Recent Changes to UK Rules on Advertising to Children

Selective Distribution Still (Sometimes) Alive and Well in France

The Italian Supreme Court Rules on When a Registered Trademark Can Be Revoked for Non-use

Passing Data Between Retailers to Facilitate Transactions: A How-to Guide

GUEST INTERVIEW WITH CHARLOTTE HOLLIHAN

Direct Marketing Regulation in the UK Is Increasing


Recent Changes to UK Rules on Advertising to Children

Author: Nicola Conway

2017 is shaping up to be the year that the UK's Committee of Advertising Practice ("CAP") puts its foot down on how companies can advertise to children online. In recent months, CAP has published a multitude of guidance to ensure that marketers know exactly how they can and cannot direct marketing communications at under-16s and under-18s.

On 13 April 2017, CAP published new guidance directed at marketers of age-sensitive products. The CAP Code1 already includes media placement restrictions protecting (i) children (under-16s) from being targeted with marketing for products such as lotteries and food or soft drinks high in fat, salt or sugar; and (ii) children and young people (under-18s) from being targeted with marketing for products such as alcohol, gambling and electronic-cigarettes. The new guidance assists by clarifying that age-restricted marketing communications must not be placed in or around media that is obviously directed at the relevant protected age category (for example on games websites for young children or in teen magazines), or in other media where the protected age category makes up more than 25% of the audience. Marketers must be able to show that prior to placement they have taken reasonable steps to understand the likely composition of their audience and to reduce the likelihood of those in a protected age category being exposed to age-restricted marketing communications.

On 28 April 2017, CAP published new guidance directed at all marketers who make, or run the risk of making, online marketing communications to under-12s. The CAP Code already requires that marketing communications be obviously identifiable as such. The new guidance clarifies that in order to ensure that under-12s recognise when they are being marketed to, marketers must provide a level of "enhanced disclosure" so that the message is communicated in a "prominent" and "interruptive" manner. Advertisements which are subject to this enhanced disclosure requirement should state up-front the marketer's identity and the commercial intent of the advertisement in a way which can be easily understood by a child under the age of 12.

On 6 June 2017, CAP published new guidance directed at all marketers. It reconfirms that marketers are required to demonstrate that they have taken reasonable steps to target age-restricted advertisements responsibly so as to minimise children's online exposure to them. The key takeaway from the guidance is that the steps taken to exclude the relevant audience (e.g. under-16s or under-18s) need only be "reasonable", but they must be real. Where available to them, marketers should use sophisticated targeting tools provided by digital media companies to collect data from the audience and use it to exclude certain groups. By collecting age data, a marketer is able to take steps to exclude all under-16s or under-18s from its target audience. By additionally collecting behavioural data, for example data on what users are interested in, a marketer could exclude from its audience all persons interested in behaviours common amongst under-16s or under-18s (for example teen pop concerts or children's cartoons).

The UK's Advertising Standards Authority will assess marketing communications on a case-by-case basis when deciding whether or not they are compliant with the CAP Code and all relevant guidance. With that in mind, and in light of the new guidance, marketers should now be taking steps to review existing and proposed campaigns in order to assess their level of compliance, and making any necessary changes to avoid exposure.

Selective Distribution Still (Sometimes) Alive and Well in France

Authors: Kathie Claret and François-Xavier Mirza  

On March 14, 2017, the Paris Court of Appeal heavily sanctioned internet marketplace Brandalley for having sold on its website perfumes whose brands belong to French cosmetics leader L'Oréal, despite Brandalley not being an authorized distributor.

This decision may come as a surprise as the same Court had just last year ruled in favor of internet marketplaces, including Brandalley, in cases where cosmetics owners Coty and Caudalie were found to have been unable to demonstrate the legality of their selective distribution networks (see the previous May and September 2016 EU Competition Bulletins: "Internet marketplaces trump selective distribution contracts" and "Paris Court of Appeal pokes another hole in luxury selective distribution network").

However, the Paris Court of Appeal in L'Oréal used the same reasoning as before, but this time the selective distribution network was found to have met all the requirements to be considered lawful under EU Regulation 330/2010 on vertical agreements. According to well-established case law, it is for the supplier of the selective distribution network to prove its lawfulness. In this case, L'Oréal adduced all its French selective distribution contracts in evidence and was found to have proved that:

  • Its perfume market share was less than 30%, based on studies carried out by NPD, an institute which the Court characterized as an authority recognized in the past by the French Competition Authority and the European Commission.
  • The disputed provisions contained in its selective distribution agreements did not constitute "hard-core" restrictions on competition.

The Court found that the clauses which prevented the authorized distributors from selling the products to a distributor, intermediary, wholesaler or retailer within the EEA and EFTA which did not belong to the selective distribution network were valid as they constitute the very essence of a selective distribution network.

