On March 4, 2019, the United States Supreme Court decided an important issue of copyright law that had divided federal courts for years. In Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, the question was: when can a copyright claimant sue for infringement – as soon as it files a complete copyright registration application with the US Copyright Office, or not until the Copyright Office issues a registration certificate? The Court answered: not until a registration issues. This decision will have an immediate impact on both pending and future copyright infringement lawsuits.
Section 411(a) of the Copyright Act says that a copyright plaintiff may not bring an infringement action until “registration of the copyright claim has been made” in accordance with provisions of the Act. Despite the simplicity of the quoted phrase, US Courts of Appeals could not agree on what it meant. Some courts, such as the Ninth Circuit, held that upon filing the application, a claimant could sue (the “application approach”). Others, such as the Second Circuit, held that the claimant must wait for the Copyright Office to issue a copyright registration (the “registration approach”).
Long delays in Copyright Office processing of registration applications (now an average of seven months from date of application) created an incentive for plaintiffs to bring their cases in application approach circuits, because they could sue at an earlier date. This split among US Courts of Appeals thus encouraged forum-shopping. The application approach also allowed some serial copyright plaintiffs to file infringement lawsuits at a rapid pace and, given the cost of litigation, force settlements before the defendants knew the fate of the application. If the Copyright Office later rejected the application – a key defense to a copyright claim – the settling defendant may have overpaid simply because the case was brought in an application approach circuit.
The Supreme Court’s unanimous decision, written by Justice Ruth Bader Ginsburg, rejects the application approach because it violates a basic principle of statutory interpretation: a law must be read so as to give all of its provisions meaning.
For example, the Copyright Act allows certain works to be preregistered before they are released to the public (as with television shows) and for infringement suits to be brought immediately thereafter, before any registration issues. The Act also provides that if the Copyright Office refuses to register a work, a copyright claimant can still commence an infringement action (but the Copyright Office can ask to have the action dismissed).
The Court found that such provisions would be superfluous if a claimant could sue as soon as it files an application to register. The Court also noted that Congress had declined to adopt legislation that would have explicitly permitted suit to be brought after an application was filed.
Finally, while the Court recognized that the Copyright Office was now taking “many months” to process applications, it attributed this problem to Congress’s failure to address staffing and budgetary shortages, which are problems that “courts cannot cure.”
The Fourth Estate decision could have meaningful, real-world consequences. It is likely to cut down on forum-shopping in copyright litigation. It also will reduce the ability of owners of unregistered copyrights to threaten immediate infringement lawsuits if their demands are not met. Plaintiffs who were facing the expiration of the Copyright Act’s three-year statute of limitations within six to eight months often resorted to suing in application approach circuits. Those complaints will now be at risk of dismissal if the statute of limitations expired before a registration issued. And to obtain prompt injunctive relief against an ongoing infringement, plaintiffs in all circuits will have to pay an extra $800 “special handling” fee to the Copyright Office for expedited consideration of their applications.
We may see a renewed push to have Congress enact the application approach into law. However, the Copyright Office is likely to oppose this change. In its amicus brief in Fourth Estate, the Office argued that the registration approach has the benefit of allowing a court to know the Office’s views of copyrightability at the outset of a lawsuit. The Office also argued that the registration approach creates a significant incentive for owners to seek registration immediately after publication, rather than waiting for an infringement dispute to arise.
Find out more about the implications of this decision by contacting the authors.
On Monday, March 4, 2019, the U.S. Supreme Court issued a unanimous ruling holding that a copyright owner cannot file a lawsuit for copyright infringement until the U.S. Copyright Office has registered the work at issue. This decision resolves a long-standing circuit split over whether it was sufficient to have a copyright application on file with the Copyright Office or whether an issued registration is prerequisite to bringing a lawsuit.
The Supreme Court reasoned that because the Copyright Act specifically requires that a work be registered before a lawsuit is filed, the Copyright Office must take action some action. Therefore, it is not sufficient for the copyright owner to merely file an application before bringing a lawsuit. The Supreme Court rejected the argument that waiting for a copyright registration to issue would prejudice the rights of copyright owners, particularly in light of the Copyright Office’s seventh month average processing time.
