medal-646943_1280

The dispute centred largely around one television advertisement which featured the protected expressions ‘Olympics’ and ‘Olympic Games’, describing the telco as the “official technology partner of Seven’s Olympic Games coverage”, and was generally themed around the upcoming Games. After the AOC initially expressed concern, Telstra amended the advertisement to include a text disclaimer that they were not an “official Olympic sponsor”. Despite this, the AOC still sought to stop the campaign from running, contending that it contravened section 36 of the Olympic Insignia Protection Act 1987 (Cth) (‘the Act’) which protects the commercial use of Olympic properties, and also amounted to misleading and deceptive conduct, or conveyed a false misleading representation, under section 18 and section 29 respectively of the Australian Consumer Law (‘ACL’).

The court ultimately found that Telstra’s campaign merely demonstrated their sponsorship arrangement with Seven, who is the official broadcaster for the 2016 Rio Olympic Games, and was not in contravention of the Act or the Australian Consumer Law.

The Olympic Insignia Protection Claim

Under section 36 of the Act, in order to use protected Olympic expressions for commercial purposes, a licence must be granted from the AOC. There was no question that Telstra had in fact applied protected Olympic expressions without a valid licence; the crux of the dispute was whether Telstra’s promotions and advertisements amounted to commercial use. Under section 30 of the Act, commercial use would be made out if Telstra’s advertisements and related promotions would suggest to a reasonable person that Telstra was a sponsor of, or provided sponsorship-like support, to bodies or individuals associated with the Rio Olympic Games.

Relevantly, when considering Telstra’s television advertisement, the court took into account that while the Olympic Games provided the underlying theme or story of the advertisement, the advertisement itself made no express mention or reference to the International Olympic Committee (‘IOC’), the AOC or any Australian Olympic athletes, let alone express reference to a sponsorship arrangement between Telstra and any of these bodies. It was also relevant to the court’s decision that the advertisement did not feature other protected assets such as the five ring symbol or the torch.

Ultimately, the court determined the critical question was whether the advertisement made it sufficiently clear that Telstra’s sponsorship-like arrangement was with Seven, and not any Olympic body. The court decided that while the original advertisement was “borderline”, on the balance of probabilities, the revised advertisement did not “cross the line” to suggest to a reasonable person that Telstra was a sponsor of the Olympics or any Olympic body, but rather sufficiently conveyed the commercial arrangement between Telstra and Seven.

Australian Consumer Law Claim

In regards to the AOC’s claim for a false or misleading representation, and misleading and deceptive conduct, the court considered firstly that the viewership of the television advertisement was likely to be “very broad and wide-ranging” and the advertisement itself was inherently transient in nature. Furthermore, it was likely that the viewer would only take in the main message or theme of the advertisement, observing it casually and subject to distraction.

Secondly, the court found the key question for determining whether Telstra’s marketing efforts amounted to a false or misleading representation was whether they conveyed, or were likely to convey, to a reasonable person that Telstra had some form of sponsorship, licencing or affiliation arrangement with an Olympic body or the Olympic Games. While this test was similar to the Olympic Insignia Protection Claim, the court stated that the ACL claim was more concerned with the “overall impression” conveyed by the ‘Go To Rio’ campaign.

The court found that it was unlikely a reasonable person would regard Telstra as directly affiliated with any Olympic body or the Rio Olympic Games, and thus Telstra’s campaign did not convey a false or misleading representation. Furthermore, the court held that the AOC failed to demonstrate to the requisite standard that Telstra’s conduct was misleading or deceptive.

Overall, the court considered that it would be unwarranted to prevent Telstra from promoting its arrangement with Seven and it would be difficult to promote it without using the protected expressions or by making reference to the Olympic Games. Ultimately, the court found that while there was no doubt that Telstra intended to capitalise on the forthcoming Rio Olympic Games and foster some sort of connection, it had done so by effectively promoting its sponsorship arrangement with Seven in relation to Seven’s Olympic broadcast, rather than with an Olympic related body or with the Olympic Games directly.

Given neither of the AOC’s claims were made out, the application was dismissed with costs.

