The ASA Making Moves - An Update

The ASA Making Moves - An Update

By Afro-Buff   Wednesday, June 14, 2017   No comments:

Gail Schimmel

It has been six weeks or since you last heard from us on the predicament of the ASA in South Africa. Recently, their new acting CEO - Gail Schimmel* - took time out to speak with Afro-IP on developments.

 

Upbeat and positive, Gail is addressing the main issues raised in the Business Rescue Report as follows:

 

Short Term Funding

 

The ASA is calling on every single player in this industry – every agency, every marketer, every advertiser, every media owner and the lawyers – to pre-pay ONE ASA filing fee (R24 396 including VAT).

 

Their call to action is based on the simple premise that advertising disputes need a place of self-regulation away from the courts and the government, that is both speedy and accessible (an attribute of a well-functioning ASA).

 

In exchange for that filing fee, funders will get:

·       Full credit to file a complaint using this fee at any point in the future;

·       A year’s access to the ASA  Rulings Library, valued at R3300;

·       The right to carry the ASA logo, adapted to reflect that you are a supporter of self regulation, on your marketing material;

·       A responsible marketer MAC certificate (providing the funder qualifies) which in turn earns BEE points;

·       Access to training and support in how to leverage the ASA process.

 

Jurisdictional Concerns

To address concerns over jurisdiction highlighted in the Herbex case (which the ASA currently appealing) Gail aims to address these in its memberships contracts which is consistent with the recommendation in the Business Rescue Report. This means that where mainstream associations are involved, it could address the problem if contractual obligations are adopted and enforced by them as part of their membership with the ASA.

 

Sustainability

 

Gail informed us that the ASA has reduced staff from 22 to 7 and consequently decreased its overheads significantly. It has also received several substantial pledges for funding going forward. Gail hopes to further streamline the ASA process and reduce the cost of appeal to make the system more user friendly. Gail also plans to halt the ASA’s application to become an ombudsman under the Consumer Protection Act, focusing instead on renewing public confidence in the ASA as a forum of choice for advertising disputes.

 

Tea

Visiting the ASA, it is clear that it is already different from the forum just a year ago. Tea is served with the teabag in the cup, leaving nothing to chance, and although this is something Gail also promised to fix it’s indicative of an already more austere, purposeful and pragmatic ASA. In a sense (cents) - it is up to the advertising industry and related stakeholders now.

 

*Who is Gail Schimmel?

 

Bright and affable, Gail is armed with more than sufficient nous and experience to understand the dilemma faced by the ASA and to turn the organisation around. She needs support though. Gail’s online profile, twitter and blog can be viewed through the links.

 

How to pledge?

 

Follow the information here (link no longer available).

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What you need to know about the ASA's predicament in South Africa

What you need to know about the ASA's predicament in South Africa

By Afro-Buff   Friday, April 21, 2017   No comments:

The Advertising Standards Authority's future in South Africa is in grave doubt and it not only affects them and their employees, but the entire advertising fraternity and all consumers. Here are some facts that you need to know about what is happening:

• The ASA is a non profit body that has been in existence for 50 years, set up to assist self regulate advertising disputes. When working effectively it has allowed for speedy and relatively inexpensive dispute resolution for both competitors and consumers.
• On 21 October 2016, the Advertising Standards Authority (ASA) went into Business Rescue (an intervention that attempts to prevent a company from its financial distress to prevent its liquidation).
• The reasons why the ASA is in distress are:
• lack of funding
• lack of membership participation
• high operational costs
• costly litigation (the Herbex (pending) appeal and a damages claim of +-R17 million, set down for 6 March 2018)
• decreasing use of its services (including competitor claims)
• On 25 April 2017 is the ASA's second meeting of creditors and a special AGM has been called by the business recue practitioners to table a number of resolutions based on their research:
• a new management team and board
• a leaner organisation structure (from 20 to 13)
• a long term funding model
• a streamlined adjudication process
• By 30 April 2017 the ASA needs to secure at least R5 million to cover its historical debt. Within a short time thereafter, a further R3 million is required to fund its operating capital in the immediate future. As a result a fund raising initiative is being launched at the special AGM.
• The special AGM is taking place at the SAB World of Beer 15 President Street Newtown at 10am on the 25th. (Afro Leo just pointed out that this venue is interesting because it is a reminder of the 2015 packaging fight between SAB (now AB InBev) and  Brandhouse Beverages over the Amstel Lite packaging (see here reported on this blog for example). It is poignant because the case illustrates the very need for the ASA i.e. this type of case (based on imitation - a special ground under the ASA code) would not easily be adjudicated in a court because imitation alone is not passing off and the courts are very reluctant to rule favourably on unlawful competition claims where there is no passing off - eg Cochrane Steel).
• The proposal for ongoing short term funding requires a commitment of R1.34 million per month from its members in proportion to their ad-spend.
• A failure to secure short term funding will result in an application to liquidate the ASA which will be to the detriment of creditors, up to 20 people will lose their jobs and the ASA services will be lost and/or left to the courts (with cost and other disadvantages) and/or government (which will mean the advertising industry will be regulated by the state).
• In the longer term the ASA intends to cover its costs through a hybrid model which includes an advertising levy (66%) and a contractually negotiated rates from media (34%).
• The ASA has applied to become an industry ombudsman under the Consumer Protection Act. This could alleviate its litigation challenges (over jurisdiction) and over time resolve some funding issues. (Afro Leo points out that accreditation may take some time because of strategic differences between the National Consumer Council and other stakeholders)
• The ASA are attempting to also deal with potential jurisdictional challenges through stronger member contracts requiring media, marketers and advertisers to agree to be bound by their Codes (which incidentally include the Sponsorship Code).
• Their are various risks to accepting the Business Rescue Plan - the retrenchment process will be costly, there is an unquantified risk of a damages claim which could bankrupt the ASA, the ongoing jurisdiction battles over non members is subject to an appeal which could severely hamper the ASA if the appeal by them is not successful.

Here is the invitation to the special AGM.

 

 

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GP: The ASA is here to Stay ...And BAT feels the effect of its power

GP: The ASA is here to Stay ...And BAT feels the effect of its power

By Afro-Buff   Friday, March 17, 2017   No comments:

From the desk of Andrew Papadopoulos (KISCH IP) comes this guest post which is a timely update on what's happening at the Advertising Standards Authority (“ASA”) in South Africa. The ASA was/is experiencing financial difficulty and recently went into business rescue. This, coupled with the damning decision in Herbex (discussed below and which is currently on appeal), left many to doubt the future of this traditional forum of choice for packaging and advertising disputes. Here he analyses its predicament and the recent ruling in the BAT case.

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"There have been many reports about the future of ASA in the recent months but it appears that the ASA is alive and kicking, with no hint of it going anywhere.  If anything, the ASA is poised at obtaining more power.

The first supposed blow to the ASA was a May 2016 High Court judgment in the case between Herbex (Pty) Ltd and the ASA.  This judgment placed in question the ASA’s ability to adjudicate matters over advertisers who are not members of the ASA.  This matter is currently on appeal before the Supreme Court of Appeal (“SCA”) and therefore the effect of this is that the High Court decision is suspended pending the SCA’s ruling.

Following this judgment and in the latter part of 2016, the ASA went into voluntary business rescue in an effort to restructure the industry regulating body.  Comment out of the ASA on this process was that it was a strategic decision and would not affect the operations of the organisation.

These two events did not instil much hope in the ASA and attracted many questions surrounding the relevance of the ASA as an industry watchdog.  However, it would seem that the ASA had different thoughts.

A proposed advertising industry code and ombudsman scheme has been published for public comment, in terms of which the ASA is to be recognised and accredited as an ombudsman for alternative dispute resolution of complaints pertaining to advertising. In other words, the ASA has applied for formalisation of its “Industry Code” in terms of the Consumer Protection Act, which would thereby give the ASA the teeth it has been missing in its current form.  This would also remove any question about the ASA’s jurisdiction and avoid cases like the Herbex judgment.

The proposed Industry Code mainly concerns the consumer-centric provisions (for example, those relating to misleading claims and untruthful advertisements) and omits those competitor provisions relating to advertisements which imitate and take advantage of another’s advertising goodwill.  Therefore, once the Industry Code is enacted, it is proposed that all provisions which have been excluded in the Industry Code will be dealt with in terms of the ASA’s current advertising code.  It is further proposed that the Industry Code (or some other legislation) will later deal with the competitor protection provisions in the same way.