This decision underscores the importance of proactively seeking copyright protection for copyrighted works to avoid having to wait for a copyright registration to issue when faced with a major infringement. The case is Fourth Estate Public Benefit Corp. v. Wall-Street.com LLC et al., case number 17-571, at the Supreme Court of the United States. A more detailed analysis of the implications of this decision for copyright owners will follow.
Businesses are constantly looking for an extra dimension that will allow their brand to cut through the saturation of the modern world. Increasingly, corporate re-brands or brand refreshes are including bespoke musical themes known as ‘sound identities’ or ‘audio brands’ to create a further aural association with the product or service offering.
As a medium that is inherently evocative, these ‘sound identities’ are intended to distill the company’s core values into music and often involve the creation of variations of this identity to reflect different aspects of the business’ operations. They can be widely used to reinforce visual elements on websites, mobile applications and even directly as hold music or in radio advertisements.
This element of branding is not a new phenomenon and there are numerous examples where consistent use of a ‘sound identity’ has been highly effective for brand awareness. Accordingly, like any brand name or aspect of a visual identity, businesses should consider appropriate protection for IP associated with these ‘sound identities’.
Trade Mark Protection
The most obvious form of protection is registering a trade mark, which will allow the business to prevent others traders from using the ‘sound identity’ with respect to specific goods and/or services.
Under Australian law, to receive registered protection as a sound mark, the application must:
meet formality requirements for precisely representing / describing the sound mark, including a graphic representation e.g. musical notation, and a concise and accurate description of the mark; and
satisfy registrability requirements, namely:
be capable of distinguishing the relevant goods and services, and not be a sound that is purely ‘functional’ or ‘common to the trade’, such that other traders would want to be able to use the sound; and
not be deceptively similar or substantially identical to existing registrations that protect the same or similar goods and services.
When protecting a ‘sound identity’, businesses should consider the following:
to minimise issues with registration, any design brief should specify that sounds related to the business’ offering must be adequately transformed from their ‘functional’ or ‘common’ form. Similarly, during development, ‘sound identities’ should be reviewed to ensure that they are not deceptively similar or substantially identical to previous registrations;
if they are wedded to a ‘functional’ or ‘common’ sound, they should be prepared to file evidence of use that demonstrates that the mark is capable of distinguishing the relevant goods and services;
registration of the most basic variation of the ‘sound identity’ will ensure the broadest possible coverage. However, this should be balanced with protecting the identity’s core variation as the mark must be used in its registered form or otherwise risk becoming vulnerable to removal from the Trade Mark Register for non-use; and
defensive trade marks may be filed to prevent ‘sound identities’ from being misused for goods and services that are unrelated to the business’ core offering.
A ‘sound identity’ will also attract copyright protection.
Under Australian law, provided that the ‘sound identity’ demonstrates originality and is the product of the creator’s skill and effort, it will receive automatic protection as a:
‘musical work’ for the underlying composition; and
‘sound recording’ for the recorded performance of the composition. Notably, any variations of the ‘sound identity’ would be individually protected by this category.
Ownership of the ‘Sound Identity’
As with any other marketing collateral, businesses should ensure that they own the rights, or have proper permission, to use the ‘sound identity’ and any variations by way of a license or assignment from the composers and/or performers.
Further, this ownership or permission should be obtained prior to use and include a moral rights consent that allows for use without attribution of the creator and permission to edit and/or remix the work.
For further information or assistance with matters relating to protecting ‘sound identities’, corporate re-branding or transfer of IP rights in Australia, please contact Melinda Upton, Nicholas Boyle, Jessie Buchan, Lucy Meadley and Valiant Warzecha.
The UK’s Competition and Markets Authority has announced, following its investigation (see our earlier article available here), that it has secured commitments from 16 social media influencers about how they post online (see link to CMA press release here). The influencers, including singer Rita Ora and model Alexa Chung, have agreed to clearly state if they are in a commercial relationship, or are receiving payment in kind, for any products that they endorse on their social media channels.