Lessons learned for marketers

This ruling provides some valuable guidance for marketers who want to leverage Olympic assets. While Telstra’s campaign has been allowed to run, this is not to say marketers can blindly use protected expressions. Telstra was in a unique position due to its commercial arrangement with Seven and therefore had valid reason to be using protected Olympic expressions in order to promote that relationship.

Ultimately, marketers must ensure they do not “cross the line” by creating advertisements that suggest to a reasonable person a sponsorship arrangement or sponsorship-like support of the games, any Olympic related bodies or its members, if such an arrangement does not exist. Whilst the court has established that this test is not to be “over-intellectualised”, brands “walk a fine line” when employing Olympic assets and caution should be exercised.

Who owns your #hashtags?

by

Hashtags have become a powerful social media marketing weapon in the battle for consumer attention and brand engagement online. Thanks to the indexing power of the lowly hash symbol (#) on social media, it is now common for hashtags to take centre stage in the development and execution of advertising campaigns as a tool that can place a brand at the centre of customer conversations.HASHTAG

But while marketers and brands have been effective early adopters of hashtags, the law, as always, has been slow to adapt. In the world of intellectual property and marketing law, the hashtag phenomenon has numerous implications, raising interesting questions such as who ‘owns’ hashtags and how does the law help brands to protect them.

What is a hashtag?

For those who are late to the party, a hashtag is simply a keyword or phrase preceded by the hash symbol (#). Their use was popularised in social media by Twitter when the platform formally adopted hashtags as a means of indexing tweets. They are now a feature of most social media platforms, including Instagram and Facebook. Hashtags categorise messages by aggregating all posts with the same hashtag in real-time, allowing users to search and view related content, for example, to pick some of our favourite topics, #copyright or #defamation (we admit it, we are #nerds).

Hashtags are commonly used to describe or ‘label’ a social media post, for example, someone interested in flying might use the hashtag #pilot. Hashtags also often take on a life of their own and go beyond mere descriptors. For example, hashtags have sometimes become the de facto slogans or taglines at the centre of many online conversations and social media movements, such as the recent #destroythejoint and #illridewithyou movements in Australia, acting as a loudspeaker amplifying the conversation.

How are marketers using hashtags?

The power of hashtags as an indexing tool has not been lost on savvy brands and their marketing agencies, who have witnessed online conversations develop organically around popular hashtags, without the need for excessive media spending. Developing a ‘viral’ hashtag that leads to increased engagement, traffic and sales can be thought of as the holy grail of social media marketing.

Encouraging the growth of popular hashtags is also big business, with a growing number of brands and agencies partnering with increasingly powerful social media influencers – ‘trend setters’ with large followings on social media – who are paid to post content about the brand’s products and services and get the social media conversation started. Effective hashtag campaigns can also have public relations value, with ‘viral’ campaigns commonly the subject of news reports in the mainstream media, expanding a brand’s reach even further.

There are countless examples of where brands and other organisations have done it well. Famous recent examples include:

  • #SFBatKid, where the city of San Francisco was transformed into Gotham City to grant a Make-A-Wish dream for a 5-year-old cancer patient, who became BatKid and had to save the city from villains while millions of people followed along on social media using the #SFBatKid hashtag. The #BatKid and #SFBatKid hashtags were reportedly tweeted more than 545,000 times in three days and Make-A-Wish saw an enormous boost in website traffic during the peak of the campaign.

 

  • Calvin Klein’s #MyCalvins campaign, which encouraged Instagram users to upload photos in their Calvin Klein underwear with the hashtag #MyCalvins. As part of the campaign, the brand engaged more than 100 social media influencers to contribute to the hashtag, boosting the conversation. The campaign generated over 179,000 photos and proved effective in capturing attention and encouraging online engagement.

 

  • The Air New Zealand and Qantas #AirlineWager campaign, which saw the rival airlines agree to a ‘friendly’ wager over the result of the 2015 Rugby World Cup final, with the loser’s staff to wear the winning team’s uniform the day after the match (unfortunately for the Aussies, the #allblacks won – you can see the results here. The campaign was covered extensively in the press without the need for any media expenditure.