Brandalley also disputed a provision that prevented authorized distributors from actively marketing new products which had not yet been launched in France for the year following their launch in another Member State. According to the Court, this did not constitute a prohibited restriction either as it was justified expressly in the agreements by the necessity not to jeopardize the launch of a product in the event of staggered launches, the purpose of which was to test the product for a limited period of time in a particular area.

  • Brandalley's allegations that L'Oréal’s selective network was not "water-tight", based on the facts that L’Oréal did not produce its distribution contracts with parties in other EU Member States and did not explain how it policed unsold stock remaining in the hands of former distributors, did not convince the Court that such network was not “water-tight”.

Thus, as Brandalley did not demonstrate that the L'Oréal products it proposed for sale on its website were obtained through the L'Oréal selective distribution network, Brandalley was found to have violated Article L. 442-6 of the French Commercial Code which, inter alia, holds liable a party who participates in the breach of the prohibition for distributors bound by a selective distribution agreement to sell outside the network.

Furthermore, Brandalley was found to have:

  1. committed free-riding;
  2. harmed the brand image of the products;
  3. misled consumers by advertising price reductions whereas L'Oréal did not recommend retail prices to its distributors;
  4. committed acts of unfair competition.

The Paris Court of Appeal therefore ordered Brandalley to pay L'Oréal €500,000 in damages.

Decision: CA Paris 14 March 2017 no. 15/23991.

The Italian Supreme Court Rules on When a Registered Trademark Can Be Revoked for Non-use

Authors: Luigi Zumbo and Arturo Battista  

The Italian Supreme Court has recently upheld the decision of the Court of Appeal of Milan and stated that businesses may lose their trademarks if they are not being used in a profitable way in the relevant market.

In 2007, Brandconcern BV ("Brandconcern") submitted an application for the registration of the trademark "Lambretta", despite that trademark having been owned by Scooters India Limited ("SIL") since 2002. Brandconcern concurrently commenced an action against SIL, requesting that the trademark be revoked on the grounds of its "long lasting non-use" by SIL.

The First Court rejected Brandconcern's claim, who appealed the decision before the Court of Appeal of Milan.

The Court of Appeal overturned the decision of the First Court and ruled that the trademark should indeed be revoked as a consequence of the total suspension of its use for three years (from 1985 to 1988). That decision was reached despite the persistent good reputation of the trademark.

This decision can be regarded as useful guidance for businesses on how to avoid losing their trademarks for non-use. In particular, the Court of Appeal stated that in order to avoid revocation, a trademark's use must be effective in that it is used in such a way as to influence the marketplace, affecting competitors' operational scope.

The Italian Supreme Court agreed with the Court of Appeal and confirmed that the essential element for "trademark survival" will be the effectiveness of its use and not its lasting reputation.

Passing Data Between Retailers to Facilitate Transactions: A How-to Guide

Authors: David Zetoony and Christopher Achatz  

Online retailers often learn information about a consumer that may be used by them to help identify other products, services, or companies that may be of interest to the consumer. For example, if a person purchases an airplane ticket to Washington DC, the person may want information about hotels, popular restaurants, or amenities at the airport.

Although online retailers often strive to provide recommendations quickly, and to make a consumer's transition to a third party retailer seamless, the Restore Online Shoppers' Confidence Act ("ROSCA") generally prohibits one online merchant from transferring payment information (e.g., a credit card number) to a second online merchant. ROSCA also prohibits the second online merchant from charging a consumer’s payment card or financial account, unless the second online merchant has clearly and conspicuously disclosed to the consumer all material terms of the transaction and received the consumer's express consent to the charge. The following provides a snapshot of information concerning ROSCA.

$340.3B

Amount spent per year by consumers online.1

6

Number of Federal Trade Commission enforcement actions initiated underROSCA.2

100%

Percentage ofROSCA cases that have been filed by the FTC in federal district court, as opposed to an administrative adjudication.3

 

Questions to consider when evaluating the data privacy issues involved in passing information between online retailers:

  1. Are consumers being presented with third party products or services when they visit a retailer’s website?
  2. Are consumers being presented with third party products or services immediately after they visit a retailer’s website?
  3. Are such items affirmatively selected by the consumer, or added automatically to the consumer’s shopping cart?
  4. If the consumer decides to purchase such third party products or services, would he or she likely think that your organization, or the third party, is processing the transaction?
  5. Is the total cost of each third party product clearly and conspicuously disclosed?
  6. If the consumer indicates that he or she wishes to buy a third party product or service, can the consumer easily change that decision?
  7. Is contact information being transferred from one retailer to another?
  8. Is payment information being transferred from one retailer to another?
  9. Is the third party offering a free trial offer? If so will the consumer be charged any money to participate and does the consumer need to take an affirmative act to prevent a charge after the trial period?
  10. Is the third party offering a continuity program or membership? If so are the terms of the program clearly and conspicuously disclosed?

GUEST INTERVIEW WITH CHARLOTTE HOLLIHAN

London Associate Nicola Conway talks with Charlotte Hollihan, founder of the London-based jacket and blazer specialist Charlotte London, about the challenges a new fashion brand can expect to face when coming to market in London.