Reflecting on the formal pledge made by the 16 celebrities, Andrea Coscelli, Chief Executive of the CMA (a UK government department responsible inter alia for enforcing consumer legislation) noted that influencers have a “huge impact on what their fans decide to buy“. He stated “you should be able to tell as soon as you look at a post if there is some form of payment or reward involved..” and these steps by the CMA relay a salient message to brands and influencers that “they must be open and clear” in order to comply with consumer protection law.
The CMA has also published a new quick guide for influencers about how to be transparent with followers (see link here “Guidance”). This is the latest guidance provided during a long-running effort by national enforcers such as the ASA and CMA to clamp down on unclear influencer marketing and advertising practices and to assist them with understanding what they need to do to comply with the rules. See our earlier blog posts published in the last few months on this topic here and here.
While this latest guidance focuses on what influencers must do, it is clear from earlier guidance that the responsibility for compliant posts is shared between the influencer and the brand with which they are connected; so brands should also take note and update their influencer guidelines accordingly.
Guidance from the CMA for labelling of influencer posts
The main points are that influencers should:
make it clear to followers when they have been rewarded to advertise a product or service, e.g. through payment, or being gifted or loaned a product;
be transparent about their relationship with any brands/businesses (current or reasonably recent past i.e. “within the last year”) by expressly stating their post is promotional in nature (e.g. just including discount codes in a post is not enough);
not mislead consumers, e.g. by failing to disclose their “business purpose” and suggesting they are just a consumer of the relevant product or service; by suggesting they bought it when it was a gift/freebie; or, by suggesting they have used a product/service when they haven’t.
The CMA maintains the existing regulator position that there is no one way to make posts clear and that different platforms have different options for doing so, but they have provided some quick do’s (e.g. ‘Advertisement Feature’ / ‘Advertisement Promotion’, #Ad, #Advert, and using the ‘Paid Partnership’ tool on Instagram in addition to these hashtags) and don’ts (e.g. #sp; #spon; #client; #[BRAND NAME]ad; “thank you [BRAND]”; or merely tagging a brand). They state that an effective disclosure must be (i) transparent; (ii) easy to understand; (iii) unambiguous; (iv) timely; (v) prominent; and (vi) on the same page as the post (no click required to view).
Links to earlier guidance by the ASA and the CMA are available here, here and here.
The CMA’s announcement and Guidance does not constitute new rules or rule changes, but it does add a few new points of detail to existing guidance (particularly the more detailed list of disclosures which do not go far enough to draw the promotional nature of the product reference to the consumer’s attention). It also makes clear that this is and continues to be a hot topic for the regulators. For example, in addition to the pledges it has obtained from the 16 influencers, warning letters have also been sent to other celebrities asking them to review their current practices, and the CMA has said it will be undertaking further investigation work into the role and responsibilities of social media platforms.
Accordingly, brands that have working relationships with influencers must actively work with influencers to ensure that they understand and are complying with the rules, because ultimately the brands may also be held responsible if an influencer’s post fails to comply.
We anticipate that further guidance, new platform tools, and new recommended practices may emerge once the CMA has carried out its investigation of social media platforms.
In a sign of a potentially liberalizing trend for standing at the U.S. Trademark Trial and Appeal Board, the Board recently ruled that a consumer had standing to oppose a company’s application for the trademark RAPUNZEL for dolls and toy figures. Curtin v. United Trademark Holdings, Inc., Opposition No. 91241083 (TTAB Dec. 28, 2018).