 

Social media platforms: the rules of engagement

The popularity of hashtags as a marketing tool has developed as a result of their role as an indexing system on social media. While the system itself is owned by the relevant platform, specific hashtags are generally subject to the same ownership rules as other content posted on social media.

Generally speaking, social media platforms do not claim ownership of user content, but their terms of use usually include a licence for the platform to use the content in certain, and often very broad, ways. Instagram, for example, expressly states in its Terms of Use that “Instagram does NOT claim ANY ownership rights” in content posted on Instagram, but users do grant to Instagram a non-exclusive, fully paid and royalty-free, worldwide, limited license to use the content in any media formats through any media channels (other than content that is not shared publicly, which will not be distributed outside Instagram).

While the social media platforms themselves do not claim ownership over the actual wording of a particular hashtag, the person who creates the hashtag does not automatically have the exclusive right to use it. Such a claim could only be made where the relevant creator can establish a legal ownership right, such as via copyright or a trade mark law. None of the major social media platforms impose rules on the ways in which hashtags can to be used, other than limitations on some platforms on the number of hashtags that can be used in each post. Given that neither the social media platform nor the author of the hashtag may be able to claim legal ownership of the hashtag, the result is a Wild West scenario where brands can create their own hashtags, co-opt already popular hashtags or seek to undermine competitor hashtags, seemingly all within the rules of the platform.

This lack of clarity in the social media platform terms of use does not mean brands should be too gung-ho about attempting to hijack or dilute a competitor’s hashtag. Risks may still arise out of this conduct, including the potential for trade mark infringement or misleading or deceptive conduct, which in turn may place the brand seeking to undermine a competitor in breach of the platform’s terms of use.

On Instagram, for example, all users warrant that posting content to the platform does not violate the rights of any person, including any intellectual property rights. If a brand is able to assert a legal ownership right over a particular hashtag, such as by way of trade mark registration, it is arguable that a competitor who uses that hashtag to seek to undermine the competition may find themselves in breach of Instagram’s terms of use and the subject of a complaint (not to mention possible legal action for trade mark infringement).

Similarly, as part of Instagram’s Terms of Use, users agree that they must not, in using Instagram, violate any laws in their jurisdiction (including but not limited to copyright laws). In Australia, the Australian Consumer Law prohibits misleading and deceptive conduct and false or misleading representations in trade or commerce. So what happens, for example, where a brand uses a unique hashtag that is specifically associated with another brand or with a particular event, such as #stateoforigin for the State of Origin series? Is that brand falsely implying that it is associated with or sponsoring that event? What if they make numerous posts that all include the same hashtag? As always, the content of the specific post or posts will be the key to answering the question and determining whether a reasonable member of the target audience would understand that the content implied such an association. Brands engaging in such conduct therefore need to be aware that they may well find themselves on the end of a consumer law action and a complaint for breaching the relevant social media platform’s governing rules.

So what about copyright?

So how can a brand establish an ownership right in a hashtag? Is it even possible?

There has been some speculation as to whether hashtags may be protected under copyright law. In Australia, copyright protection extends automatically to literary, dramatic, musical and artistic works. However, like advertising slogans (State of Victoria v Pacific Technologies (Australia) Pty Ltd (No 2) [2009] FCA 737) and headlines (Fairfax Media Publications Pty Ltd v Reed International Books Australia Pty Ltd [2010] FCA 984), in most cases hashtags are likely to be too short and insubstantial to constitute original ‘literary works’ and therefore are unlikely to attract copyright protection.

While the question of hashtags is yet to be directly considered by the courts, the courts have considered the question of copyright in advertising slogans. Like slogans, marketing hashtags are generally short and snappy, designed to be memorable. In Sullivan v FNH Investments Pty Ltd t/as Palm Bay Hideaway [2003] FCA 323, the court considered the advertising slogans “Somewhere in the Whitsundays” and “the Resort that Offers Precious Little”, finding that the slogans did not demonstrate the requisite degree of judgement, effort and skill to be original literary works in which copyright might subsist. Similar decisions in Australia and abroad reinforce the view that copyright is unlikely to be established in hashtags in the majority of cases.

In the absence of copyright protection, the answer for brands looking to protect their hashtags is much more likely to be found in the law of trade marks.

