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:
- 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:
- it would cause a significant imbalance in the parties’ rights and obligations arising under the contract; and
- it is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term; and
- 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?
- 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)
- 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.
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.
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.
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.
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:
- all graphically distinctive signs, flags, mottos, emblems, and anthems used by the International Olympic Committee;
- 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;
- the name, emblem, flag, anthem, motto, and trademarks and other symbols of the Rio 2016 Organizing Committee; and
- 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  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.
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.
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.
With the London 2012 Olympic Games just over two months away it’s likely that Olympics fever will soon take hold across Australia. If you or your client catches a bout you should 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 London 2012 Olympic sponsors to gain an exclusive right of association with the Games. Using the Olympics brand is not only regulated by usual legal sources such as the Australian Consumer Law, copyright and trade mark but also by legislation specific to the Olympics, all of which you and your client need to acknowledge.
1. Specific Olympics Legislation
The Olympic Insignia Protection Act 1987 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 the Act.
The UK has also enacted special legislation to protect additional expressions linked to the upcoming 2012 Games including:
“– any two of the words: Games, Two Thousand and Twelve, 2012, Twenty-Twelve
– any word in the list above with one or more of the words: London, medals, sponsors, summer, gold, silver, bronze”
This means that even expressions such as “London Games” and “2012 Games” are protected from use by organisations without authorised consent from the Olympic Committee.
2. Australian Consumer Law – misleading or deceptive conduct
Even if you do not use any Olympic insignia, the Australian Consumer Law prohibits the making of false representations of association, affiliation, endorsement, sponsorship or a similar relationship with the London Olympic Games where in fact no such relationship exists. The test when assessing misleading or deceptive conduct under the Australian Consumer Law is based on the overall impression made to the target audience and agencies should consider this test if developing an Olympic-themed campaign.
An example? An advertisement for running shoes which is accompanied by the caption “Helping Athletes Win” would arguably not be considered to suggest an association with the Games. However, a promotional product bearing the colours of the Olympic rings as well as athletic imagery arguably would be an issue.
3. Copyright and Trade Mark Infringement
The logos, fonts and imagery utilised by the London 2012 Olympic Games are protected by a combination of copyright and trade mark registrations. Reproducing a trade mark or logo, or adopting the official font in your 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 has been obtained for your specific intended use.
Whilst Olympic fever is contagious, the side effects of unauthorised association are legally risky and potentially costly for you and your clients. You should be prudent and cautious when deciding whether to conduct an Olympic-themed campaign and should avoid any use of the Olympic names and its highly valuable brand assets. Make sure not to rely on the assumption that your use will go unnoticed as the Olympic Committee keeps a watchful eye on those seeking to ambush their event and to protect the investment of their official sponsors.
We recommend that any marketing campaigns that could involve any Olympic association be subject to legal clearance, so feel free to contact us if we can assist.
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…