Applicant United Trademark Holdings, Inc. had argued that Opposer Rebecca Curtin, a law professor and “mother of a young girl,” lacked standing because she failed to allege she was a competitor in the doll and toy figure industry or had any other direct stake in using Applicant’s RAPUNZEL mark in a descriptive or generic manner. The Board found, however, that Opposer’s allegations were sufficient to establish a direct and personal stake in the outcome of the proceeding and that her belief of damage had a reasonable basis in fact such that she was not a “mere intermeddler.” Summarizing her allegations, the Board observed that Opposer: “is a consumer of dolls and toy figures of fairytale characters, including ‘Rapunzel,’ that she has purchased and continues to purchase said goods, and that registration of the applied-for mark by Applicant would constrain the marketplace of such goods sold under the name ‘Rapunzel,’ raise prices of ‘Rapunzel’ dolls and toys figure, and deny consumers, such as herself, the ability to purchase ‘Rapunzel’ dolls offered by other manufacturers.” Id. at 7.
The Board remarked that “[c]onsumers, like competitors, may have a real interest in keeping merely descriptive or generic words in the public domain, ‘(1) to prevent the owner of a mark from inhibiting competition in the sale of particular goods; and (2) to maintain freedom of the public to use the language involved, thus avoiding the possibility of harassing infringement suits by the registrant against others who use the mark when advertising or describing their own products.’” Id. at 9 (citing In re Abcor Dev. Corp., 588 F.2d 811, 200 USPQ 215, 217 (CCPA 1978)). Indeed, while it is well-established that standing exists where a competitor needs to use a particular designation to describe its own goods, more cases are emerging to support claims by consumers who are not industry competitors.
In the widely-cited decision on standing, Ritchie v. Simpson, 170 F.3d 1092 (Fed. Cir. 1999), the opposer had alleged he would be damaged by the registration of marks for O.J. SIMPSON and THE JUICE because the marks disparaged his family values. The Board found that opposer had standing based on his real interest in the issue and his belief being reasonable, stating that an opposer need not have a specific commercial interest, not shared by the general public, in order to have standing. Id. at 1096. The Ritchie decision has been criticized as putting an opposer’s moral views at issue before the Board—and possibly throwing open the door for other claims based on the morality of an applicant.
And a few years later, in McDermott v. San Francisco Women’s Motorcycle Contingent, 81 USPQ2d 1212, 2006 WL 2682345 (TTAB 2006), aff’d, 240 Fed. Appx. 865 (Fed. Cir. 2007)), the Board seemed to reign back in the standard. There, opposer had claimed that registration of applicant’s mark DYKES ON BIKES would be a violation of his civil rights, asserting standing under Ritchie’s broad definition of a “real interest” in the proceedings. But the Board found (and the Federal Circuit later affirmed) that the opposer did not satisfy the second prong required for standing because he failed to show he had a “reasonable” basis for his belief of damage, merely pleading his subjective belief that he was personally offended without offering objective evidence that this belief was shared by others.
Yet the trend appears to be toward a relaxation of standing requirements and allowing proceedings by consumers to move forward before the Board. So is this a sign of a liberalizing trend for standing at the Board? And will there be more consumer-initiated proceedings before the Board?
Interview with Melissa Schoffer Farber, SoulCycle’s Senior Director of Legal Affairs
To describe New York-based SoulCycle as a company offering indoor cycling classes is a serious understatement. While SoulCycle does tout 90 locations in the US and Canada, with a growing international presence, the business has morphed from an indoor cycling company into a powerhouse lifestyle brand. The brand focuses on redefining health and happiness through unique mind-body-soul experiences. A hefty portion of SoulCycle’s business is its retail offerings, and its loyal following avidly deck themselves in its stylish apparel. We sat down with Melissa Schoffer Farber, SoulCycle’s Senior Director of Legal Affairs, to learn more about the brand.
Melissa, can you tell us about SoulCycle?
SoulCycle has taken the fitness world by storm. What started as an indoor cycling class has grown into so much more! At its core, SoulCycle provides riders (this is how we refer to SoulCycle clients) with a candlelit sanctuary where they can emerge feeling better, stronger and inspired. Founded on the belief that fitness could be fun, while also offering the best in hospitality, SoulCycle has fostered an amazing community of loyal fans. Since 2006, SoulCycle has continuously grown and expanded its reach, evolving into a lifestyle brand. In terms of retail, SoulCycle was at the forefront of the athleisure market when it opened the first studio 12 years ago. From day one, fashion has been an integral part of the brand, selling apparel inside the studios before expanding into e-commerce in 2010. Currently, SoulCycle produces at least 12 retail collections each year.