How to trade mark a #hashtag

In the United States, it is already well established that hashtags are registrable as trade marks where they function as an identifier of the source of the applicant’s goods or services. A similar conclusion is likely in Australia. In fact, a brief review of the trade marks register shows that some brands have already registered trade marks incorporating the word “hashtag”, for example “Hashtag Yolo”, which is registered in relation to energy control devices.

The trend of seeking trade mark protection for hashtags is likely to increase as brands settle upon and build value in hashtags as part of their overall branding.

Section 17 of the Trade Marks Act 1995 defines a trade mark as follows:

“A trade mark is a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person.”

There is no doubt that a hashtag, being the # mark followed by a word or words, is capable of falling within this definition. The question in most cases will therefore become whether the particular hashtag is capable of distinguishing the applicant’s goods or services from those of other traders.

As with any other trade mark, where a trade mark consists of the # symbol followed by descriptive or non-distinctive elements, it will likely not be registrable. For example, #SYDNEY would be rejected as Sydney is a well-known location and should be available for other traders to use to indicate the origin of their goods or services. IP Australia has indicated that other examples such as #PLAYNETBALL for sporting services or #FINDADATE for dating services would run into similar issues. Guidance from IP Australia suggests that, in most cases, the distinguishing element of the trade mark will not be the inclusion of the # symbol, but the words that follow it. Simply placing a # symbol in front of ordinary generic or descriptive words is unlikely to allow you to register them as a trade mark because other trader’s will still need to use those words in the course of business.

However, in some cases it may be arguable that the hashtag itself is an essential part of the company’s branding, especially where the brand has already used the hashtag to such an extent in the market that it has acquired a reputation in the hashtag, with a high degree of consumer recognition. Again, the courts are yet to consider the question directly, but a parallel can be drawn with domain name trade marks, which have been the subject of judicial consideration.

Many brands choose to trade mark their domain name where it forms an essential part of their branding. However, the top level domain (e.g. .com or .com.au) will not normally be the distinctive feature of the trade mark. The website name itself (e.g. ‘Google’ in google.com) must generally be capable of distinguishing the goods or services in order for a trade mark to be registered. In REA Group Ltd v Real Estate 1 Ltd [2013] FCA 5593, however, the Court found that top level domains could be essential elements of a brand. In that case, the Court held that Real Estate 1 had infringed realestate.com.au’s registered composite “realestate.com.au” trade mark on the basis of evidence of widespread consumer recognition of the mark. This evidence supported the proposition that the essential or distinguishing feature of the “realestate.com.au” logo was the domain name in its entirety, rather than simply the words “realestate”. The inclusion of .com.au as part of that essential feature was necessary because “realestate” on its own would not be sufficiently distinctive to establish brand identity, being a term commonly required in the industry. The Court found that the use of “realestate1.com.au” as part of an internet address on a search results page was deceptively similar to the registered “realestate.com.au” trade marks and therefore infringed those trade marks. A similar conclusion may be reached in respect of hashtags, where the hashtag itself becomes an essential feature of the brand recognised in the market, however, this remains to be seen.

Infringing a protected #hashtag

Of course, registering a hashtag trade mark does not necessarily mean that brands will be able to prevent anyone from using their trade mark on social media. To establish infringement, brands would need to show that the competitor had used as a trade mark a substantially identical or deceptively similar sign in relation to the same or closely related goods or services or in relation to unrelated goods or services where the registered trade mark is well known.

One of the key issues likely to arise is whether using a hashtag on social media is use as a trade mark, as a badge of origin to distinguish the brand’s goods or services.

Imagine that a brand had registered as a trade mark a popular hashtag such as #lol in relation to certain goods, say clothing. If another clothing brand were to post on their Twitter account a humorous tweet of a celebrity’s wardrobe malfunction with the #lol included, would that constitute an infringement? In many cases, the answer is likely to be no, because the alleged ‘infringing’ use would merely be use of the hashtag in its ordinary sense, in this case to indicate that the subject matter of the tweet is funny, rather than as a badge of origin (i.e. use as a trade mark). As with potential claims for misleading and deceptive conduct, the answer will usually lie in the content and context of each post.

