Both the fashionably and legally inclined watched on last week as Australia’s most fashionable case unfolded in the Victorian Supreme Court.
Retail giant Myer originally toted Sydney-based designer Kym Ellery to court in January over a breach of contract, after the 29 year old entered a deal with its rival, David Jones, in November last year. Myer sought to enforce a three year exclusivity clause, which was allegedly breached 18 months into the contract. In response, Ms Ellery’s legal team argued that the contract was a restraint of trade.
The clause in dispute prevented Ms Ellery from supplying her clothing to any other Australian retailer with 15 or more stores. However, the contract allegedly did not oblige Myer to buy Ms. Ellery’s designs, leaving the designer in a potentially sticky financial situation. Whilst it seemed like a big corporate retailer bullying a little designer, it was actually another round of the Myer / David Jones war in disguise.
Like a fly in a fashionable web, Ms Ellery was confronted with a tough decision after signing with David Jones. According to a number of sources, Myer revised its original $187,000 agreement with the designer, offering her $1.5M to remain exclusive. However Ms Ellery’s legal team revealed that the offer was fashionably late and it would have cost the designer more to breach her new contract with David Jones than to breach the original agreement with Myer or even accept its revised offer.
Myer had previously sought injunctions to prohibit Ms Ellery’s designs from appearing at the David Jones launch earlier this year, but later dropped its application. The store had also dumped the designer from judging its Fashion on the Fields competition around the time the David Jones contract was signed.
The fashion show court proceedings ended last Tuesday in an anticlimax for spectators, with the parties reaching an out of court settlement. It’s apparently a win-win situation: Ms Ellery is to pay Myer’s legal costs and will continue stocking both department stores. This case serves as a chic reminder that sometimes disputes are best settled off the runway out of court, as the legal uncertainties can often result in unanticipated financial and reputational consequences.
Stephen von Muenster, Principal at von Muenster Solicitors & Attorneys, will present at the Communications Council Social Media Legal Seminar & Launch of Social Media Code of Conduct.
The presentation will discuss the potential issues, opportunities and pitfalls agencies and brands might face in the developing communications landscape. Stephen will also discuss the need to manage your risk and be aware of your legal and ethical accountability, along with providing tips on legal compliance in the social media space.
This seminar is particularly pertinent given the recent ruling from the Advertising Standards Bureau on the use of Facebook as an ‘advertising medium’. You can find out more about this issue and recent changes in the regulatory landscape here.
The sold out event is being held at the Surry Hills Library on Monday, September 10. A second seminar will be held on September 27 at the same venue from 5:00pm click here to book a ticket.
The industry has been abuzz with the ruling from the Advertising Standards Bureau (ASB) that content on a brand’s Facebook page is considered to be advertising and/or marketing communications. Many of our clients have been calling to enquire about the consequences for the industry and how the ruling may impact their or their clients’ Facebook pages.
The decision by the ASB is in line with a decision of the Federal Court in 2011. In Australian Competition and Consumer Commission v Allergy Pathway Pty Ltd (No 2)  FCA 74 the Federal Court held that health company, Allergy Pathway, was liable for postings of third parties in social media because it had control over its social media pages, knew that misleading testimonials had been posted on Facebook and Twitter, and took no steps to remove them.
The recent determination of ASB regarding Diageo’s Smirnoff Facebook page has extended the reach of the Federal Court decision by stating that provisions of the Advertiser Code of Ethics (the Code) apply to an advertiser’s Facebook page and to content generated by advertisers, as well as material or comments posted by users or friends. The ASB found that a Facebook page falls within the definition of advertising and marketing communications under the Code and is not merely a networking tool used by existing customers.
In a decision of the ASB on the same day as the Smirnoff decision, the ASB found that the VB Facebook page had breached various provisions of the Code. Again the ASB found that the Facebook page was a marketing communication tool and that the provisions of the Code applied to content created by VB as well as content posted by users or friends. Importantly, the ASB noted that the VB Facebook page user comments, identified in the complaint, were posted in reply to questions posted by VB.
The above decisions closed a perceived loophole, which allowed brands to benefit from social media without accepting responsibility for content posted by advertisers or customers on Facebook, which would have otherwise been inconsistent with the Code or a breach of the Competition and Consumer Act 2010 (Cth) (the Act). In particular, s18 of the Australian Consumer Law in Schedule 2 of the Act, prohibits misleading or deceptive conduct.
In an article published by the Canberra Times, the Australian Competition and Consumer Commission (ACCC) backed the determination of the ASB. The competition watchdog sent a warning to large companies with a wealth of resources at their fingertips – if comments are not removed within 24-hours then the company will face potential court action.
If the ACCC’s past modus operandi is anything to go by, an ACCC prosecution of a large company who has not obeyed the ACCC stated view will usually follow.
