A Bodyform sanitary towels promotion offered Stella McCartney underwear as prizes. The fashion house was not impressed and complained to the Advertising Standards Authority. Nadine Seymour mulls the outcome and muses on whether Stella might have had better luck in the courts.
Topic: Promotion Marketing
Who: ASA and SCA Hygiene Products UK Ltd ("Bodyform"), Stella McCartney Ltd
Where: ASA, UK
When: September 2010
Law stated as at: 29 September 2010
On 15 September 2010 the Advertising Standards Authority (“ASA”) ruled that the promoter of a competition need not seek brand owner approval or consent to give away third party products as prizes.
Bodyform sanitary towels ran a competition promotion in April 2010 that offered Stella McCartney underwear as prizes. Two of the advertisements included an asterisk to the statement “This is not in association with Stella McCartney”.
Stella McCartney Ltd (“SM”) complained to the ASA under clauses 201.1 and 20.2 of the CAP UK Code of Non-broadcast Advertising, Sales Promotion and Direct Marketing ("CAP Code") that the promotion was:
(a) denigratory and took unfair advantage of the SM brand, because Bodyform had associated their hygiene product without SM's permission;
(b) the ads were misleading as they implied SM endorsed the promotion, which it did not; and
(c) there were insufficient qualifications in the ads to make it clear that the promotion was not endorsed by SM.
The ASA did not uphold the complaint because it found that:
(a) it was clear to readers that it was a valuable and desirable prize and that in the absence of disparaging claims, readers would not interpret the promoter as discrediting the product owner’s brand or company. Therefore, it did not take unfair advantage nor was it denigratory; and
(b) due to the absence of any claims that SM endorsed the promotion there was no need for Bodyform to obtain permission from SM.
It is worth noting that the new CAP Code provisions relating to denigration and unfair advantage (clauses 3.42 and 3.43) have not been changed substantively from the previous version, and so the position regarding brand owner consent remains the same.
What about trade mark law?
Not surprisingly STELLA MCCARTNEY has been registered as a Community Trade Mark in respect of a wide variety of products including a number which might arguably be "similar" (in trade mark law terms) to sanitary towels.
So would the brand owner have had a case in trade mark infringement?
Should SM try to pursue a claim for trade mark infringement they would find that the sale of their goods in the EEA would have exhausted their trade mark rights. This permits the promoter to use the goods and trade marks as prizes without the brand owner's consent.
However, following C-59/08 COPAD v Christian Dior SA, goods which have an image of allure and prestige bestowed upon them may allow the proprietor to oppose the use their trade mark where there may be a serious detriment to the trade mark by permitting the use.
Such an argument would on the face of it seem to be available to SM in this case.
Dior goods are a premium luxury item distributed under tightly controlled channels. The European Court did not set out a test for 'luxury' nor the factors relevant to determine what amounts to 'luxury', but it would likely include consideration of the proprietor's customary style when offering their goods to the public. Further, the fact that the defendant was using the claimant's allegedly luxury brand in a small promotion with a free prize might be relevant to an argument that the aura of luxury was being damaged.
Having said this, the cost, time and risk of such a case would likely dissuade most proprietors from pursuing a trade mark infringement claim in respect of such limited usage. SM may for these reasons have decided on a complaint to the ASA, although of course there would be nothing stopping SM from pursuing a trade mark infringement claim once the ASA case was concluded.
What about passing off?
The promoter is permitted to enjoy the advantage that comes with its fair and honest use of the brand owner's goods and name in a competition without creating a cause of action in passing off, but should always be mindful not to mislead the public by creating a false association with the brand owner.
Bodyform's ads did not state any relationship to SM and the explicit wording "not in association with" was an attempt by Bodyform to limit any potential passing off claim. The cost and risk in a passing off case would likely dissuade a brand owner from pursuing it to court.
What about contract law?
The brand owner may seek to include terms restricting the use of their goods after resale by use of a contract. Depending upon how the promoter sourced the prize, the value of the prize and the type of goods offered would impact whether and how a contract was formed. The brand owner would need to overcome issues such as privity of contract, whether the terms were reasonable and enforceable, the commercial practicalities of obtaining acceptance by the customer and potential competition law concerns regarding control of the goods on the market.
It is unlikely that SM could rely on a breach of contract in the purchase of its underwear and so would be unable to rely on this approach for requiring consent.
Why this matters:
It may be assumed that SM chose the ASA as the most cost, time and resource efficient route to obtain a decision.
However, promoters should be wary of:
- prize competitions offering third party branded products as prizes where the overall circumstances of the promotion may not be in line with the third party's customary style for their 'luxury' goods under trade mark law
- how their prize competition advertisements are presented to reduce the risk of a passing off claim; and
- any contractual terms agreed during the purchase of the goods, in particular on high value goods.
In considering SM's alternative claims the ASA's approach appears sensible and will hopefully continue to prevail, allowing promoters to offer prizes without first seeking the brand owner's consent. However, it is worth bearing in mind that the ASA is not a court and does not operate a "precedent" regime by which it is bound by previous decisions and each case, as they say, turns on its own facts.