The courts have considered a similar issue in the context of search engine results and advertising keywords. In Lift Shop Pty Ltd v Easy Living Home Elevators Pty Ltd [2014] FCAFC 75, the court considered whether a composite trade mark featuring the words “LIFT SHOP” was infringed by use of the same words in the title of a webpage, as shown by search results. Lift Shop – the owner of the trade mark – alleged that using the keywords in this way amounted to trade mark infringement. But the court decided that use of the words as keywords “lift shop” was descriptive for the purpose of taking advantage of the operation of search engines, the words being descriptive in the business of selling lifts. Similar conclusions may be reached where brands seek to enforce trade marks over descriptive hashtags. Other brands using the hashtag descriptively for the purposes of taking advantage of a social media platform’s indexing system would be unlikely to constitute use “as a trade mark”. On the other hand, use of a highly distinctive hashtag trade mark may still raise questions of infringement.

Protect your #brand

The law is still catching up with the hashtag phenomenon and it is clear that achieving legal protection for the use of hashtags on social media may require a creative approach.

The primary function of hashtags is to act as an indexing system on social media, which means that, at present, there is no way for brands to filter ‘approved’ brand content (e.g. authorised KFC content featuring the #KFC) from the thousands of unauthorised posts that may include the same hashtag. However, as hashtags become more important in the development and execution of advertising campaigns, more brands are expected to consider their options when it comes to protecting and using these potentially valuable assets. Especially where brands develop a distinctive hashtag to be used as a badge of origin, an application to register the hashtag as a trade mark should be considered.

At the same time, brands and their agencies using social media need to carefully consider whether or not they might be infringing someone else’s intellectual property, or running the risk of consumer law infringement or breaching social media platform terms of use, when they create new hashtags and use existing ones, especially when referring to another brand’s assets or where there is potential for consumers to be misled. In any event, the growing importance of hashtags in social media marketing is likely to lead to some interesting battles over the use of these key brand assets (#itson!).

Brand protection – it’s not child’s play

by

Two children’s toy manufacturers have gone head to head in a trade mark dispute heard before the Federal Court of Australia.

The dispute arose when Australian company Playgro alleged its PLAYGRO trade marks were infringed contrary to s 120(1) of the Trade Mark Act 1995 (Cth) by Playgo Art & Craft Manufactory and Playgo Toy Enterprises, both incorporated in Hong Kong.

toys-1064262_960_720

During 2013 and 2014, Playgo sold and delivered in China toys bearing its PLAYGO Device Mark to Myer and to a subsidiary of Woolworths, for sale to customers in Australia. The toys were then sold to Australian consumers at Myer, Woolworths and Big W stores.

The key issues in the case turned upon two main questions:

  1. Was the PLAYGO Device Mark substantially identical with or deceptively similar to Playgro’s registered trade marks?
  2. Did the Playgo companies ‘use’ as a trade mark in Australia the Playgo Device Mark, when the toys were in fact sold by the various retailers?

One of the PLAYGRO trade marks and PLAYGO Device Mark are reproduced below:

   PLAYGROPLAYGO

The court ultimately found that the PLAYGO was not ‘substantially identical’ to Playgro’s trade marks, but it was ‘deceptively similar’. Playgo also ‘used’ as a trade mark the PLAYGO Device Mark in relation to toys in Australia and therefore infringed the Playgro trade marks.

Substantially identical or deceptively similar

To determine whether the PLAYGRO and PLAYGO trade marks were substantially identical, the Court examined the marks side-by-side, noting their similarities and differences. The Court ultimately found that the marks could not be substantially identical because the PLAYGO device mark, with its white lettering on a red background and the words PLAY and GO on separate lines, had a distinct appearance from the PLAYGRO mark.

When considering deceptive similarity, however, the Court does not carry out a side-by-side comparison, but rather compares the trade marks from the perspective of the ordinary person’s imperfect recollection of an applicant’s mark and their impression of a respondent’s mark. The Court found that the marks were deceptively similar because the first syllable ‘Play’ in each mark was identical, the last syllable was almost identical and was visually and phonetically very similar (i.e. ‘GRO’ and ‘GO), varying only through the presence of the letter ‘R’, and, when considered as a whole, the marks looked and sounded very similar. On this basis, the Court considered it was likely that there was a real danger of confusion arising from the imperfect recollections of an ordinary person, particularly the imperfect recollections of consumers who only occasionally purchase children’s toys. Such consumers might very well be caused to wonder whether the two products in fact come from the same source. Playgro was thus successful on the ground of deceptive similarity.