Can you tell us about your role at the company and areas of focus?
I joined SoulCycle as their first in-house attorney in 2013. I’ve watched the company grow from 11 studios to 90! My role like the company itself has certainly evolved over the years. But, I now spend the majority of my time focused on protecting and developing the brand. This means working closely with the business teams on matters of intellectual property, advertising/marketing, and retail, among others.
You can’t walk down the streets of New York City without seeing people decked out in SoulCycle apparel. How did SoulCycle make the transition from an indoor cycling fitness company to a lifestyle brand?
I think this happened organically as riders fell in love with the brand. They were excited to wear clothing bearing the SoulCycle name and logos, and were eager to find ways to incorporate the energy of SoulCycle into their lives, inside and outside the studios.
We see that SoulCycle has collaborated with apparel and accessory designers as well as other brands. Can you tell us about a collaboration that you have worked on?
I’d love to! One of the first collaborations I worked on with SoulCycle, was with Shopbop, in 2014. It was a big moment for the brand as it was a retail offering outside the studios. It was exciting to work together as a collaborative team to bring this opportunity to life, and looking back, I see how that teamwork and camaraderie set the stage for future work – creating a strong and cohesive relationship between Legal and Retail, important for any company.
What is the most exciting part of working at SoulCycle?
That energy I spoke about earlier which comes out of those magical studios – inspiring you to be the best version of yourself. I’m fortunate to work somewhere where I can disappear into that candlelit sanctuary (during a work-day!) and I do not take it for granted. It’s exciting to work for a company that is focused on making people feel their best, physically and emotionally, on and off the bike!
After many years of litigation and lobbying expenses, the battle over pre-1972 music rights has finally been ended. On October 11, 2018, President Trump signed the Music Modernization Act (“MMA”), legislation that purports to provide additional protection for song writers and publishers, as well as to provide a clearer licensing landscape for those who use such music. The bill revamps Section 115 of the U.S. Copyright Act in three major aspects:
Pre-1972 Sound Recordings
The marquee change relates to songs recorded prior to 1972. Under the 1976 Copyright Act, Congress extended federal copyright protection to sound recordings. However, the scope of federal protection did not extend to sound recordings fixed before January 15, 1972. So far, these pre-1972 sound recordings have been protected by state copyright law under a variety of different regimes, causing chaos and the aforementioned litigation. The MMA closes this hole by providing federal copyright protection for pre-1972 sound recordings (back until 1923), including requiring royalty payment for digital audio transmission of pre-1972 sound recordings and providing time frames for when those recordings will fall into the public domain.
It has always been a challenge for music services to match song writers and publishers with sound recordings. Up until now, the Copyright Office only required music services to send or publish Notices Of Intent, which serve as public notices of intent to distribute sound recordings. In this system, song writers and artists had no guarantee of being compensated in a timely manner for uses of their works.
The Act ends the Notice Of Intent process by the creation of the Mechanical Licensing Collective (“MLC”), an agency that has the ability and authority to grant blanket licenses to music services. Henceforth, digital services will fund the MLC and, in turn, obtain a blanket mechanical license for the download and streaming of musical works. The rates for these new blanket licenses will be set by the Copyright Royalty Board on a market-based standard. The MLC will then collect and distribute royalties, as well as create and maintain a public database providing information regarding musical works and their respective owners.
While music services will now have to pay to distribute these songs, in return they were able to negotiate a longer term of negotiated royalty rates from the Copyright Royalty Board.
Royalties for Music Producers
The MMA also simplifies the payment of royalties for producers and engineers. Artists will now be able to send instructions to SoundExchange, the organization in charge of collecting and distributing digital performance royalties for sound recordings. Specifically, artists will be able to communicate, through letters of direction, as to the distribution of royalties to their producers contracted in the process of making a sound recording. SoundExhange will now distribute such portion of royalties directly to producers for their participation in the creation of sound recordings.
