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!
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.
Geographical Indications (GIs) are signs used on products in order to inform consumers about a product’s geographical origin and a quality, characteristic or reputation of the product linked to its place of origin. GIs such as Scotch Whiskey and Parmesan cheese, have generated significant value for EU farmers and producers. Both the UK and EU are fiercely protective over GIs and, consequently, the future of GIs is an important outstanding point yet to be agreed in Brexit negotiations.
While the UK Government remains confident in its ability to broker a withdrawal agreement with the EU, it has provided some guidelines as to what might happen to GIs in the event that no deal is reached by 29 March 2019.
The Brexit White Paper established the UK Government’s initial position on GIs. In brief, the UK intends to establish its own GI scheme, consistent with the WTO Agreement on Trade-Related Aspects of Intellectual Property (TRIPs). It is envisaged that the scheme will provide “a clear and simple set of rules on GIs, and continuous protection for UK GIs in the UK”. The rules are intended to mirror the current EU regime and be no more burdensome to producers.
Issues to consider in the event of a no deal scenario
The UK Government recognises that in the unlikely event of a no deal scenario, there are two issues for UK producers of GI products to consider:
the use of a new UK logo on products marketed in the UK; and
the preparation of an application for GI status in the EU, or other steps that producers may wish to take in order to protect product integrity (e.g. applying for trade mark protection)
A new UK logo
Regardless of whether the UK Government succeeds in reaching a deal with the EU, it has plans to introduce a new UK logo for GI products to replace the EU logo. Producers of GI products wishing to use this logo will need to make preparations to comply with the new rules around use of this logo. This will be subject to consultation. The details have not yet been finalised.
EU protection of UK GIs
The UK Government anticipates that all current UK GIs will continue to be protected by the EU’s GI schemes. However, in the event that current UK GIs are no longer protected by the EU’s GI schemes, the UK Government recommends UK GI holders to consider:
submitting applications to the EU commission for GI protection as ‘third country’ producers (the application process being similar to that used by EU countries, with the additional need to show that the GI was protected in the UK); and
applying for EU Collective Marks or EU Certification Marks to protect their products.
UK GI holders should therefore proceed with caution and prepare for a “no deal” scenario. Accordingly, applying for EU Collective Marks or EU Certification Marks to protect their products would be a sensible precautionary measure to ensure continued protection UK GI holders should also consider filing an application to the EU commission to obtain GI protection as a third party.
International protection of UK GIs
The UK Government is working with its global trading partners to replicate EU free trade agreements and other sectoral agreements, including accommodating the protection of UK GIs in third countries. After March 2019, irrespective of the outcome of EU negotiations, the UK Government expects UK GIs currently named in and protected by EU free trade agreements and other sectoral agreements to remain protected.
Despite the remaining uncertainties, the UK Government’s position on the future of GIs after March 2019 sounds positive. Either way, Irish Whiskey, Irish Cream and Irish Poteen (GIs produced anywhere in Ireland) will continue to be fully protected in the EU and the UK; at the very least the glass is half full.
This week, the UK Government released multiple technical notes detailing the intellectual property implications of a no-deal Brexit for exhaustion of rights, patents, trademarks and designs, and copyright. A few months ago, the idea of a no-deal Brexit was only entertained as a highly unlikely, ‘worst-case scenario’. The following four notes provide an update on the government’s plan in light of a hard Brexit.
In the event of ‘no deal’ the note confirms that the UK will continue to recognise the EEA regional exhaustion regime from exit day. Accordingly, there will be no immediate change to the rules affecting imports of IP-protected goods into the UK.
However, while there may be no change for imports into the UK, there may be restrictions on the export of parallel goods from the UK to the EEA. UK to EEA exporters will need to check with EU rights holders to see if permission is needed.
The government will thereafter be conducting research and consultation to see if any longer term changes to the regime will be required.
For further information please contact Ruth Hoy (Partner).