Use as a trade mark in Australia

The issue of whether the PLAYGO Device Mark was used as a trade mark in Australia arose in circumstances where Playgo actually sold and delivered the toys bearing the mark to Myer and Woolworths in China, but knowing that they were ultimately for sale to customers in Australia. Notwithstanding that Playgo sold the products in China, the Court found that Playgo had used the PLAYGO Device Mark in Australia because it was used as a ‘badge of origin’ to indicate a connection in the course of trade between the goods and Playgo. Playgo did not cease to use the PLAYGO Device Mark upon delivery of the goods to Myer and Woolworths in China; rather, the mark was being used by Playgo so long as the goods were in the course of trade and it was indicative that they were the Playgo’s products. The goods remained ‘in the course of trade’ until their ultimate sale to customers in Australia by the various retailers and, as such, infringement was established.

The rematch

This month, the Court made further orders in the dispute because the parties were unable to agree on orders to give effect to the Court’s first judgment. One of the key bones of contention in these new proceedings was whether the declaration of infringement should extend to the use of the word ‘Playgo’ in addition to the PLAYGO Device Mark.

In this case, Playgo argued that using the word ‘Playgo’ in the fine print on their packaging was not ‘use as a trade mark’, but merely use as a legend to refer to the Playgo Device Mark. The Court was not moved by this argument and found that the use of the word ‘Playgo’, even only in the fine print on product packaging, was ‘use as a trade mark’ because it would have appeared to consumers to indicate a connection in the course of trade between Playgo and the products. This view was supported by the fact that Playgo had used the word ‘Playgo’ immediately followed by the letters ‘TM’ and the words “is a trade mark of, which were strong indicators the word was being used as a trade mark.

Having established that the use of the word was ‘use as a trade mark’, the Court considered whether the word ‘Playgo’ was deceptively similar to ‘Playgro’. For the same reasons given in the first case, the Court found that the words were deceptively similar and therefore made a declaration of infringement in relation to the word in addition to the Playgo Device Mark.

Lessons for brands & their agencies

In a crowded market such as children’s toys, it is not surprising that conflict arises as companies try to protect their valuable brand assets and intellectual property. This dispute is another reminder to brands and their agencies that a trade mark does not have to be strictly identical to an existing trade mark in order to be found to infringe that trade mark. It is therefore essential that brands and their agencies carry out proper checks and due diligence for potentially infringing trade marks before launching their products in Australia. This due diligence should include exhaustive searches for existing trade marks along with reputational searches for any common law trade marks, to determine whether or not there are likely to be any barriers to the registration or use of your proposed trade mark in Australia.

For assistance with trade mark and brand protection matters, contact us on (02) 8221 0933.

“When my customer smiles at me…I go to Rio”: Ambush Marketing and the Rio Olympics

by

As Brazil prepares to host the 2016 Olympic and Paralympic Games in Rio de Janiero, the Brazilian Congress has been busy attempting to protect the valuable intellectual property surrounding the Rio Olympics by enacting specific legislation in an effort to curb ambush marketing attempts, and unlawful associations by brands, which inevitably occurs during large scale sporting events.Brazil_and_australia

As is our usual advice around this time, agencies and brands need to consider the legal risks of associating a brand with the Olympics where the brand is not an official sponsor or licensee, particularly given the level of investment by official Olympic sponsors to gain an exclusive category right of association with the Games. Using the Olympic brand is not only regulated by the usual legal protections such as the Australian Consumer Law, copyright, and trade mark law, but also by legislation specific to the Olympics generally, all of which needs to be considered if any degree of unofficial association is to be made.