In the wake of GDPR, the UK’s Committee of Advertising Practice has amended the CAP Code to introduce new rules on the use of data for marketing. It has also launched a consultation on potential further rule changes relating to child marketing data and prizewinners.
As discussed in a recent blog post (see here), CAP has been considering its future regulation relating to use of data in marketing and advertising, following the entry into force of GDPR. As such, in May 2018, CAP suspended existing Code rules regulating data protection issues (Section 10 – Database practice; and Appendix 3 – Online behavioural advertising), and initiated a Consultation on the collection and use of data for marketing.
In its Regulatory Statement on the new rules (see here), CAP identified the following aspects of GDPR as being particularly relevant to advertising rules:
a new definition of personal data;
a more detailed definition of consent;
stricter requirements for offering online services to under 16s;
reference to direct marketing as a “legitimate interest” for processing data; and
(related to that) a right to object to processing for the purposes of direct marketing carried out on the basis of a “legitimate interest”.
The rule changes cover three key data protection issues:
Removing rules on “pure data protection matters”
Although CAP considers that responsible data processing is an “intrinsic part of marketing, especially in a digital age”, CAP has decided to remove the rules on pure data protection matters (for example, data security and transfers of data outside the EEA) on the basis these rules are “unlikely to attract an expectation of regulation by the UK’s advertising regulator”. This conclusion is supported by the fact the ASA receives a low level of complaints on such matters, with complainants much more likely to address their grievances to the UK’s data protection regulator the ICO. The removal of ASA jurisdiction in this area is to be welcomed – as Consultation respondents had noted, there is otherwise the potential for uncertainty arising from having two different regimes regulating this area.
Amending Section 10 (Database Practice) of the CAP Code to comply with the GDPR
The amendments to Section 10 reflect and align with the GDPR, for example reflecting key GDPR definitions and mirroring the Article 13 and 14 fair processing notice requirements. They also include confirmation around responsibility for compliance with data rules (while marketers are likely to be data controllers and so primarily responsible, others involved in sending marketing communications are also responsible – agencies beware!). In addition, there is a new rule requiring marketers to do everything reasonable to ensure anyone notified to them as dead is not contacted again.
Removing Appendix 3 (Online behavioural advertising) of the CAP Code
This Section is removed and online behavioural advertising is instead addressed under the general marketing-related data protection rules set out in Section 10.
CAP indicated in its Evaluation of Consultation Responses (see here) that it will have regard to relevant Information Commissioner Office (ICO) and industry guidance relating to online behavioural advertising.
These rule changes announced at the beginning of this month, have been introduced with immediate effect. However, the rules will be under review for a 12 month period and CAP has said the ASA aims to deal with issues informally for the first 6 months, i.e. there will be a grace period for advertisers to get used to the new approach.
CAP intends to use independent industry watchdog the Direct Marketing Commission (DMC) to provide advice in cases where “legitimate interest” is put forward as the basis for processing personal data for marketing communications. Additionally, CAP will refer matters to the ICO where an issue is particularly contentious and the outcome has the potential to affect widespread industry practice. Such a co-ordinated approach, like the updating of the Code to take account of GDPR more generally, is to be welcomed, so as to avoid uncertainty and inconsistency. While the ICO will doubtless continue to be the main point of call for data protection related complaints (and marketers will want to concern themselves primarily with compliance with GDPR and other privacy law rather than the CAP Code in relation to data processing matters), it is highly desirable given the ever-increasing importance of data in marketing and advertising that the CAP Code is consistent with and complements GDPR.
ON THE HORIZON
Further changes are expected in future months. As we reported in September (see here), in light of GDPR, CAP has been considering changes to the requirement to announce details of prize promotion winners (Rule 8.28.5 of the CAP Code). The ASA is not currently enforcing Rule 8.28.5, and has now opened a further consultation on this issue as well as the subject of using data in marketing to children which will close on 7 December 2018 (see here). As per our previous article, and given the changes that have already been announced following the implementation of the GDPR, it seems likely that the requirement to publish names of prize winners will not be reinstated following the conclusion of the consultation. In addition, those interested in data aspects of direct marketing may wish to respond to the ICO’s consultation on its Direct Marketing Code (see here); the closing date for that one is 24 December 2018.
