Tuesday, 24 February 2015

Cochrane goes to the ASA in latest Adwords development in South Africa


Yesterday, boutique IP firm RM Tucker Attorneys notified Afro-IP of their article (Google Adwords - an even clearer picture) in the latest development in Adwords legislation in South Africa, once again involving fencing specialists Cochrane Steel and M-Systems. In this development, Cochrane Steel sought a ruling from the Advertising Standards Authority on the issue keyword bidding.

Readers will remember that Cochrane Steel had sued M-Systems for unlawful competition for bidding on the mark CLEAR VU as an adword. Cochrane Steele lost, setting a precedent that the mere bidding on a competitor's mark as a keyword without more (eg it appearing in the ad text) is not unlawful competition. The High Court case is well covered by this blog and you can view those summaries here, herehere and on CNBC Africa, here.

In January, Cochrane Steel lodged a complaint before the Advertising Standards Authority. Ryan Tucker, and advocate Lisa Oken  set out the ASA development in their summary as follows:

"THE NEXT STAGE – TAKING IT TO THE ADVERTISING STANDARDS AUTHORITY (“ASA”)

In a ruling handed down by the ASA Directorate on 3 February 2015 (M-Systems Group v Cochrane Steel Products; Case number 2014-1859F), the next stage of the saga between the parties was decided. The complaint lodged by Cochrane was based on identical facts as contained in the above judgment. The facts form part of the ruling and are as follows:
  1. Cochrane started advertising its fencing in 2006 under the trade mark CLEARVU.
  2. In 2010, Cochrane lodged 2 trade mark applications for the CLEARVU trade mark – these were opposed by M-Systems (currently before the Registrar of Trade Marks).
  3. Cochrane still uses CLEARVU to advertise and sell its fencing.
  4. In 2012, M-Systems began trading in similar fencing products and it started bidding on the keywords “ClearVu”, Clearvu” and “clear view” on the Google Adwords advertising service. (for further detail on how Google Advertising works, please see this links provided below).
  5. Other competitors have also started to bid on similar keywords and Cochrane has had to increase its bids on its own trade mark (product name) in order to lessen/decrease the damage as a result of “concurrent use with competitors”.
Cochrane argued that despite the same facts being in issue as in the Gauteng Local Division, Johannesburg judgment, the ASA is still obliged to ‘determine whether or not the Adwords used by M-Systems amount to “unlawful advertising”, more specifically, a breach of clause 8 of Section II of the Code’ (the Advertising Code), which relates to the ‘exploitation of advertising goodwill’.
M-Systems responded to the complaint as follows:
  1. The matter has been decided already by the High Court, which held that M-Systems Google advertising practices (i.e. bidding on Cochrane’s trade mark or similar thereto) were not prejudicial to Cochrane’s business – M-Systems was competing fairly and legally.
  2. None of its advertisements incorporate the word “clearvu”, thus they cannot be construed as implying that M-Systems’ product is the same as Cochrane’s.
  3. It alleged that Cochrane was merely trying to prevent fair competition by lodging unfair complaints.
THE RULING OF THE ASA DIRECTORATE
The main issue that the ASA Directorate dealt with was its jurisdiction in the current matter. It stated that the ASA only hears matters relating to “published advertising” (in relation to the definition of ‘advertising’ in the ASA Code). Despite the fact that Google’s Terms and Conditions for its Adwords specifically incorporating ‘any applicable advertising codes of practices’, this does not automatically extend the scope of the ASA Code to include Adwords purchased on a “behind the scenes” basis’.
The ASA Directorate proffered that Cochrane is not objecting to the actual content or claims of M-Systems’ GoogleAds that appear when one does a search for “clearvu”, but rather finds it objectionable that M-Systems uses the keyword “clearvu” to ensure its sponsored link appears as one of the GoogleAds.
Clause 4.1 of Section I of the ASA Code defines an ‘advertisement’ as follows:
‘… any visual or aural communication, representation, reference or notification of any kind which is intended to promote the sale, leasing or use of any goods or services; or which appeals for or promotes the support of any cause. Promotional content of display material, menus, labels, and packaging also fall within the definition. Editorial material is not an advertisement, unless it is editorial for which consideration has been given or received.‘
The ASA then referred to Revivo Tea v P Linzer / 13898 (29 June 2011), Loan Discovery SA v Brown / 21626 (17 April 2013) and the websites, http://www.webopedia.com/TERM/A/adwords.html and http://www.google.co.za/adwords/how-it-works/ , in coming to its decision that an Adword is not regarded as the “advertisement” itself, but merely as a trigger that ensures that a person’s advertisement is displayed. There is a marked difference between what is considered as the person’s “advertisement” and the “Adwords” selected. The ASA acknowledged that there was a relationship between the keyword and the advert but for the purposes of applying the code, they were different.

According to the ASA, all of this supports the argument that the “adwords” selected are not the actual advertisements, but merely the variables that trigger the display (or not) of a person’s advertisement.
The ASA held that the “Adwords” in which Cochrane seeks to establish goodwill are not “advertisements” as defined in Clause 4.1 of Section I of the Code. In the circumstances, the ASA does not have jurisdiction to rule on the business or advertising practices of Google Adwords. Rather than the complaint’s dealing with the “content” of advertising as such, it rather deals with the advertising practices of Google AdWords.
Bearing this in mind, and given that the words “clearvu”, “clear vu” or “clear view”do not appear in the GoogleAd submitted by the complainant, the complaint cannot be entertained, as it does not relate to any published “advertisement” as defined in Clause 4.1 of Section I of the Code."

Afro Leo contacted the ever efficient ASA yesterday and was told that no appeal had been filed. So it is 2-0 for M-Systems, but the saga is not over. There has been a request for leave to appeal in the High Court case due to be heard soon. There is also a pending trade mark opposition case in which M-Systems has claimed that the mark CLEAR VU is not registrable in the form in which it has been applied because the words clear and vu (as a misspelling of view) are descriptive. The law on keyword bidding is also developing in other jurisdictions.

Tucker and Oken suggest that the ASA should not have dismissed the complaint and used the opportunity to embrace digital advertising.

"We would like to stress that the definition of ‘advertisement’ includes ‘any visual or aural communication, representation, reference or notification of any kind…’ Surely the use of the words “of any kind” should have been taken by the Directorate to incorporate digital advertising and Google Advertising in particular."

Afro-IP would like to know your views. Is bidding on a keyword, without anything more, advertising or would you have preferred the ASA to have become a forum for these types of disputes if misuse of advertising goodwill can be shown, as Tucker and Oken suggest?
The ruling can be downloaded here.

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