1.       Specific Brazilian Olympics Legislation

Soon after Rio de Janiero was chosen to host the 2016 Games, Brazil enacted special legislation to protect additional symbols and expressions specific to the Rio Olympics in The Olympic Act (Law 12,035/09 of October 1, 2009). Under this legislation, Brazilian authorities are responsible for monitoring, investigating, and suppressing any unlawful acts that violate the rights in the Olympic symbols, which are defined as:

  1. all graphically distinctive signs, flags, mottos, emblems, and anthems used by the International Olympic Committee;
  2. the names “Olympic Games,” “Paralympic Games,” “Rio 2016 Olympic Games,” “Rio 2016 Paralympic Games,” “XXXI Olympic Games,” “Rio 2016,” “Rio Olympics,” “Rio 2016 Olympics,” “Rio Paralympics,” “Rio 2016 Paralympics” and other abbreviations and variations, and also those equally relevant that may be created for the same purposes, in any language, including those in connection with websites;
  3. the name, emblem, flag, anthem, motto, and trademarks and other symbols of the Rio 2016 Organizing Committee; and
  4. the mascots, trademarks, torches and other symbols in connection with the XXXI Olympic Games, Rio 2016 Olympic Games, and Rio 2016 Paralympic Games.

The legislation makes it clear that an unlawful act may include use of the above symbols even if the use is not for a commercial purpose. Furthermore, the legislation seeks to expressly curtail ambush marketing practices by prohibiting the use of expressions and symbols which are ‘sufficiently similar’ to the symbols listed above, to the extent that the sufficiently similar symbol is “able to invoke an undue association of any products and services whatsoever, or even any company, transaction or event with the Rio 2016 Games and Olympic Movement”.

It is unlikely that this Brazilian legislation will have an extraterritorial effect in Australia and therefore would not influence or restrict local Australian marketing campaigns.  However, following the Australian High Court’s decision in Dow Jones & Company Inc v Gutnick [2002] HCA 56, infringing materials conducted via the Internet or other digital technology have the possibility of attracting “global liability” whereby advertisers and brands may be subject to the laws of Australia, even if the infringing material is uploaded overseas. It is possible that the courts of Brazil would take a similar approach, given the global nature of the internet. Therefore, if an online or social media campaign is uploaded to the Internet by an Australian brand, and is able to be viewed or downloaded in Brazil, there is the possibility that legitimate rights holders may be able to take action in Brazil against an Australian campaign which allegedly infringes the Brazilian legislation, regardless of the fact that the campaign is not being conducted from Brazil or targeted at Brazilian nationals.

The mere fact that individuals in Brazil can view the material may be sufficient. Of course, the Brazilian authorities would need to attempt to enforce any judgment in Australia, which raises complex questions under International law and treaties, which is beyond the scope of this article. However, the risks remains.

Australian Position

In Australia, the Olympic Insignia Protection Act 1987 (Cth) regulates the commercial use of certain Olympic expressions. Any advertising or promotional campaigns where the brand featured is not a licensed user must steer clear of words such as “Olympics”, “Olympic Games”, and “Olympiads” (or any words closely resembling these) in order to avoid infringing the legislation. The Olympic motto “Faster, Higher, Stronger” and its five ring symbol are also protected under this act.

In addition, the Major Sporting Events (Indicia and Images) Protection Act 2015 (Cth) offers specific protection to the organisers and sponsors of major Australian Pacific sporting events, including the Asian Football Confederation (AFC) Asian Cup 2015, the International Cricket Council (ICC) Cricket World Cup 2015, and the Gold Coast 2018 Commonwealth Games. Whilst the explanatory memorandum of the Bill indicated that there was potential for the scope of the Bill to be widened to account for future major events, at this time, this act does not provide specific protections in relation to the Rio Olympics in an Australian context. As indicated below, there are still existing protections in Australian law which protect the commercial rights of Olympic organisers and official sponsors.

2.       Australian Consumer Law – misleading or deceptive conduct

Even if you do not use any Olympic and specific Rio Olympics insignia and symbols, the Australian Consumer Law prohibits the making of false representations of association, affiliation, endorsement, sponsorship or a similar relationship with the Rio Olympics where in fact no such relationship exists.