So change appears to be on the horizon for the ASA… but what is happening in the meantime?  Surely would-be advertising infringers don’t just pause their unlawful activities while the ASA gets its house in order?  Well, following a recent judgment out of the Final Appeal Committee of the ASA, it would appear that the ASA has not missed a step.

Since December 2015, tobacco manufacturers Leonard Dingler (part of the Philip Morris group) and British American Tobacco (“BAT”) have been embroiled in a bitter battle over the latter’s entrant to the pipe tobacco market, AFRICA GOLD.  The dispute went through all levels of the ASA (together with numerous interlocutory applications being launched) and has concluded in a ruling handed down on 7 March 2017, with BAT being ordered to immediately cease use of its AFRICA GOLD advertisements and packaging on account of them being too close to Leonard Dingler’s famous BOXER pipe tobacco packaging.

Leonard Dingler’s original complaint was on the grounds that the AFRICA GOLD packaging and get-up is too close to the well-known BOXER pipe tobacco.

The Final Appeal Committee of the ASA agreed with Leonard Dingler and found that BAT’s AFRICA GOLD packaging, which was launched in August 2015, imitates and takes advantage of the advertising goodwill subsisting in the BOXER product and packaging design.  The ASA held that BAT had intentionally designed the AFRICA GOLD packaging to utilise the same combination of key elements to those of the BOXER packaging which has been in the South African market for over 95 years, with hardly any changes to the pack design.

An earlier decision by the Advertising Industry Tribunal of the ASA also found that BAT’s use of the words “Original”, “Makoya” and “No. 1” on the AFRICA GOLD packaging was likely to mislead the relevant consumers and likely to exacerbate the impact of the imitation.

During proceedings BAT attempted to challenge the ASA’s jurisdiction to adjudicate the matter (following the Herbex judgment), but BAT later withdrew this defence on account of it being a member of the Consumer Goods Council of South Africa (“CGCSA”) which is a member of the ASA.  The CGCSA actively advocates for the ASA, stating on its website that “the regulation of advertising is essential for the country and ASA has been the voluntary regulator… The CGCSA members place consumer protection at the heart of its business, recognizing that consumers have the right to transparency, to fair business practices and to the right of redress amongst others…”

The ASA ruled that BAT’s current packaging, which includes all of its point of sale material, must be withdrawn, and the process to withdraw the packaging must be actioned with immediate effect.  BAT was also ordered to pay Leonard Dingler’s costs in the proceedings."

Thanks Andrew, and very encouraging indeed.

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

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

By Afro Leo   Tuesday, February 24, 2015   No comments:

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, here, here 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 (link no longer available).

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A$A funding crisis and Frankies v Woolies update

A$A funding crisis and Frankies v Woolies update

By Darren Olivier   Wednesday, January 18, 2012   No comments:

Those scales need $ fast

Disturbing news of the possible demise of the Advertising Standards Authority (South Africa) for lack of funding has been circulating for a few weeks now with no immediate respite in sight.

Afro Leo was on the phone to the ASA this morning who confirmed that there was "no change in the situation".

The ASA is the regulatory body that protects consumers from unethical and misleading marketing and referees disputes between competitors. This latter function often involves disputes over packaging, slogans and advertising goodwill which is where it overlaps with intellectual property, especially passing off and unlawful competition.

The ASA has, to a large extent, through its efficiency, relatively cheap cost, transparency (eg an up-to-date website complete with decisions) and engaging manner, shown up our courts by attracting disputes which otherwise might have been heard before them. In doing so, it has fulfilled a vital function for business and the consumer, generally.

An example of a recent dispute handled by them is the Frankies V Woolies look-a-like packaging saga that erupted in the press just before Xmas. News on the development of this case is that Frankies has filed its complaint. It took some time before monies reached the ASA and no doubt the Xmas holidays delayed the matter. In any event the ASA is now awaiting Woolies' reply before taking the matter further. For Afro Leo's grilling by Bruce Whitfield about the dispute (702 and Cape Talk) click here.

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