  1. Tell us about Charlotte London jackets and blazers.
    Charlotte London jackets are fresh twists on classic pieces. They're elegant, versatile and wearable at work, at a party, or wherever strikes your fancy. We have jackets that are soft and feminine and others that are sexy and fierce because, after all, you aren't the same person everyday. Lots of fast fashion houses sell basic jackets and blazers which can be very 'blah', but I don't think you should spend money on something that doesn't make you feel great, and falls apart within the season. Our debut 'London Collection' for Spring 2017 is all about Spring in Bloom; it's really polished and plays into the elegant and beautiful vibe of this City.
  2. Why did you choose to create just jackets and blazers, rather than dressing the whole woman?
    You can either create basics that cater to a woman's needs, or standout pieces that cater to a woman's wants. We want to focus on one thing and do it well. We chose jackets and blazers because it's what we love, and of course, you're never fully dressed without a jacket.
  3. What tips do you have for a new fashion brand getting itself off the ground?
    My first tip would be — if you're not 100% committed to doing whatever it takes to bring your goods to market then stop before you start. It's very 'Vogue' at the moment to be an entrepreneur, but starting a new business requires more time, hard-work and capital expenditure than people realise. My second tip would be — consider working with a business partner. Whether they bring investment or ideas to the table (or both), I'm a firm believer that two heads are better than one. Apart from anything else, someone who travels the journey with you can keep you motivated, on-track, and on-beat.
  4. Do you think London is a harder market to enter than others for a new fashion retailer?
    London is undoubtedly one of the busiest marketplaces for fashion brands to enter. Having said that; if you can identify a gap or a need that hasn't been filled then you should give it a shot. Having worked in finance, I recognise the juxtaposition between formalwear and fashion which we businesswomen face — and that's the gap which Charlotte London fills. My advice would be to do your due diligence before you think about launching a new brand — go online and look if what you are trying to create has been done before. The reality is that you may find better-established brands already serving your target customer.
  5. Apart from brand competition, what other challenges can a new fashion brand expect to face?
    Each business faces unique and different challenges. We found it easy to find a workshop to manufacture our designs at a great quality, but ended up having a nightmare developing a website which is, of course, crucial for an online store. Another typical challenge for new brands is identifying and reaching your target customer; it can be difficult at the beginning to know where to start. The internet is a great tool because it enables you to reach so many people at once, but that can in itself be a distraction. It's important to focus on who your customer is and pay attention to what they want and the feedback they alone are giving you, and not pay too much attention to anyone else. After all, your customer is most important, and you can't please everyone.
  6. And finally, what is the next step for Charlotte London?
    We want to grow our jacket collection, partner with other great online retailers who love the brand and won't compromise on our values, and at some point sell within carefully selected stores and boutiques around London. Our jackets will always be available onsite, but we would love for women to be able to go try them on and see them first hand. There are so many ways we'd like to expand and we're very excited about the future of Charlotte London!

Charlotte Hollihan founded ‘Charlotte London’ to bring perfect jackets and blazers into the world for the elegant, international and polished woman. Charlotte now continues to work on developing the collections and adding different and versatile pieces. Charlotte draws her influences from the many places she has visited and her international upbringing, and uses this insight to create jacket styles that are wearable and fun in every context.

Direct Marketing Regulation in the UK Is Increasing

Author: Nicola Conway

The Digital Economy Act 2017 (the "Act") received royal assent in April 2017 and is now an Act of Parliament. The Act covers a range of topics, but of particular note to commercial entities is Section 96 of the Act which enhances the regulation of direct marketing and which will come into effect on 28 June 2017.

The aim of Section 96 is to better protect citizens against spam calls, texts and emails, and will require the Information Commissioner's Office ("ICO") to create a new code of practice regulating direct marketing.

The ICO's current guidance explains the direct marketing laws under the Data Protection Act 1998 ("DPA") and the Privacy and Electronic Communications (EC Directive) Regulations 2003 ("PECR"), guides organisations on how they can stay within the law and maintain a good reputation with customers, and sets out what enforcement action the ICO can take against those who breach the rules. This guidance will soon be superseded by the new code which, unlike the ICO's current guidance, will have statutory weight.

The new code will contain practical guidance for organisations on how to responsibly engage in direct marketing in compliance with the Act, the DPA, the PECR, and any such other guidance as the Commissioner considers appropriate to promote good practice having regard to the interests of data subjects in particular.

Whilst breach of the new code will not in itself be an offence, non-compliance will be admissible in evidence in any proceedings and where relevant must be taken into consideration by the Commissioner or a court or tribunal. The new code will therefore strengthen the ICO's ability to enforce direct marketing laws and take action against entities which cause a direct marketing nuisance to consumers.


1. UK Code of Non-broadcast Advertising, Sales Promotion and Direct Marketing

2. U.S. Census Bureau News, Quarterly retail E-Commerce Sales

3. Enforcement actions reviewed as of January 2017.

4. Id

 

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