While the ASB has so far refused to issue specific guidelines on social media policy, here at von Muenster we expect that the ACCC will release industry guidelines in the near future.
What does all this mean for agencies and their clients?
Community managers will now have to be vigilant in monitoring their social networking pages to ensure that all content posted by any person is not in breach of the Code or in contravention of the Act. It will on a case by case basis be necessary to moderate, respond to or even remove content posted by a brand’s Facebook page users. Community managers should also undertake training on the requirements of the Code and the Act to ensure they are able to identify posts by third parties which may be problematic. This training should not just be linked to infringements under the Code or Act but also other applicable laws, including defamation, copyright, trademarks, causing offence and racial discrimination.
It is difficult to provide a precise formula or guide as to what content or posts should be left, moderated or removed. Different rules apply under the self-regulatory Code and applicable laws, such as the Australian Consumer Law which forms part of the Act. Each situation turns on its own facts and circumstances, and often one will have to consider numerous factors, including the nature of the Facebook page and the advertiser; the nature of the products; the audience that is engaging with the Facebook page; the effect of other related marketing communications; and the overall context. It will be important to seek legal advice on a case by case basis if unsure.
At the end of the day, a commonsense approach will need to be taken. If a post or content is suspicious, offends, is blatantly wrong or could cause a is representation to other Facebook page users, then you need to ask the question: ‘do I moderate, remove or leave the post’? The Code and other applicable industry codes (for example the ABAC alcohol code) are quite straightforward and should readily be able to be applied to what is being posted on Facebook pages.
Section 18 of the Australian Consumer Law is a little more complicated. As stated above this section prevents misleading or deceptive advertising claims and is designed to protect consumers. It applies to Facebook and other social media sites, including posts by users (see Australian Competition and Consumer Commission v Allergy Pathway Pty Ltd discussed above). Not all posts that are incorrect or inflated will be misleading. The posts need to be considered against the Facebook page as a whole – the other posts, posts by the advertiser and the context. The audience of the Facebook page needs to be considered and then the message that is being conveyed to that audience needs to be ascertained – if the message is misleading or constitutes a misrepresentation to a reasonable member of the audience of the Facebook page, then it is possible there will be a breach of Section 18.
Personal opinions, puffery – ‘hey this is the best drink in the whole world’ – and other forms of social banter are unlikely to lead others into an erroneous assumption about the brands products. It is where the brand puts out a misleading message or allows a misleading message to develop, and the responding posts reinforce or amplify this message, where we see possible breaches occurring. The possible spectrum of situations are endless and again, each Facebook page and situation will need to be assessed on its own merits.
If an organisation is active in social media and is engaging on a frequent basis, then for larger organisations with greater resources, it is likely that the response time to moderate or remove offending content may be as little as 24-hours, however this is by no means law at this time and awaits a judicial pronouncement.
Please get in touch if we can be of any further assistance in helping you and your clients navigate the implications of these decisions.
In May, we warned about the dangers of associating a brand with London 2012 without consent: http://www.vmsolicitors.com.au/2012/05/18/sweating-over-the-legal-side-effects-of-olympics-fever/
It seems we foreshadowed the current climate, with the London Organising Committee of the Olympic Games and Paralympic Games Limited (LOCOG) now cracking down on ambush marketing. As LOCOG has recently announced, they take incidents of ambush marketing seriously, emphasising the exclusive rights of official sponsors and the significant investment of these companies in order to obtain these rights.
Under the (Advertising and Trading) (England) Regulations 2011, one of the aims of which is specifically to prevent ambush marketing, 25 ‘Event Zones’ around London have been established within several hundred metres of competition venues. Within these areas, engaging in unauthorised advertising or trading activity in open public places during specified periods around the Games is prohibited and only businesses which have successfully applied to trade or advertise are permitted to do so. ‘Advertising’ is deliberately defined extremely broadly by the Regulations to cover both commercial and non-commercial advertising, and includes:
‘any word, letter, image, mark, sound, light, model, sign, placard, board, notice, screen, awning, blind, flag, device, costume or representation, whether illuminated or not, in the nature of, and employed wholly or partly for the purpose of, promotion, advertisement, announcement or direction’
The Olympic Delivery Authority, established by the London Olympic Games and Paralympic Games Act 2006, has engaged enforcement officers with expertise in trading and advertising to enforce these Regulations and protect their advertising sponsors. These officers, unofficially dubbed the ‘brand army’ and decked out in purple, are able to enforce severe penalties against anyone contravening the Regulations, including fines of up to £20,000.
Concerted attempts to prevent ambush marketing around the Olympics have also manifested closer to home. A TVC for Australian Mining featuring Olympic cyclist Anna Meares has been pulled this month 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 (a rival to official Australian team sponsor Rio Tinto) while she spoke about her Olympic hopes in London. Protection against ambush marketing has reached new heights these Games, so advertisers be careful to steer clear of the brand army’s war path!