Important changes to UK trademark law will come into effect on 14 January 2019 in order to implement the European Trademark Directive 2015. While some of the changes are minor in the nature, others are quite significant or even brand new.
The reforms will affect trademark applications and registrations, trademark management and enforcement of trademarks. To provide a flavour of what brand owners can expect, we highlight some of the most significant changes below.
Applications no longer need to be accompanied by a graphical representation of a trademark. Instead, applicants can choose from a wide variety of formats, including submitting sound and video files online. However, applications in such formats cannot provide a basis of an internal application as the World Intellectual Property Office (WIPO) currently does not accept presentations of trademarks as sounds or multimedia files.
Authorised users of a collective trademark may intervene in infringement proceedings brought by the trademark owner. In doing so, they may obtain compensation for their own losses suffered due to the third party infringement.
Upon application by a trademark owner, customs authorities will be able to detain infringing goods passing through the UK en route to countries outside the customs territory of the EU. The burden of proof in such cases will be reversed: the person shipping the goods must prove that there are no third party rights to prevent them from shipping or circulating the goods. There are also enhanced provisions to deal with parties intending to counterfeit goods. By way of example, trademark owners may take action against parties who make packaging or any other materials that are used to produce infringing products.
To date, trademark owners have been unable to take legal action against potentially infringing trademarks which have already been registered without having to resort to bringing invalidation proceedings first. As a result of the reforms, courts may consider the validity of trademarks during the course of trademark infringement proceedings.
The reforms introduce new defences to trademark infringement claims. The “own name defence” can only be invoked if the infringement constitutes the use of one’s own personal name. Company names cannot be relied upon for the purposes of the “own name defence”.
Additionally, the “non-use defence” will give the alleged infringer the possibility to show that the rights holder did not put the trademark to genuine use in a five year period. This consolidates proceedings as defendants previously had to commence parallel revocation proceedings and were unable to invoke defence in the infringement proceedings.
Under previous practice, trademark owners could only take legal action against licensees under contract law. The reforms introduce the additional opportunity for brand owners to pursue licensees under trademark law. Actions under contract and trademark law can be brought concurrently.
Under certain circumstances, licensees may pursue alleged trademark infringers themselves. While a non-exclusive licence will still need the consent of the trademark owner to pursue alleged infringers, an exclusive licensee only has to give the trademark owner the initial opportunity to take legal action. If the trademark owner fails or refuses to take action within two months of being notified, an exclusive licensee can pursue its own legal action.
In legal proceedings brought by the trademark owner against alleged third party infringers, licensees will be able to intervene in the proceedings in order to obtain compensation for damages suffered due to the infringement
Whereas previously it was only possible to divide trademark applications, trademark owners will soon be able to divide their registered trademarks.
Trademark owners will receive trademark renewal notifications earlier with renewal notifications being six months instead of four months prior to the renewal date. If the trademark owner fails to renew the trademark, restoration of the trademark is possible if the failure to renew is “unintentional”. This changes the previous test where the UKIPO had to assess whether it was “just” to renew the trademark. Consequently, the restoration process should become easier and more objective.
With all eyes on Brexit, it seems that the implementation of the EU trademark reforms in the UK have not been a high priority on anyone’s agenda. However, it is important to note that these changes provide opportunities for brand owners to further expand their trademark portfolios and more powers to enforce their trademark rights against potential infringers.
We strongly advise brand owners to familiarise themselves with these upcoming changes as they will have an impact on trademark portfolio management and enforcement strategies.
The ASA has this week published new guidance for influencers about how to make their ads clear (see link here “Guidance”). This Guidance follows the ASA’s call for evidence in March 2018.