Pursuant to the Australian Consumer Law (embodied in Schedule 2 of the Competition and Consumer Act 2010 (Cth), any marketing activity that falsely or misleadingly suggests, or implies an association, sponsorship, or affiliation between a brand and an event may constitute misleading or deceptive conduct (section 18) and/or contain false or misleading representations (section 29).

However, the distinction must be made between, on the one hand, a marketing activity that indirectly implies an affiliation with an event, which may only lead a consumer to wonder about the association, or call to mind the Olympics and related sports generally, which may not give rise to a cause of action under the Australian Consumer Law, and on the other hand, a marketing activity that makes direct and misleading claims of association with an event, leading a consumer into error which may result in deception or a misrepresentation under the Australian Consumer Law.

Additionally, ambush marketing may be actionable under the common law action of passing off if it causes damage to the reputation or goodwill of an official sponsor or supplier to an event, or wrongful appropriation in the sense of causing potential customers to associate the product or business of an official sponsor or supplier with that of the marketed brand where no such connection exists.

For example, during the 2012 London Olympics, a TVC for Australian Mining featuring Olympic cyclist Anna Meares was pulled after the Australian Olympic Committee claimed it was in breach of advertising guidelines aimed at protecting official sponsors. The TVC showed Meares in cycling gear sporting sponsor BHP Billiton’s logo (who were a rival to official Australian team sponsor Rio Tinto) while she spoke about her Olympic hopes in London.

Generally speaking, if an advertisement for running shoes was created which was accompanied by the caption “Helping Athletes Win”, this would most likely not be considered sufficient to suggest an association with the Games in breach of the law. However, a promotional product bearing the colours of the Olympic rings as well as athletic imagery arguably raises consumer law concerns.

3.       Copyright and Trade Mark Infringement

The logos, fonts, and imagery utilised by the Rio Olympics are protected by a combination of copyright and trade mark registrations in addition to the legislation enacted in Brazil mentioned above. Reproducing a trade mark or logo, or adopting the official font in marketing material will likely amount to an infringement of these legal areas, and any use of the Olympic brand assets should be strictly avoided unless permission (likely by way of a license) has been obtained for the specific intended use.

Recommendations

Whilst Olympic fever is contagious, the side effects of unauthorised association are legally risky and potentially costly for both agencies and brands. Agencies should be prudent and cautious when deciding whether to conduct an Olympic-themed or associated campaign, and should avoid any use of the Olympic names and its highly valuable brand assets. It is important not to rely on the assumption that any use will go unnoticed, as the Olympic Committee and official sponsors keep a watchful eye on those seeking to ambush their event and to protect the investment.

It is useful to note that if an agency and brand are attempting to associate with the spirit of the Olympics whilst not crossing the legal line, each particular communication must be considered on its own merits having regard to the dominant impression of the communication or advertisement, the context, and the media on which it will be promoted or advertised, as this will have an effect on the legal outcome.

We recommend that any marketing campaigns that could involve any Olympic association, particularly ones which ‘sail close to the wind’ be subject to legal clearance.

UPDATE: Copyright dispute between Seven and Nine reaches mutually-agreed settlement

by

 In a blog post last year we discussed The Seven Network’s (Seven) failed attempt to obtain an interlocutory injunction against The Nine Network (Nine), alleging that The Hotplate infringed Seven’s copyright in My Kitchen Rules. The crux of the dispute was the similarity in format, with Seven arguing that it owned the copyright separately in both the original format and production elements of My Kitchen Rules, as well as in the physical production “bibles” and related documents.

talk-show-1149788_1920

Now, Seven and Nine have reportedly reached a mutually-agreed settlement. Nine has agreed to not produce any further series of the program, nor to ever broadcast or redistribute its first series; and both sides will pay their own legal costs. Whilst both parties purport to be pleased with this outcome, the result appears to be more favourable for Seven.

It is notoriously difficult to establish copyright infringement in Australia when it comes to TV formats and the mere fact that two programs have the same premise, or similar features, is unlikely to be sufficient to demonstrate infringement. The Courts have considered the question on several occasions, including in Green v Broadcasting Corporation of New Zealand [1989] All ER 1056 and Nine Film & Television Pty Ltd v Ninox Television Ltd [2005] FCA 1404. For more information and practical tips on protecting formats, see our original post.