Does your Pinterest board pin someone else’s photographs?
If so, you are probably interested to know the potential dangers and liabilities of using the site.
The person who takes a photograph usually becomes the owner and has copyright over that photo. A person who publishes or reproduces the work and communicates it to the public without permission infringes the copyright. So arguably (there have been no cases on this issue so far) if you’re taking someone else’s images and putting them up on your board, you’re infringing their copyright!
So what if your company is only posting pictures that belong to them – are you liability free?
Potentially not. On 6 April 2012 Pinterest updated its Terms of Service. These stated that Pinterest may be used for “personal, non-commercial use” and its Acceptable Use Policy includes a list of prohibited activities, including using “the Service for any commercial purpose or the benefit of any third party…” Yet despite this, Pinterest’s Terms of Service allows a person to open an account on behalf of a company and moreover it does not appear to be shutting down branded commercial pages already existing on the site.
So step carefully and keep an eye out for developments that no doubt Pinterest will make on its Terms of Service!
As more and more branded mobile applications come across our desks for legal review, the importance of compliance with privacy legislation (in Australia and worldwide) has turned into a recurring theme.
Where you or your client are collecting personal information about Australian users through an App, you will need to comply with the principles set out in the Privacy Act 1988 which deal with how you may collect, use and disclose such information.
Remember that personal information is information that identifies the user or could identify the user. Common examples are names and addresses, but personal information can also include medical records, bank account details, photos, videos, and even information about what users like, their opinions and where they work – simply put, any information where the user is reasonably identifiable from that information. An obvious example in the App world is where you require users to register to interact with the App, and such registration involves the provision of information like their name and email address.
- What information is collected by the App and how is it used?
- Does the App collect precise real time location information of the device?
- Do third parties see and/or have access to information obtained by the App?
- Is the App supported by advertising, and does the App collect data to help the App serve ads?
- What are the user’s opt-out rights?
- How is personal information stored? How can users access or correct the information held about them?
Our current privacy laws are under consideration for reform this year with one of the take-outs being the importance of privacy policies and clear and accurate disclosures as to how personal information is being used.
A common question asked of our team members is: ‘if a defamatory comment is posted on our social media page, would we be liable?’ To answer this question, we have provided a brief overview of the law as it currently stands.
The nature of social networking sites lends itself to the inherent risk of a consumer posting a defamatory comment on the site, being a comment that could:
- injure the reputation of a person by exposing them to hatred, contempt or ridicule;
- cause others to shun or avoid a person; or
- lower a person in the estimation of others.
Liability attaches at time of publication (and re-publication) of a defamatory comment, including on a brand’s own site, Facebook or Twitter page. But who is liable for the defamatory publication?
The author, being the consumer who posted the defamatory comment, will usually be liable. But the defamed person will often not pursue the author, due to the difficulty that online anonymity/pseudonymity may pose in identifying the author or the simple fact that the author’s pockets are typically not as deep as those of the brand.
It is unlikely that a social networking host or provider, which provides the platform itself (i.e. Facebook, Twitter etc.), will be regarded as publishing, or even as authorising the publication, of the defamatory material, given its role as platform host/provider is a passive one. In the recent English decision of Payam Tamiz v Google Inc, Google UK Limited  EWHC 449 (QB), Justice Eady agreed with Google’s argument that it merely provided access to the communications system Blogger.com and did not create, select, solicit, vet or approve the content on the system – this is all controlled by the blog owner. Justice Eady summarised:
“… it may perhaps be said that the position is, according to Google Inc, rather as though it owned a wall on which various people had chosen to inscribe graffiti. It does not regard itself as being more responsible for the content of these graffiti than would the owner of such a wall.”
Even if the social network host or provider is deemed to be a publisher, it may be afforded protection in Australia as an ‘internet content host’ (ICH) or ‘internet service provider’ (ISP) under section 91 of Schedule 5 of the Broadcasting Services Act 1992 (Cth), although this has not yet been determined with respect to defamation in Australia (see our blog ‘Twitter sued for Defamation’ on this point). Section 91(1) of this Act states that any law of a State or Territory, or rule of common law or equity, has no effect to the extent to which it subjects an ICH/ISP to liability for hosting or carrying particular internet content of which it was not aware or requires an ICH/ISP to monitor, make inquiries about, or keep records or, internet content that it hosts or carries.
The question however remains whether a brand operating a social networking site will be deemed to be the publisher of defamatory comments of users of their site and accordingly liable. The law in Australia is largely untested. Liability will likely depend upon the extent of control exercisable by the brand over what is published on their site as well as the brand’s knowledge of the defamatory material on their site.