This is a hot topic at the moment with:
The European Commission having just published a report about the behaviour study it conducted on advertising and marketing practices in social media (see link here) (“EC Report”); and
The ongoing consumer enforcement investigation that was launched by the Competition and Markets Authority (CMA) over the summer relating to social media endorsements and the labelling of posts by social media influencers.
Tips from the ASA for labelling of ads
The Guidance is easily digestible with a helpful infographic (page 13). Brands who use influencers will want to ensure influencers are obliged to follow the rules in the guidance, and to take measures to ensure that the influencers do so in practice. This is because ultimately not only the influencer but also the brand can be liable for breaches of the CAP Code and related consumer law as a result of things done by the influencer. The main points are as follows:
For a post to qualify as an ad it requires two forms of involvement by the brand: (i) some form of “payment” (in the broad sense) and (ii) some “control” over the content. (Where it qualifies as an ad it must comply with the CAP Code, including, in particular, rule 2.1 of the code i.e. it ” must be obviously identifiable as such”.
“Payment” includes all forms of commercial relationship or reciprocal arrangement (e.g. being a brand ambassador), payment in kind (e.g. give aways, gifts, trips), as well as the more obvious payment for posting something.
“Control” includes the brand having a say over the content of the ad (wording, images, hashtags), the logistics around posting (e.g. dates/number of times), or even just reserving the right to check or approve it – even if the brand ultimately doesn’t do so.
“Payment” but no control? The CAP Code is unlikely to apply, although consumer protection legislation still applies.
Ways of making an ad clear – it needs to be obvious: upfront (before people engage with the content), prominent, appropriate for the channel and suitable for all potential devices (consider is it clear on mobile too?)
The ASA likes: Ad, Advert, Advertising, Advertisement, Ad/Advertising/Advertisement Feature.
The ASA “usually recommends staying away from”: #Spon and other forms of the word sponsorship; In association with; Thanks to [brand] for making this possible; and @ + brand.
They recommend using a label at the beginning (this could be in the title, thumbnail or on an image depending on the platform)
As pointed out in the Guidance, if a post does not involve “control” such that it is not an ad, this does not mean an influencer/brand can relax; quite the opposite. Consumer protection legislation (e.g in particular the Consumer Protection from Unfair Trading Regulations 2008) will still apply where there is “payment”, and breach of these rules can carry criminal sanctions including a fine and/or imprisonment.
The Unfair Trading Regulations prohibit in particular unfair commercial practices (e.g. affecting the economic behaviour of a consumer by encouraging them to buy something because they believe they are reading someone’s personal recommendation when they are being paid to give the opinion), and misleading actions and omissions (e.g. omitting material information such as the commercial nature of a post). In particular, these regulations require influencers to disclose in relation to a product they are posting whether they have received any payment, commission, service, product, loan of a product or other incentive.
Links to earlier guidance of the CMA as noted by the ASA in the Guidance are available hereand here.
Whilst the ASA’s new guidance is not new rules or rule changes, this is clearly an area of great importance to the regulators currently, and the guidance helps clarify what kind of labels are sufficient, and which are not.
Just 2 days ago the ASA upheld a complaint against Warpaint Cosmetics (2014) Ltd t/a W7 as a result of a post by an influencer, Olivia Buckland, who included hashtags referencing the brand and whose role as brand ambassador was noted in her Instagram profile and in videos published previously. However, the ASA held that it was an ad because of the agreement between the brand and influencer and as such, without a clear label such as #ad, given that posts could be searched for and read without the context of the profile, the post was not obviously identifiable as a marketing communication in breach of the code. (See decision here)
The key findings of the EC’s report include that one third of participants in the study did not pick up on the commercial nature of native advertising. Further that labels identifying the content did not assist, although more visible labels did assist in Finland. The findings in the report are going to be discussed with national enforcers such as the ASA and CMA, who will decide whether enforcement action is needed.
Certainly, in the UK it will be interesting to see what the CMA concludes in its investigation.
Nevertheless, brands working with influencers, even in an informal way, must make sure that they are complying with the rules, because the brand will be held responsible for the post of an influencer if they get it wrong.