In terms of control, Facebook, for instance, affords significant control to the page owner, including control over who can post, control over who can view the posts, and the power to delete posts. However, just because a brand may have the technical capability to take down defamatory comments on their site does not automatically deem them to be a publisher.
The brand’s knowledge of the defamatory material must also be considered. Does the brand authorise the publication of the defamatory matter or merely facilitate it? If the brand is found to be a publisher, the answer to this question will determine whether the brand may avail themselves to the defence of innocent dissemination, which applies “to those who participate in the communication of defamatory matter but do not authorise that communication” (Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574 per Gaudron J).
But when may a brand be found to ‘authorise’ the defamatory matter – at time of posting, when the brand becomes aware of the defamatory comment, or never? This issue has been considered for the purpose of contempt, where it was held that the publisher “accepted responsibility for the publications when it knew of the publications and decided not to remove them” (ACCC v Allergy Pathway Pty Ltd and Anor (No 2)  FCA 74 per Finkelstein J).
Therefore, if your brand exercises sufficient control to be able to take down defamatory material from its social networking site, and fails to do so within a reasonable time of notification of the existence of the defamatory material, it may be held responsible for the continued publication of the defamatory material. It is however uncertain whether your brand can merely rely upon users of its site to notify them of the defamatory material, or whether it must actively monitor content on its site. As a risk management strategy, we recommend moderating content on your brand’s site on a frequent basis and taking down any defamatory content as soon as reasonably practicable, so that your brand is not the one that ends up resolving this question before the courts.
Last month our consumer and competition watchdog, the ACCC, put the advertising industry on notice that it will be more aggressive in pursuing misleading ads.
In her speech at the Australian Association of National Advertisers Annual Congress (for a full copy, go here), ACCC commissioner Sarah Court flagged three big ticket items:
- fine print qualifications and disclaimers;
- credence claims; and
- the use of testimonials.
Here is a quick overview of the watch-outs:
Fine print disclaimers. Here the concern is where disclaimers in fine-print are used to qualify large headlines, particularly where the product or service being advertised is complex or detailed. The Optus ‘Think Bigger’ campaign in 2010 (see image) got into hot water for this very issue. Customers were told that when they signed up to a ‘Think Bigger’ plan, their data usage would consist of a specific peak and off-peak allowance. The Federal Court found that the short small-print disclaimer: ‘Speed limited once peak data exceeded’, did not give customers an accurate description of how the plan actually operated, that is, that once a customer exhausted their peak allowance, their service would be curbed to a humble 64kpbs, during peak and off-peak usage. The court fined Optus $5.26 million in the highest pecuniary penalty imposed so far under the Australian Consumer Law. Optus is now appealing the penalty.
Credence claims. Credence or credibility claims can offer a competitive advantage and are powerful in influencing consumer choices, but the ACCC has warned against making false or exaggerated claims in this regard, cracking down on the advertising strategy of late, particularly in relation to claims of origin or product description in relation to food. Last year the ACCC took action against a poultry company which claimed their chickens were “free to roam” in in-store displays and on delivery trucks. The ACCC successfully argued that this was misleading, given that the chickens were in fact reared indoors and restricted in their ability to roam.
Use of testimonials. Testimonials, like credence claims, are used to gain consumer trust, and as a result, must always be accurate and truthful. In 2008, Coca-Cola published an ad featuring Kerry Armstrong “busting” myths that the drink made people fat, rotted teeth and was packed with caffeine. After negotiations with the ACCC, the soft drink giant published corrective ads to qualify the sweeping claims made.
How to avoid moving into the spotlight for all the wrong reasons:
- Make sure you consider the overall impression of the ad to consumers and watch out for headlines that require qualification by way of disclaimer.
- Ensure you maintain all records of information that can be used to substantiate any claims you make about a product/service in your ads.
- Where unsure, always seek legal advice, as the eyes of your consumers may not be the only ones watching…
During the two hour presentation Stephen will discuss the issues that marketers and agencies face in social media communications. Using recent market examples, he will cover the legal issues and risk management challenges facing social media hoaxes, consumer generated branded content, advertiser blogs, ad mashups and consumer commentary.
Stephen will also offer some practical tips and techniques that can be used to effectively manage the legal and commercial risks associated with consumer engagement in social media.
So far the event is well subscribed with some 75 attendees representing a number of Perth creative agencies, digital agencies, government departments and marketing teams.
Stephen von Muenster, principal of von Muenster Solicitors & Attorneys, is set to present along with a Prof Mark Pearson (author of ‘Blogging and Tweeting Without Getting Sued’) and ACMA’s Julia Cornwell.
The session will also examine case studies of brands that have found themselves in social media firestorms – and how they got through the crisis.
Full article on Mumbrella today here.